Section 5. Latin America, Africa, and Middle East

Item 1. Responding to Market Growth and Expansion

Integration of the Latin American market

Since 2000, the Latin American automotive market has been growing at a rapid pace supported by economic growth brought on by surging energy costs and increasing prices for minerals, and grains, as well as the expansion of regional economic tie-ups such as the Common Southern Market (Mercosur) and the Andean Community of Nations (CAN).

Mercosur aimed to achieve completely free trade within its region by 2006. Efforts to that effect included the elimination of all tariffs among its members in 2000, with the exception of cars and sugar. CAN was also able to build a free trade zone with the elimination of tariffs by Peru. To respond to these events, Toyota Motor Corporation (TMC) established Toyota Mercosur in 2003 as a virtual organization for centrally managing Toyota do Brasil Ltda. (TDB) and Toyota Argentina S.A. (TASA). Toyota Mercosur was established to build a system for carrying out optimum and flexible operations in Latin America by centrally managing and operating procurement, manufacturing, sales, and management operations as the production operations in Brazil and Argentina were getting firmly under way.

At the time Toyota Mercosur was established in Latin America, there were also active movements toward integrating economic zones. In 2005, the nations belonging to Mercosur and CAN concluded a free trade agreement (FTA), making CAN members associate members of Mercosur. Meanwhile, in 2003, an automobile agreement between Mercosur and Mexico went into effect and the four Mercosur member nations and Mexico concluded bilateral FTAs.

In this way, Mercosur expanded beyond its original region and evolved into a free trade zone for cars and parts in the Pan-Latin American region, including Mexico, which is a member of the North American Free Trade Agreement (NAFTA). With the Pan-Latin American region in its sights, in 2002 TMC established regular workshops run by hands-on distributor staff members in various countries in order to strengthen area marketing activities. Furthermore, TMC developed people with working experience at distributors into trainers specializing in local regions, and set up an educational subcommittee in 2003 and regional councils in the field of advertisement and public relations in 2006, as part of its area marketing activities.

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