Annual Report 2014

First, I would like to extend my sincere gratitude for your continued support and understanding.

Since 2009, Toyota has encountered a multitude of challenges. Thanks to the tireless efforts of all concerned, today we can take pride in the strengths of our management practices and culture. I am convinced that we are now in a position to take a definitive step forward toward sustainable growth.

Just as a tree's growth rings testify to its survival and growth, I believe that Toyota's ongoing growth rests entirely on its ability to grow in the face of any adversity. Having recently achieved the unprecedented milestone of 10 million vehicles in global Group sales, we are now advancing into uncharted territory. If we are to achieve sustainable growth, it is vital that we nurture our human resources while building on each growth ring. It is equally important, however, that we maintain self-restraint and avoid overextension. Balancing these concerns and directing management resources to areas that offer the potential for growth, we will pursue bold innovation and make aggressive forward-looking investments.

For example, Toyota reorganized its automotive operations into four business units in April 2013. This more agile and autonomous management structure enables each unit leader to adopt a self-sustaining approach that makes the most of on-site, hands-on experience, thereby facilitating quick decision making. This ability to address individual requirements on a more detailed basis is all the more important when considering the varying scales and stages of motorization in each market. In 2014, we are taking this concept of self-sustaining operations one step further by making better cars on an individual platform basis. For example, “Team K” will assume comprehensive responsibility for the development, procurement, and production for models that employ the K platform, including the Camry and Avalon. This greatly broadens the scope of the development process, which had tended to focus on individual models, and allows whole platform teams to channel their energies toward making better cars.

In North America, the decision has been made to unify and relocate the manufacturing, sales and marketing, corporate, and financial services headquarters at a new shared campus in Plano, Texas, from the latter half of 2016. This will allow our North American operations to address the needs of customers in a timelier manner, and to produce ever-better cars that exceed expectations. With a history spanning more than five decades, Toyota believes that its operations in North America will benefit through this “One Toyota” concept. By undertaking a thorough review of its business structure and working beyond the boundaries of established manufacturing, sales and marketing, and corporate and financial services, we are better placed to pursue sustainable growth.

Toyota is equally committed to innovation, the wellspring for new technologies and future growth. Moving forward, we will maintain our commitment to the environment by strengthening and developing our hybrid technologies. In addition to efficient gasoline engines and fuel cell vehicles, we will endeavor to develop and commercialize safety technologies that offer safe and responsible ways of moving people. Taking each of these factors into consideration, Toyota will actively direct resources toward next-generation mobility and IT infrastructure innovation.

As I have already mentioned, my goal is to ensure that Toyota evolves into a company that is capable of sustainable growth. Even in the face of a situation like the recent global financial crisis, Toyota must not only be resilient, but also be well-equipped to succeed against adversity.

Toyota marked its 75th anniversary in 2012. It is important to remember that the many fruits that we are able to harvest today were sown and cultivated by our hard working predecessors. It is imperative that we, too, place similar importance on our responsibilities to plow, plant, and cultivate the seeds of the future. In this manner, future generations can benefit from the work we do today.

Early in April 2014, we articulated a new internal slogan: “Work Today, Smile Tomorrow: in Pursuit of True Competitiveness and Innovation.” This new slogan encapsulates my strong belief that our continued growth must be informed by a strong sense of history. At the same time, it is a forward-looking statement that paints a picture of how Toyota should look both a decade and century from now.

What is the engine for sustainable growth? We have learned from experience that we can achieve sustainable growth only if we create attractive and appealing cars that bring smiles and if we foster the human resources needed to make this a reality. At the same time, ever-better cars can be produced only through efforts made by employees on the front line. Individuals must take ownership of their work and place the utmost emphasis on local manufacturing, swift decision making, and immediate action. As we continue to grow, however, tasks that were once routine may become increasingly difficult to perform. We also have to remember that actions taken during a crisis may not be practicable at other times.

As I see it, Toyota's current situation is particularly critical as we are now entering another expansion phase. This is why I believe it is important to put in place independent business units to carry out all appropriate activities on the front line.

All 330,000 Toyota employees around the world are doing their best to bring happiness, safety, and peace of mind to customers and communities. As we work to achieve these goals, I would very much appreciate your continued support.

July 2014

Akio Toyoda
President

Annual Report 2014 PDF version

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