Toyota Motor Corporation

Ladies and gentlemen,

thank you very much for joining us despite your occupied schedules. We really appreciate your participation. We would like to start Cisco ER 2021 second quarter financial performance announcement of Twitter Motor Cooperation.

In order to directly convey to you the financial

results, we have invited some stakeholders who are present here today, and this is distributed online to the media representatives. First of all, let me introduce the participants from TMC side for the part one, Kenta Kon, Chief Financial Officer and Operating Officer.

Masayoshi

Shirayama, Chief Officer for External Affairs and Corporate Communications. Without further ado, Mr. Kon is going to share with you the overview of the financial results. Hello everyone. Thank you for joining us today. I am Kenta Kon.

First and foremost, we would like to convey our deepest sympathy to those who have been suffering from COVID-19 and those who have been affected by the continued spread of the virus. We also would

like to express our heartfelt appreciation to our customers around the world who chose us, as well as our stakeholders, shareholders, dealers, and suppliers who support us.

Now, I would like to discuss Toyota's financial results for the first half of

the fiscal year ending March 2021.

First, consolidated

vehicle sales for the first half ended September 2020 was

at ,086,000 units, which was .3% of the consolidated vehicle sales for the first half of the previous

fiscal year.

Toyota and Lexus brand vehicle sales was at 4

,011,000 units, which was .0% of such sales for the first half of the previous fiscal year. Although vehicle sales for the first quarter, when the impact of lockdown measures implemented in many countries was severe, amounted to 69% of that of the quarter of the previous fiscal year, and vehicle sales for the second quarter recovered .1% of that of the previous year. Once again, we would like to express our sincere gratitude to our customers around the world who chose us, and all of our stakeholders, including our sales outlets and suppliers, who have made an effort to deliver as many vehicles that our customers want as possible. Consolidated financial results for the first half of this fiscal year were sales revenue of ,335.2 billion yen, operating income of 519.9 billion yen, pre-tax income of 728.8 billion yen, and net income of 629.3 billion yen. I would like to explain the factors which impacted operating income year on year. First, the effects of foreign exchange rates decreased operating income by 120 billion yen. Second, cost reduction efforts increased operating income by 50 billion yen. Third, the effects of marketing activities decreased operating income by 970 billion yen, largely due to the decrease in sales volume caused by the spread of COVID-19. Finally, a reduction in expenses increased operating income by 115 billion yen. As a result, excluding the overall impact of foreign exchange rates, swap valuation gains and losses, and other factors, operating income decreased by 805 billion yen year on year. As for operating income for each region, although operating income decreased year on year in all regions, largely due to the decrease in sales volumes caused by the spread of COVID-19, we succeeded in securing operating income in all regions. Next, let me explain our consolidated subsidiaries and equity method affiliates in China, as well as our financial services business. As for our China business, operating income of consolidated subsidiaries increased by 34.2 billion yen year on year to 112.4 billion yen, thanks largely to marketing efforts. Our share of profit of investment accounted for by equity method was up 15.5 billion yen year on year to 79 billion yen, thanks largely to marketing efforts. Regarding financial services, operating income, excluding swap valuation gains and losses for the fiscal year, was broadly flat year on year at 211.2 billion yen. Next, I would like to

explain our return to shareholders. In this interim period, although the automotive industry as a whole was in a downturn due to the spread of COVID-19, we were able to record a profit for the first half of this fiscal year with the support of our stakeholders, including our shareholders. Considering these factors, we plan to make an interim ordinary dividend of 100 yen per common share. In addition, we would like to thank our shareholders for their continuous support and have decided to add a special dividend of 5 yen for a total of 105 yen per common share. As for share repurchases, we have decided not to repurchase our common stock as a form of interim shareholder return. Although our profitability remains trying and impact of the continued spread of COVID-19 continues to be unpredictable, we remain committed to accelerating our efforts to sow the seeds for the future through investment in growth for transformation and actions for SCGs. Now, let us move on to discuss the outlook for the full fiscal year ending March 2021. With regards to our consolidated vehicle sales, we have increased our forecast from the time of our first quarter results by 300,000 units to 7.5 million units. Regional sales breakdown is as stated in the presentation. As for Toyota and Lexus brand vehicle sales, we anticipate that vehicle sales will increase by 300,000 units compared to our forecast from the time of our Q1 results to 8.6 million units. Regarding the recovery of Toyota and Lexus brand vehicle sales, we anticipate that sales will recover to previous year levels, namely approximately 100% in October to December and approximately 105% in January to March 2021. Next, let me explain the full-year consolidated financial performance. We've adopted 4X rate assumptions for October onwards of 105 yen per dollar and 120 yen per euro, which makes the full-year assumptions 106 yen per dollar and 121 yen per euro. Based on this, our forecast for full-year consolidated financial performances are sales revenue of 26 trillion yen, operating income of 1 trillion, 300 billion yen, pre-tax income of 1 trillion, 760 billion yen, and net income of 1 trillion, 420 billion yen. Now I would like to explain the factors that will impact operating income year on year, comparing to our forecast at the beginning of the fiscal year. Operating income is now expected to be 1 trillion, 300 billion yen, up 800 billion yen from the previous forecast at the beginning of the fiscal year. The detailed analysis is as stated in the presentation. We see slide 15, which compares the latest operating income forecast for this fiscal year with the results of the previous fiscal year. Although we were able to report a profit, the first half of this financial year has just completed, and the environment surrounding us remains highly uncertain, considering the risk of a second and a third wave of COVID-19. In

the second half of this financial

year, while continuously making efforts together with all our stakeholders, including cost reduction efforts at all levels and efforts at manufacturing sites and sales outlets, we remain committed to continuing to steadily sow seeds for the future and to accelerating our transformation into a mobility company. This concludes my presentation. Thank you for your attention.

We would

like to start the

Q&A session. If you have a question, please press the button that says Raise a Hand, and your name will be called. And please turn on both the microphone and the video or camera. And we would like to have as many people as possible ask questions here. We would like to ask you to limit to one question per person.

Now, Mr. Katori

of Yomiuri newspaper, please. I will switch the screen, so if you find yourself on the screen, please start asking your question,

please. We are now switching

the screen, so please give us a little time.

Now, Mr. Katori,

please. Could you start your question, please?

Katori of

Yomiuri newspaper, thank you for the opportunity. First of all, with respect to the financial results you have just announced, I would like to ask your appraisal and assessment. Especially you made an upward revision. So what is the most important factor that contributed to that? What is your view on that? And at the same time, some European countries have locked down their countries, and COVID-19 is spreading once again in the United States. So toward the second half, what is your assessment of the likely risk in the second half? That's my first question. And the second question relates to the production. When you had this announcement in May,

you already had impact

on your production plans.

And

you also talked about that, because demand was affected. However, as we look back, the recovery since then seems to be going on quite smoothly. So for the past half year, how have you been able to coordinate your supply chain? If you have been able to do that successfully, what were the keys for that? Those are my two questions. Thank you for your question. First of all, with respect to my assessment and appraisal of the financial results,

first

of all, the financial results between April and September, it covers a six-month period. The first three months period and the second three months period, so dividing into these two, three months period, the first quarter and second quarter show different situations. I wish I could show you the PowerPoint slide showing the quarterly financial results. Could you show the quarterly financial results on the screen, please? Thank you.

In the first

half, the operating income, 506 billion.

What

you see on the screen relates to three months period in the second half. The operating income was 506 billion yen. So if we divide this as April-September period, the latter half, that is July-September period, compared with the first three months, shows significant recovery. And the marginal decrease in operating income compared with the first three months period has shrunk significantly. And on the quarterly basis, the operating income of 500 billion yen was generated, which owes a great deal to the efforts made by individuals. And that achieved the recovery that we are now seeing in the figure of operating income.

And

the fact that we've been able to achieve the recovery to this extent

was

also mentioned when the financial results were announced previously. We showed the projection of 8 million yen and 500 billion, but we were not quite sure because things were so uncertain. Despite that, and although this is just the half-year place where the first half was completed, but the fact that we were able to generate positive profit owes a great deal to every effort made by dealers and suppliers to deliver as many vehicles as possible. And it really owes the hard work of those people, and that allowed us to keep our plans running. And by us, keep the plans running also allowed many related industries or suppliers to keep on their operations. And therefore, the entire automotive industry has been supporting this recovery. And I really felt that in the real field. So that's what I felt in the first half-year period. And as I said, this shows only the results of the first half or half-year period. But as I look back in specific cases since the global financial crisis, for the past 11 years, we consistently engaged ourselves in various initiatives and activities. And those efforts created a foundation for what we see today. I strongly feel about that. For example, the financial institutions really supported us and cooperated with us. We were able to take loans from financial institutions, and we were able to secure solidly the financial resources we need. At the time of the global financial crisis, we had 3 trillion yen. But today, with the support of financial institutions, it has been raised to 9 trillion or 10 trillion yen.

And in conducting activities

in business during this fiscal year, those support meant a great deal to us. At the beginning of the fiscal year, we really didn't know what could happen in charge of financial and accounting activities of the company. I wasn't quite sure how things will evolve. But the top executives, especially our president, President Toyoda, as a top executive, remained very calm and very stable. And that allowed us to make decisions whenever that need to be made on the spot.

So

that helps us a great deal, and I appreciate that a great deal. With respect to the second half, as Mr. Katori mentioned in his question, we see lockdown in place, and the COVID-19 virus is spreading. And we will continue to remain vigilant in those evolution and developments. And as I said, we only have actual results for the half year period. It's not that we have a clear view of the next half year. So I will continue to watch very carefully the impact of COVID-19.

In terms of the status

of production, right now at this moment, for example, in North America or Europe, the production in April was almost zero. However, at this point, right now, we have seen significant recovery. For example, in North America in September, the actual result was compared with previous year, 108% of the previous year's level. And in Europe, it's 102% of the previous year's level. And in Japan, the recovery has been made to the extent of the production reaching 104% of the previous year's level. So in the sense, the suppliers and supporters are working very hard. They've been kept extremely busy. They have a huge workload because of the strong recovery. So while preventing the risk of COVID-19 spreading, working closely together with the suppliers, we would like to keep this production momentum. That's my response. Thank you.

Thank you, Mr. Katori. We'd like

to go on to the next question from

Asahi

Newspapers. Chiba-san, please.

We will be switching the screen. When you

see yourself on the screen, please start with your question.

Mr.

Chiba, please. This is Chiba speaking.

This

is Chiba from Asahi Newspapers. Do you hear me? Yes, we hear you fine. Question, please. Thank you. Well, I might be asking you on the details, but for the factors that increase operating income, for asterisk number two, the others area, then the sales and marketing, there's quite a large, more than 100 billion, 110 billion, and asterisk number three, for the increase or decrease in expense and expense reduction efforts, this is also plus 115 billion, 130 billion, quite a big number, and also asterisk number four, valuation gains and losses from swaps, et cetera, it's 45.8 billion. So I think there are some accumulated from the April to June period, but can you tell me the breakdown of these? And in addition to that, for July to September term, is there any characteristic special factors for the second quarter on the positive side and the negative side? What kind of special factors were there in the second quarter?

Thank

you for your question. So for the contents, starting with the effects of marketing activities, so for the increase, decrease, increase others 110 billion yen, the breakdown, there's mainly two factors here, and the first will be for the sales expenses, so this has reduced. And particularly in North America, the incentives has gone down. In order to, since we have been effectively utilizing our marketing expenses, so therefore incentives per unit has gone down, and also there was a drop in the total incentives because of the drops in the total volume. So this has had an effect on the positive side, and now for the other negative side, this is a global factor, but for the supply parts, the income from supply parts had reduced somewhat, and these two factors in a net has an effect of 110 billion yen. And the second for expenses,

it

is among the 130 billion, a large part of it will be the general expenses, so the business expenses and also entertainment fees, meeting expenses, event expenses, in our case, for example, consumables for the office works, office supplies, so including those factors, this term, this quarter, we have been able to reduce significantly, and for the business expenses, business travel expenses, of course, it is difficult to move up travel freely, but just looking at a non-consolidated TMC, there is about several billions of reduction in the business travel expenses.

And going into the details for

the consumables, when the office supplies compared to last year, we have been using only about half of supplies, and also the research and investigations are compared to the peak, it is about one-third compared to the peak. So, for example, we are doing research in-house with our in-house resources, so those are some efforts that we have been making to reduce the expenses. That has a significant impact included in this 130 billion effect. And the final part for the swap valuation gains and losses, this is accumulation of various factors, so the forex swap

expenses and also for the securities, and

many of the details have been accumulated in this number of gains and losses from swaps, etc. And also my question was about the three-month special factors for the three months from July to September. Sorry for that, excuse me, and especially for looking at July, September

items, if there was a special factor,

actually there was not. There was no special factors, so looking at the operating income from July to September, no temporary or one-time income or

loss,

there was no significant item here. Thank you for your question. Thank you.

Thank you, Mr. Chiba. Let us move on to the next question. From Daily Industrial newspaper,

Mr. Navatuka, please. I will switch the screen, so if you find yourself on the screen, please start your question.

We are now switching the

screen, so please give us a little while.

Mr. Navatuka, please

start your question. Microphone, please. Mr. Navatuka, please turn on the microphone. Your microphone is still off, still muted. Can you hear me? Yes, we can hear you, Mr. Navatuka. Navatuka of Daily Industrial newspaper, thank you for the opportunity for asking this question.

In terms of capex for

the current fiscal year on the full year projection, it is 1 trillion, 400 billion. Compared with the outlook shown at the beginning of the fiscal year, there is an addition of 50 billion. Could you explain the reason for that addition or increase for capex? Thank you.

In terms of outlook for capex, it has been

increased from 1 trillion, 350 to 1 trillion, 400 billion. What's the reason for this 50 billion increase? There is no major factor behind that. The yen was lower than we had anticipated at the beginning, and therefore there was the difference caused by this translation difference. And also in different projects, there has been some increase in project expenses in certain regions. And in other areas, there has been some decrease in those projected investments. But there has not been any major change that resulted in those fluctuations. In terms of just the accumulation of small factors, and this is the most -to-date figure that we have announced today.

Thank

you very much.

Mr. Nagatsuka, thank you for your question. Now let us move on

to

the next question.

From New Choonichi

newspapers, Mr. Osada, please.

We will be switching the screen. When you see

yourself on the screen, please start your question. We are now switching the screen. Ms. Osada,

please. This is Osada speaking

from Choonichi newspapers. Thank you for this opportunity. It is a detailed question. For the six months accumulated results as interim results, number three, labor costs. No, excuse me, not labor costs. For the effort made to reduce the expenses, so for the R&D, there was a plus 20 billion.

So specifically, what are

you talking about here?

Thank you for your question. Here also, it is not a

significant item that is included in here, but for the R&D expenses, especially right now, we are focusing on the case areas. So we

are now shifting the

conventional R

&D activities to the case areas. For about 40 percent, it will be in the so-called advanced

technology research areas. So the R&D expenses will be in this advanced R&D field, and especially for prototype expenses, those items have been continued to make improvements. And the effect on net, there will be annual basis, a 20 billion effect. That is, I think, how this number should be understood. So that is all from myself. Thank you.

Thank you, Ms. Osada. Allow me to move on to the next question, please. We will switch over the screen, so when you find yourself on the screen,

please start your question.

Mr. Noguchi,

could you start your question, please? Thank you, Noguchi of NHK. Can you hear me? Yes, we hear you well. Thank you for this opportunity.

Relating to the outlook of the future period, as was

referred to in the earlier question, to a certain extent, going forward, the uncertainty remains very high. The U.S. presidential election has not yet been called.

Depending upon the

outcome of that election, the environmental regulations and auto bills or policies likely to be implemented in environmental areas might come out differently. So what is your assessment, what is your take on that at this moment? And in relation to the outlook of the second half, what are expected likely impact on your second half results?

Thank you. With respect to the second

half of our year, as far as the outcome of the presidential election is concerned, the final results are not yet called. But no matter what the outcome may be in the United States, we have been operating our business for many, many years. For a long period of time, we employ many employees, including the dealers and suppliers and also the local community in which we are allowed to operate. We are working with them very closely in the United States. And through those,

we want to be a better corporate citizen. And we remain committed to being that. That stance will not change by enhancing

our competitiveness, by becoming even more competitive. We will continue to work harder to become a better corporate citizen. In terms of the outlook for the second half,

we are not expecting any

substantial impact stemming from how the presidential election turns out to be.

Mr. Noguchi, thank you for

your question.

Now going on to the next question. Mr. Kigawa, please. We will switch the screen, so please speak if you have your own video on the screen. When you see

yourself on the screen, please start with your question.

We are switching the

screen. Please wait a moment.

Mr. Kigawa, your

camera is off. Thank you. Now we see you. This is Kigawa

speaking. Thank you.

Do you hear me? Yes,

we hear you. Thank you. I want to

ask

a question about the U.S. Regarding the U.S. So you talk about the sales incentives, and you said that there is positive impact from the reduction of incentives in operating income level compared with the previous quarter. It is, we see a positive impact on operating income. And for the inventory level for U.S., auto data shows that it's about 40 days. So in the past, it was around 60 days. I think compared to that, it's quite reduced. And incentives, it's probably the level is about the same year on year. So it's flat. So I think you can say that you have a healthy condition in selling the vehicles. And Toyota shares, it seems that it is increasing. Therefore, that you can probably can say that it's not just in the recovery period, but you're having a good performance. So why do you think that in the U.S. you're having a good performance and also for the outlook for the inventory level, maybe the dealer side is not having enough inventory. So on a timeline, when do you believe that it will return to the regular level? So from suppliers, we hear that you have quite a tight inventory. And so what will be the outlook? How do you see the second half?

Thank you for your

question.

For North America, as if you can see the per region situation for the segment between July to

September, the results are here. It's on page 19, probably in the back of the package. And for North America, just looking at second quarter, we have been increasing the profit operating income.

And with breakdown here, of course, the automobile business is contributing,

plus the financial business.

And so one by one, to answer your questions for inventories, yes, it is still in a quite a tight situation. So according to the model, the situation will differ, but

mainly the light pickups

and also light SUVs will be those that do not have enough in inventory. So when we

ask the members in North America, they say that based on the inventory level for the incentives, there will be different according to the outlet of the dealer and different according to the region we're talking about in the United States. So then centers are being adjusted accordingly and try to work in detail as possible. And we believe that will be most effective in dealing with the situation. And for the reason why we are having a good performance here is

right

now we're putting a lot of efforts in trying to increase the inventory level. But when you look at the new products,

the new vehicles, the new models, we have been able to continuously supply the new models into

the channel. So several years ago, the SUVs, we were said that we're quite behind and late in introducing SUV models. But now SUVs are being introduced in the U.S. market and it's being taken quite well. That's what we believe the reason is. And for the inventory level, there's a lot of effort put by receiving the cooperation from suppliers to continue production and try to come to the level that we think is appropriate. So by the beginning of the term, we think that we will be able to recover to the appropriate level. I just want an additional question. So incentives from the other side, do you think that even without so much incentives, cars will sell? Is my understanding correct? We don't have to make too much effort in forcefully pushing up incentives? Well, looking at the current situation, I think it's just a result that as a result we can say that we did not need so much incentives. Thank

you very much,

Kigawa-san.

Let's move on to the next question from the Chube Economic Journal,

Mr.

Iwasaki. We will switch up the screen, so if you find yourself on the screen,

please start your question.

We are switching the screen, so please

give us a little more time.

Mr. Iwasaki,

could you please start your question? Iwasaki of Chube Economic Journal, can you hear me? Yes, we can. Thank you.

In terms of suppliers located

in central Japan, the Chube area, and not limited to Chube area, but throughout Japan in terms of suppliers, as the production recovers, in terms of supply chain, do you have any concerns? Or in terms of cash management, the suppliers, am I right in understanding that they have subsided and there is no further concern? As we see a rather sharp recovery, what sort of attention should be paid to the suppliers going forward? How are you going to work together with suppliers or cooperate with suppliers? That's the first question. The second question relates to the effect of the cost reduction in the first half. You achieved 50 billion yen, the benefits of that. That may reflect the impact of a production reduction, and especially in the first half, you've foregone the price change of the parts and components, so that may be a factor. But moving forward in the second half, in terms of the cost reduction efforts, how are you going to achieve higher cost reduction working together with the suppliers? What sort of specific activities are you going to engage yourselves in?

Thank you. In terms of concerns or concern

about cash management or financial availability, do we have none? We need to remain very vigilant in terms of the developments on that front. With the suppliers, we are working very close together, and our procurement department,

for each supplier that we are working

with, are hearing out their issues and their conditions. So that's how we are doing. And this year, our procurement department

are having very close communication with

the suppliers, more often than in the past and more closely than in the past. And by doing so, such information can be obtained from suppliers so that we can take necessary responses as needed. In terms of cost improvement efforts, we announced 50 billion yen in the first half.

In the first half, usually we talk about 300 billion yen

of cost reduction benefits. That's for the four-year. And in terms of the

first half, usually

it should be around 150 billion yen. That's the normal situation. So the normal situation generates 150 billion, whereas we actually achieved 50 billion. But this 50 billion includes 20 billion yen in materials price. So on the cost basis, we did have the benefits of reducing costs or saving costs by 70 billion yen. During this period, the volume, especially in the first part of the first half between April, May, and June, the production volume was very small. And partly due to that, the efforts were made to improve productivity, to save cost, and our support plans have been accumulating those cost reduction efforts. But because of the smaller volume, the benefits of that was less visible. In the second half, in terms of the full year outlook, we are expecting slightly below 200 billion yen. That's our eye level in terms of our target. So in the second half, we would like to accumulate more and more in terms of cost saved. Thank you. Thank you for your response.

Thank you, Mr. Iwasaki. There's still more questions, but

the special time is coming closer. So we'll just take one last question from

Asahi Newspapers.

Kamisawa-san, please.

We will be switching the screen. When you

see

yourself on the screen, please start with your question.

Mr. Kamisawa, please. I'm from

Asahi Newspapers. My name is Kamisawa. So there was earlier another question, but for the reason why you have good performance in the United States is also my question. In the United States, they're having a large impact from COVID. The number of infections is also increasing. So among in this environment, why is it that Toyota is able to have a good performance? And also for your outlook going forward, probably it's difficult to forecast. However, even with this widespread of COVID, you're able to maintain this level of sales. So does it mean that because it's not in a panic, you're able to have a forecast, thinking from a stable perspective? So can you tell me a little bit more about your forecast going forward?

Thank you for your

question. Well, thanks to everyone's support and cooperation. We for the reason why we are able to continue our sales is what I have explained previously. So it is one is because we are able to supply the products and also the dealers. The outlets are looking very in detail to adjust the incentives and those efforts are bringing out the results. As you have said, as Kamisawa-san has said, the infection risk is heightening. And so absentee rate is actually increasing slightly. That is our understanding. Therefore, it's difficult to have a steady view for the next term, the next half. It's not still in that kind of a situation. We will be watching every month and monthly we will be making efforts to build up our volume. And that effort and that attitude will not change. That will not change for a while. So that is my understanding. Thank you. Thank you, Mr. Kamisawa. So with this, we would like to end our first part of the second quarter financial results press conference. Thank you very much for your attendance. After

this, we will take a 10-minute break and from 1.40

we will begin with part two. Thank you.

Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. i i i i i i i I i

Thank you. Thank you. Ladies

and gentlemen, I would like to start the Q2 Financial Results Announcement for 2021.

This is part two of the announcement. First of all, let me introduce to you the participants from TMC, Representative Director and President Akio Toyoda,

Bantou Kobayashi, Board Member Chief

Composite Officer and Chief Project Officer Terashi

Shigen.

Now, our President Toyoda will make his presentation. My name is Toyoda. Today, based on our first half results, I would like to share with you my thoughts as a person responsible for the management of Toyota. We thought that a forecast by Toyota would serve as a kind of signpost for those in the automotive industry, especially in these times of much uncertainty regarding the future due to the COVID-19 crisis. So, at our year-end results announcement in May this year, we issued a four-year forecast for 8 million units in worldwide new vehicle sales and 500 billion yen in operating income. Presenting a guideline enabled

abnormality

management, making it possible for each workplace to flexibly respond to changes in the environment. I believe that the upward revision to our forecast this time are due to not only to our initiatives of these six months, but also to our initiatives over the past 11 years making Toyota stronger as a company step by step. The increased strength of our financials and profit structure has also contributed. But I think that the number one factor has been that the people working for Toyota have grown stronger. At our manufacturing plants, we voluntarily produced face masks and medical face shields needed by the society. On planned non-operation days, all members engaged in kaizen continuous improvement and greatly improved productivity. On the sales front, online sales and other initiatives allowed us to continue building relationships with our customers. Every single vehicle ordered by our customers keeps our plants and the economy going. To be able to keep on producing one vehicle at a time, I believe that our members in both production and sales desperately and fully devoted themselves to their work, and that led to a rapid sales recovery. Toyota sales recovery at the time of the global financial crisis lagged behind the market by 4 percent, but in the case of COVID-19 crisis, our sales recovery outpaced the market by more than 3 percent. I believe this is the result of our ever better cars being made by everyone and the effort to deliver them to our customers. Thus, plants suspended by COVID-19 got back into action. I believe that the sight of plants operating and people working energized their local communities.

Let's make automobiles a driving force of the economy. I only indicated the direction. I believe all else was thanks to the power of the workplace, which continued

to move in that direction. Moving in that direction was not limited to Toyota, as such actions spread to five automobile trade organizations in Japan, including the Japan Automobile Manufacturers Association. The ripple effect is extremely strong in the automobile industry. The industry in Japan employs 5.5 million people. In Japan,

automobile businesses generate

approximately 15 trillion yen in annual taxes, and economic ripple effect is 2.5 times greater than the output of the automotive industry alone. Although we are only halfway through our fiscal year, I think the fast recovery of the automotive industry is already having a positive impact on Japan's economy. The

numbers we announced today are

the result of the hard work of many people.

They are

in no way simply an outcome that came about by itself.

I would like to once again express my appreciation to all those concerned. Thank

you so very much.

Drive society forward with automobiles. This commitment is not

something that we realized during the COVID-19 crisis.

It is exactly

the commitment of Kichiro Toyoda when he founded Toyota,

to improve the quality

of life of the Japanese people with automobiles.

Due to the so-called case revolution, the automobile industry is

in a -a-century period of profound transformation.

These are times

in which the future is unclear and there are no right answers. To where are

we headed? To answer that question, I realized that we needed to know

from where we came.

Please have a

look at this conical shape.

This graph was put together more than 60 years ago by our

then top management after the passing of Kichiro to guide them as they carried forth the baton passed down to them. I

believe that to help Toyota move even further

forward in a united way, top management at the time thought about what Toyota was and believed that the origin of Toyota should not be forgotten.

Toyota, though born in Japan,

has

expanded

its presence around the world.

Now,

we find that we are living in an era of profound transformation

for our 370,000 people worldwide

and their families,

as well as for the next generation that will support

the Toyota of the future.

In our Toyota's philosophy, we have defined our mission as producing happiness for all.

Even though Sakichi Toyoda made a loom and Kichiro made an automobile, I

think that

what they truly wanted to make was a sense of happiness for any customer who used their products, as well as happiness for all the people involved in work related to those products.

We realize that

even if we change what we make,

our pursuit of happiness will never change. And

our vision,

as defined in our Toyota philosophy, is creating mobility

for all. After

all,

we are in the car business. Therefore, I would like

to continue to be discerning when it comes to mobility.

And we use

the word mobility with an added meaning.

That meaning is, each person should take

action.

What is required of us now

is

that each Toyota person takes actions

that lead to the happiness of humankind,

including concerning the global environment. I believe that the Toyota philosophy,

which is a continuation of the Toyota precepts, is the very spirit of the Sustainable Development Goals. And I believe that management based on this philosophy will lead to sustainable efforts toward achieving these goals, along with the aim of international society to make a better world.

Even now, during the COVID-19 crisis, many people around the world

are

doing their best to survive while

enduring hardship. With Toyota's mission being producing happiness for all,

we

want to

work, especially in these

times of emergency, for

someone

other than ourselves, as well as for society and the future.

Going forward, we will be tested

whether or not we can truly mass-produce happiness. We will be grateful if we could receive strict yet warm guidance and support from all of our stakeholders, including you who are here with us today. Thank you very much.

Now I'd like to start

the Q&A session.

If you have a question, please press the

button that says Raise a Hand, and your name will be called.

And please turn on both

the microphone and the video camera before you start speaking. And I would like to have as many people as possible asking questions, so I would like to ask each person to limit to a single question, one question per person.

From Daily

Automotive Journal, Mr. Fukui, please.

I

will switch the screen, so if you find yourself on the screen, please start your question.

We

are switching the screen right now. Mr. Fukui, could you start your question, please?

From Daily

Automotive Journal, my name is Fukui. My question is addressed to Mr. Toyoda. Mr. President, once again, what is your appraisal and the assessment of the first half financial results? And you have increased your

forecast upward. What is your outlook for the second half? Since you became president, I think this is

the first time that you are speaking at the announcement of interim financial results. What is the reason for you taking forward this juncture?

Let me respond to your question. Thank you for the question. At the initial stage, we

announced 50 billion yen for the full 500

billion

yen for the four-year basis. That was a projection, and we achieved that in the half-year period rather than in the four-year basis. And that's not an easy task. As I mentioned in my own presentation, it is quite true that this past six months was the period of hard work for those people at the Genba, and that was very important. But above anything else, since I became president of the company, we encountered many challenges, great financial crisis, the Great East Japan

earthquake,

and extreme appreciation of the yen. And having gone through those challenges, we added to our efforts, and we acquired our effort after effort, and that accumulated to produce the results that we see today. This is the first time that I attend this financial result announcement at the half-year period. And as far as TMC is concerned, it is quite rare for the executive to be at the

interim

result announcement. But the reason why I am taking the floor now is because we are in the time of emergency caused by COVID-19 crisis. I have decided to be here. At the time of the emergency, I think it's very important to contribute to our own business and work. By all of us working, we can protect employment, we can generate profit, and we can pay tax. That, I think, is the responsibility and role of the key industry, which is a bedrock of the nation.

And automotive industry, I believe, has a huge spillover effect. The ripple effect is huge. And for us to continue doing business, continue working, can energize the related industries.

That's my view as well. And furthermore, at the initial stage, for the full year basis,

to make a projection for the

full year basis, I had the following feeling. That is to say, by giving some baseline reference point for others, the dealers, the suppliers, and employees,

we're energized to

respond to those guidelines. They thought, is there any better way? Is there any other way that we can energize people? Is there anything more than we can do? And they took very positive initiatives in doing so. And I just wanted to express my gratitude on this occasion of the financial result announcement. And at the same time, many people are fighting this COVID-19 crisis and enduring sufferings. And yet, they are trying to do their best going through this and survive that. I'm aware of that, although this is a halfway point. But by us working together covering the third quarter and fourth quarter, by continuing to work and continuing our hard work, I just wanted to convey my strong determination doing that on this occasion. Thank you.

Thank you, Mr. Fukui. We'd like to go on

to the next question.

From Automotive News, Mr.

Hans, please.

We'll be switching the screen. When you see yourself on the screen, please start with

your question.

We are now switching the screen.

A moment,

please. Mr. Hans, please.

Hello, Hans Greimel here from Automotive News. May I speak in English today?

I answer in

Japanese.

That's a good deal. Thank you. I'll keep my comments short. I just want to ask if you have an update on the Woven City project. Can you tell us when construction will start? When it will finish? When it will open? When people will start moving there? How many partners you have? And maybe a second question would be, can you tell us your plans for the Olympics next year? Your technological showcase. How are you going to have to change that for the Olympics next year?

Thank you very much. I'd like to respond in Japanese. Probably you

have the simultaneous interpretation, so I would be continuing to speak in Japanese. So if you can't understand me, you can just raise your hand and let me know that you don't understand. For the project, Woven City project, it is steadily progressing. And the way that we are promoting this, we use an AT Sprint method. So to myself, the top executive and the person in charge, every three weeks we hold a meeting to confirm the direction of the project. This rule that we introduced to have this meeting once every three weeks, every time of this meeting, I will make the decision that we believe is the best at that time. So maybe it will be that the decision will be different to what we have decided three weeks ago. But the important thing is that every time we have this meeting, we will make the most appropriate decision that meets the environment and the situation. So this is a rule that we have adopted to promote this project. Most important is the candidate area that we will be using. This place is the Toyota Motor Corporation's East Japan Higashi Fuji plant. And this plant, after one month, it will be closing its operation. That is the plan. And therefore, the employees that are working in the plant will be transferring to different locations, to the Tohoku plant. And unfortunately, there may be employees because of family reasons or other reasons. They may not be able to move to a far place. Therefore, we will be cooperating and supporting so that they can find a new job and any needs that they have. And in the meantime, we have been working with the cooperation of the community and also with the suppliers nearby. We are trying to stand by each and every individual working in Higashi Fuji plant to try to secure a place to work for them after the closure of the plant. And we think that steadily we will be able to secure those job opportunities for them. And this location, so this location of the Higashi Fuji plant, we will start the construction work from next year. And from the Public Affairs Division, I was told that I should not say anything about any date. But I'd like to say that I want to make the announcement on February 23rd. The reason why it's February 23rd is because 2 to 3, when you read it in a Japanese way, it's Fuji-san, or you can say it's Mount Fuji.

So on this day that you can call to the Mount Fuji

day, we can make a ceremony to do the groundbreaking ceremony. If we can do a groundbreaking ceremony at the foot of Mount Fuji, I will be very symbolic. And I'd like to say to everyone that we're making preparations so that it may happen that day. So now, what will be happening in this location? Well, for us, we have made a declaration that we're going to change ourselves from automobile company to a mobility company. So in this plan, we are going to utilize this location to develop products that can create a profit for us in the future, value for us in the future. And we'll be doing demonstration tasks, and it's going to be used as a lab. One thing that we'll do using this living lab will be the automobile driving vehicles. Automobile driving vehicles, it's important that you think together with the infrastructure as a package. And by having this infrastructure together, the development speed will be accelerating significantly. And with that belief, we have created one basic unit to create this woven city. I think that's a big news for a woven city project. The basic unit that I'm talking about is that each there will be a 150 meters square unit inside of the location. And then that will be consisting of three roads. There will be three roads woven in this location. One type of this road will be a dedicated road for autonomous driving vehicles. And the other road will be dedicated for pedestrians. And then the other, third road, will be a combination of the small mobility plus the pedestrians. So in this way, we want to look at how we can secure safety for autonomous driving vehicles. I think it'll be easier to understand if we have this kind of roads. However, in the up ground, there will be weather conditions. Like it will be different according to a sunny day, rainy day, hot day, cold day. The road conditions will differ. And in this kind of different, so we'll have this difference above ground. But underground, we can have the environment that will not change with weather. So we can utilize that place for vehicles that don't have to think about weather. And up ground, we'll think about weather conditions plus moving people and things. So while the economists, I'm not an engineer, but probably it'll be the most easiest level to achieve for autonomous driving with these different dedicated roads.

And for the city that is consisted by these three different types of roads, we're

thinking of having 360 residents living in this area. And for what kind of people these 360 members are, to explain a little bit, one group will be elderly, and the second will be people with families, the family group. And the third group of people will be inventors.

So in a sense, in Japan and this urban city, I want to, this place that we'll be

creating is a place that we will be able to understand the needs and the

challenges that the elderly and the families are facing in living in environment in Japan. And also in this location, we want to have inventors living together with those who have challenges in their everyday lives, so that these inventors will be able to invent things that will be helpful for the challenges that the elderly and the family has. And that can be invented in a timely manner. And these inventors will apply a certain rule, so they'll have a certain period of time that they can work in the city. If they cannot come up with results in that certain period of time, then we'll have them change with other inventors. So we're trying to have a rule or a mechanism so that this place will always be a vigorance and will be quite active. And currently, individuals and also including corporations, corporate organizations, there's about 3,000 people and corporate organizations who have applied

and

want to become a partner with us in

this urban city.

So in

that sense, I think for this urban city project, it is going to be a living laboratory. As a demonstration, we'll be doing demonstrations as a living lab. So it's an ever-evolving city that will never be completed. And our ultimate goal is to develop a safe mobility, and also we want to have it human-centric. So creating this kind of city, a town, and together with infrastructure, we want to create the future of mobility. In order to do that, we can't just work with us alone, just automobile companies. We want to have many partners to work with us, and together with those partners, we want to develop that kind of a city. So it will be ever-evolving,

and it will be a living laboratory. So I hope that

will be understood, and

also I'd like to ask you also to participate

in a certain way. We want to create the future together with you as well. So I hope that you can have high expectations and look forward to this project. So, Han-san, I'm sorry I was long in explanation, but that's all for my response.

Han-sama,

arigato gozaimashita.

Mr. Hans, thank

you very much.

Now let's move on

to the next question. Mr. Shimizu of Nippon Life, please.

Thank you for this opportunity. My name

is Shimizu of Nippon Life.

As an

institutional investor owning Toyota shares for a long period of time, I would like to ask the following question of Mr. Toyoda, the President. And including my explanation, I might take a little time, starting with the strong performance of the second quarter exceeding the market expectations and also the upward revision of the outlook and projection for the four-year basis. And I think this is due to the hard work by Mr. Toyoda and the top management, as well as employees and others involved in those hard work efforts. And I'd like to express my serious respect to that. I have been paying close attention to the words and phrases by President Toyoda. For example, in the past, you talked about intentional pause to increase competitiveness or making things as making people.

And also,

I want to ensure that I'll be the last person to spend time dealing with the consequences of the past activities. And those have been very impressive. And I hear today heard very

strong determination. I think the very simple and succinct phrases

clearly reflected the direction of Toyota moving forward and the determination of President Toyoda. But I think above and beyond that is the role that Mr. Toyoda plays as a President to ensure sustainable development. Of course, that's naturally expected. But going beyond that, Mr. Toyoda seems to be taking on voluntarily even greater responsibility at the country and global level. For example, he set us as the objective of receiving 3 million vehicle production in the domestic production. And that's a reflection of the determination to protect monosukuri in Japan, employment, technology, and human resources. And at the same time, he is now trying to implement initiatives to achieve full redesign of Toyota to make it a mobility company. And that goes beyond the reform and change of Toyota as an individual company, but rather it reflects the determination of trying to realize the future of a mobility society that no one has ever envisioned yet, with Toyota playing a central role. And to realize that, I think it is essential and indispensable to create the corporate alliances partnering with other companies. So here I'd like to ask the following question.

Not limiting yourself to Toyota as a company, but still with Toyota playing a central role, you're at the leading edge of trying

to create the society of the future and to produce happiness for all. I think you are at the cutting edge of that. I wonder what drives you, Mr. Toyoda, to make those efforts so passionately, aiming at those activities and responsibilities that go beyond one individual company?

Thank you for your question. Especially focusing

on media people, I don't receive very positive assessment or evaluation often. I'm not used to that. So I feel a bit embarrassed by receiving such a positive and favorable assessment.

As Mr. Shimizu just

mentioned and reflected in his question, I just wonder to myself, what really is driving myself?

And probably I

could say that, for one thing, the frustration and the bitterness that I felt since I became president and took over the company, what I always would say is that you can never pull it off. You can never achieve this. You have never experienced any hardship, and you don't know what's going on at Agenpa. You have never been there. So you can't do this. You can't do this job. Let's see what you've got. And many people are simply waiting for me to fail, make mistakes. And as expected, I told you so. This is what we expected. That's all the people had been expecting. And faced with that, to this point, I have been able to somehow muddle through because we encountered many, many challenges and crises. To

me, the crisis, the word crisis, the characters, in a sense, the critical situation, also reflects opportunity.

That is to say, predicament on the one hand and opportunity on the other hand. The word consists of these two words. So I have experienced those numerous crises. And every time I try to turn that crisis or predicament into opportunity, and by doing so, I try to respond to those people who said, you can never pull it off or you can never achieve that. I wanted to demonstrate that

I could do it. I did do this job. So I never wanted to

be bested, and that drove me to work harder and harder. In addition to that, and I see this in many different opportunities, as a member of the founding family, I just wanted to make things right for the founders. I have been operating with the history of over 80 years, and including myself and those people in the management who have been supporting me are now sustaining Toyota. But looking back, the founding members never experienced the benefits of what they have accomplished and such as their endeavors. I have advocated transforming Toyota from an automotive company to a mobility company,

and had in mind

the determination of the founding members to change itself from

the automatic room company into the automotive company.

And that

really reflected what in hardship they had to go through, what sort of challenges they had to go through by completing transforming themselves.

Now, -à-vis the future generation, can we really do the same thing by transforming and redesigning the company completely?

For us to be able to do that, not just Toyota at the center, but to make sure that Toyota to

be the company that is chosen by the people in the future society, and for Toyota to become such a company that I think has been a prime mover that really drove me over the years. And if I may venture to add the following, I can refer to my love for Japan.

Toyota is a global company today, and we always wanted to be the -in-town company,

and in any country or region in which we are allowed to operate, we have been trying to be a company chosen by the community. But the fact that we've been able to do that owes to what our founders started, that is, they established the first automotive company in

Japan. And we owe us today to them. So to that Japan, we want to contribute with our business, with our automotive industry.

And that, I think,

has been a very

important driving force behind me.

At the initial stage, it is quite true that I felt very lonesome.

I felt being alone,

even

if I thought nobody was dancing behind me. That's where I found myself. But today, I wouldn't say everybody or all of us, but there are so many people who are dancing to my tunes,

and

increasingly more and more people are dancing to my tunes or dancing with us. So for a little longer,

as I look back the history, but not just looking back

the

history of the past for the top management

of the next generation, I want to make sure that they can move forward looking at the future. So I would like to hand the baton over in that manner. So I hope you'll continue to support us in that.

Based

upon the history you are now trying

to

steer and

forge the future, I once again heard from you the determination and the resolution. Thank you very much. Thank you, Mr. Shimada, for your

question. Going on to the next question from Nikkan Kokyō,

Mr. Nagatsuka,

please. We will now be switching the screen. When you see yourself on

the screen, please start your question.

We are

now switching the screen.

Mr. Nagatsuka, please. It seems that your microphone is on

mute. Can you turn on your microphone?

I'm from Nikkan Kokyō.

My name is Nagatsuka. Thank you. Hi.

I have a

question to President Toyoda. For electrification, we are seeing an acceleration of the flow of electrification, and Tesla's performance is quite steady. And currently, the battery cells for the vehicle batteries, they are moving in-house and trying to improve the competitiveness on cost. So I'd like to ask how you view the company Tesla, President Toyoda, and based on your view, can you talk about your outlook for Toyota's electrification plans? Thank you for your questions.

And I will be

talking about how I view Tesla. And for electrification strategy, I will like to ask Mr. Terashi here to respond. So first of all,

in the stock market, Tesla's market capitalization

is around 40 trillion yen. And this amount, 40 trillion yen, for example, if you take Toyota and add the seven Japanese car companies, it will be the total of looking at all of these automobile companies, it's 33 trillion yen. So it means that just with one company, one Tesla, adding all the seven automobile companies of Japan, they have more market value than the seven Japanese automakers. And this company, Tesla, they have made profit from BEVs, and also with software updates, they have been generating profits. So that is the business model that they have. And also with adding renewable energies and looking at LCS, SAA, also reducing CO2, all these activities that they are doing,

there are, for us, many points to learn. Many points to learn from. But I'd also like to say that for Toyota as well, we

have been taking measures to deal with the case areas.

For the

past three years, we have been making advanced investments in these areas. And in 2019, looking at the trend in the stock market, I think you will be able to see this reflected into the trend. For Toyota's stock price compared with other car companies, Toyota's share price is starting to make a different move. In 2019, the press releases regarding the case and the decisions that we made around the case, in the companies that are working with the real industry, I think we have been making significant investments, and that has been acknowledged by the market. And

in

addition, we have established TRI and TRI-AD.

And

in these companies, the ARIN software development is being worked on, and that will be the core to have our focus not just on hardware, but to employ the idea, the approach of software first, and it will be realized utilizing the ARIN that it's being developed right now. And so what we have and what Tesla doesn't have is the units in operation, more than 100 million vehicles out in the world and this real world that we have in the business that we are in. So, without being hesitant to say this, Tesla's business,

if I can say, is a business, is

like a, you can use the analogy of kitchen and a chef, I think. So, the kitchen and the chef, they have not created a real business yet or a real world yet, but they're trying to trade the recipes, and the chef is saying that, well, our recipe is going to become the standard of the world in the future. I think that is the kind of business they have. But for Toyota, we have a kitchen, a real kitchen, and we all have a real chef, too. And we are

creating real dishes, and there are the customers who are very picky about what they like to eat,

and they are sitting in front of us and eating our dishes. So, with all these people, we can say, we see that the energy situation is different according to which region we talk about in the world, and also we holding the menu and the recipe probably will be selected because we have the full menu lineup. And, of course, in looking at the current share price, we are losing against the evaluation as a share price, but we will always be watching and learning from them, and we will always be determined to be the electrification full lineup vehicle maker. And I think we will be one step ahead to be able to be selected from our customers because of the situation Toyota has. And now for electrification strategy, I'd like Mr. Terashi to respond. This is Terashi speaking. I'd like to talk a little bit about our electrification strategy. So, Prime Minister Suga said that Japan is going to target becoming carbon neutral by 2050, at 2050. So, this means, in other words, in 2050, in the mobility world, you need to have a zero emission vehicle in order to achieve a 2050 carbon neutral Japan.

So, in this situation, in this environment, around the

globe, the environmental regulations are becoming ever more tougher. Therefore, toward 2050, in order to achieve that target, various types of technologies will become important. For example, hydrogen. There are certain regions that have excess hydrogen supplies. Those regions should utilize the hydrogen. And then renewable energies, if they have a lot of electricity that can be created from renewable energy, then they can use that. So, I think there's a lot of options according to the regions that we talk about. And like our President has just said,

who selects

mobility? Who selects the cars? At the end, it's the customers. So, whatever the regulation is, the customer will select what they want, and we will be trying to achieve carbon neutral with what the customer selected. So, from those two perspectives, we need to advance our technology in order to achieve that target. We can't just look at one side of these two. So, we need to look at the region, the customer, the regulation level,

also the

environment of that region.

All these factors will

be a factor to select the type of mobility. And at that time, we want to be able to provide a mobility that customers can select from in each of those respective situations. So, we as a full line-up maker will

be working on

the fuel cell vehicle and also the electrified vehicles, too. But among the electrified vehicles, the most practical solution will be hybrid. Probably next will be plug-in hybrid. So, having those multiple options, and every year, the distribution will be different on how much will be supplied. And at the end, we'll be achieving zero emission by utilizing all of these types of vehicles. And that we want always to be of help and use of those people who are going to select. Thank you, Mr. Nagatsuka. Thank

you. Now, let us move on to the next question. From Chūnichi newspaper,

Ms. Osada, please.

I will switch the screen, so once you find yourself

on the screen, please start your question.

Ms. Osada, could you start your question, please?

Thank you, Osada, Chūnichi newspaper. Mr. Toyoda, thank you for your message and the presentation. And in your presentation,

you mentioned that,

and I was about to ask the question relating to that, relating to the Toyota's car

making.

You said,

talked about the importance of producing and selling each vehicle one by one. And at the same time,

while people are working for Toyota, they have grown stronger.

You mentioned that in your presentation as well.

Looking at the first half and the new car sales in Japan for

fiscal year 2021, the amongst top 10 best-selling vehicles, the Toyota-made cars, number six models.

Six models, Toyota models are included amongst top 10. So even if you are able to produce those vehicles, but unless

they are appealing to attractive customers who don't choose them, the fact that your cars are chosen by customers means that you have been able to deliver and provide attractive cars in a timely manner. That, I think, led to the recovery that you have achieved to date. In terms of the evolution of car making, has there been any important evolution or important factor in

car

making? Is there anything that you have personally felt about the important factor in car making under the COVID-19 crisis? And for the last part of your presentation, you referred to Toyota philosophy. And I just wanted to ask about that, since this is a very good opportunity. Stemming from the Toyota precepts, you referred to Toyota philosophy in which you propose as the company mission to produce happiness for all. Now, why now? Why have you defined Toyota philosophy in this current context? Going back to Toyota precepts, starting with Sakichi and after his

passage, in order

to achieve this automotive industry, to determine the determination, Kiyochiro,

the

founding father of this company, compiled this Toyota precepts. And stemming from that, as a continuation from that, you announced and codified this Toyota philosophy now. So could you refer to the reason behind that? Thank you for your question.

It

is the customers and market that determine whether a car is attractive and appealing. We are trying to produce those cars, make them appealing, make them attractive.

But sometimes

some models are not regarded as such by customers. And therefore,

the fact that we

have been introduced a large number of new models, and that's how I analyze the situation. One of the reasons relates to establishment of so-called company system within Toyota.

We produce and sell close to 10 million vehicles on the full line basis. But in

the past, within TMC, we did have a system under which what is called global master plan was used. What sort of model is produced, what sort of volume, and the different models were prioritized based upon global master plan. That's how we did our business. And under such plan, those cars that sell well, produce large amount of profit, receives high priority.

And some years ago, I don't exactly remember when, but we have

decided to introduce company system.

And under that company system,

in Toyota Motor Corporation, each company

would play a certain role, amongst 10 million units, and each company would have the hardest efforts to make

so that the vehicles produced in that company will become the most attractive in the field, so that they will be given higher platforms. So sometimes it was based upon platform or the vehicles used for daily life, or coasters, or land cruiser,

which was not

redesigned for over decades or centuries, another model.

And for many decades, it didn't have any redesigns, and we didn't have a hybrid version for a century. So that's how we stood. And in that general context, we wanted to introduce a system where somebody within the company wanted to produce

and sell certain types of models.

And that, I think, produced a positive result. And in the most recent period, at the time of the great global financial crisis or great East Japan earthquake, we wondered what we should be doing with different projects, and we

applied the decelerating brake at the time of the global financial crisis. Covering all the new projects, we decided to stop and discontinue those projects for once. But this time faced with the crisis, instead

of suppressing or

discontinuing those activities, we simply tried to continue producing and

continue doing business, especially in April and May, when we were not able to operate plants. And those plants, what happened in different production plants? Once the COVID-19 crisis is over, the dealers start selling,

and once we are able to restart the production of vehicles, I'm sure there are many customers waiting to buy new models, and therefore, maximum of 50 units per day need to be added or increased in

production.

What do we have to do now? And many workers at the front line thought of what needs to be done at this point in order to add the production by 50 units per day. And in order to achieve that, the speed of a production line had to be shortened by four seconds, in the case of Toyota. It's not easy to shorten production line time by four seconds. Some can be done when the production line is stopped.

If that is the case, the production lines operating in

daytime or night,

either

of those lines are stopped. Using that leverage, based upon the soldiers' efforts,

they tried to achieve a four-second shortening

of the production line.

And in doing

so, if the production had to be increased all of a sudden,

those increased production

requirements

were achieved. Without increasing people assigned to those production lines,

by doing so,

without stopping any of the new projects that allowed us to

introduce new models, as had been

planned initially. And at the same time, about

your question on Toyota philosophy, why now? Why did we decide to make a statutory framework for that? Actually, inside Toyota,

when I

have discussions with many employees,

we talk about fight and fight.

I seem to have been using that word very often in my discussion. But at the same time, I say we shouldn't discuss in terms of a confrontational context. So people ask, who are you fighting against? And once I was asked by one of the employees, who are you fighting against? And I

wondered,

who am I fighting against?

And

the person I'm

fighting

against was actually for the purpose of regaining what it is that makes Toyota Toyota. And when I was thinking, what is really making Toyota Toyota? And when I had that in mind,

I was faced with

this COVID-19 crisis. And during that crisis time, I stayed in the

training center of

the Toyota group, and there were many historical documents and materials. And one of the employees found that cone that showed the Toyota precepts. And I really thought that this must be the good thing for us to think about the new philosophy. So based upon that

cone shape, I established this Toyota philosophy, adding

a new vision and also new missions.

But earlier,

one of the members of the corporate auditing board mentioned

that Toyota thinks that its job is done so long as

what is necessary is reduced. We used to have Neanderthal and Homo sapiens, but we now see the Neanderthal disappearing. Do you know the reason why the Homo sapiens survived? It's by the fact that Neanderthal didn't survive. Neanderthal produced what they needed solidly. That's the sort of people they were. In the case of Homo sapiens, in addition to that, they added beauty, enjoyment, and those other aspects in addition to producing what is needed. And that's what the members of the auditing board said.

So that is to say, based upon vision or

those drawings to describe what is needed, and even if we can reflect that in those visions, that doesn't ensure your survival. You also need beauty or aesthetics or enjoyment. Going back to the issue of a Toyota production system,

Toyota is not necessarily always after high efficiency. We always wanted to make things easier. And that's what I continue to say over the years. And according to that person,

and also listening to his advice,

not just making things easier,

I have decided to make things enjoyable. That is to say,

to introduce or add the element of Homo sapiens.

Of course, the ease

and

also the enjoyment is the same Chinese character.

But those enjoyment and also the like, because of those factors, lead to people choosing our vehicles and allows us to survive over the years. So in that sense, that's one of the reasons why we have decided to create and in this statutory form, that philosophy. But by creating this, we've been able

to invite those advice flowing into the company. So what is important is by having such a vision, we can continue discussing what it is that makes Toyota a Toyota. And always we have been able to reflect upon ourselves in response to environmental changes. So it's very important to use that as a tool for doing that. So in that sense, SDGs

is very close to what factor that makes Toyota a Toyota. And comparing the two, we'll make sure that we'll be able to be chosen by many partners and given good credit as compared to SDGs. And we will continue to make efforts to

that end. So I hope I can continue asking for yourself going forward. I feel as if I'm speaking at the AGM. I have many major shareholders right in front of me, so that somehow makes me to respond as if this is an AGM. Thank you very much.

We'd like to go on to the next question. Mr. Yasuhisa, please. We'll be switching the screen. When you find yourself on the screen, please begin your question.

Please.

We're switching the screen now. Mr. Shimashita, can you begin?

Thank you.

I'm a motor journalist. My name is Shimashita. Thank you very much for this opportunity. So under COVID, your performance is quite good. And President, you always say that you don't like to win. I don't like to lose. And I'm feeling how Toyota is becoming stronger. And my question is about the Mirai, the next generation Mirai. I had a test drive recently, and very simply, I thought it was cool.

That's

my impression. And also, I was very impressed with the very good driving performance. And so 30,000 units globally and more than 10,000 units in Japan. And growing this Mirai volume is going to be very key for Toyota. And for the previous generation, I've used Mirai for four years. And from that experience, we heard a question about Tesla. But in the similar timing, these two vehicles coming out, Tesla, the Eco and also Mirai, there were people around me also who were wondering which they should buy. And Tesla, they have been using those updating opportunities with new technologies. And Elon Musk was a strong character who appealed with strong messages. But Mirai, on the other hand, didn't have that kind of strong message. But for Toyota, the Mirai is important. The hydrogen society in the future is important. And what is the advantages? What is necessary for the future? That kind of message was not really heard easily from Toyota's side. And that's what the people around me were saying. And I felt that way, too. So for the people who like the advanced technologies, I think those people quite resonate with those messages. And then they decide to make their purchase. So for the new generation Mirai or if, as you are going to be spreading out, popularizing the other commercial vehicles, the fuel cell vehicles, further, what is your idea in how you will be doing that or your plans about the fuel cell vehicles? Well, rather than a message, I think it's a story that we try to tell. So we want to introduce our vehicles with a story. We want our models to be understood together with the story that it brings.

For us, when we

launch a new vehicle,

we talk about the new features. I think there's a tendency to focus on the new features in the past. But now what

we want to focus on is by using or having this model, what kind of story will be brought to you? What kind of story that you will be able to participate in as the main character? I think that should be added to the explanation that we provide when we present a new model. And for the new generation Mirai as well, it's not that just by launching the new Mirai, the FCV vehicles start to be seen on the road. It's that for pure EVs and also the FCVs, it always has to be thought together with the infrastructure. So it's not about which comes first. What I always say is it's like the flower and the honeybee. So both need the infrastructure in the vehicles. It's like the relationship between the flower and the honeybee. And now in the environment, we're seeing the wave of electrification around these two. So that will be the trigger. And with that trigger, the electrification will be going in the direction of electrification. And as a full line-up maker, we want to provide the multiple options to the customers. That is what we are thinking. And I hope that, Mr. Shimashita, you will always be sharply looking at what we do. And if you have any criticisms about our story, you should voice that anytime. So we are looking forward to your very sharp comments.

Thank you. So for those kinds of – I hope that that can be done in

a continuous way. I think to give a start, it's important to have a continuation. But give us those sharp comments with love, please. We want you to have – with your loving emotion, please. Thank you. So it seems that there are more questions, but because of the time, we'd like to limit the question to one more. Mr.

Takayuki Yasui, please. I will switch the screen so you can find yourself on the

screen, please. Start your question.

So

we are now switching the screen. Mr. Yasui, thank you for waiting. Could you start your question, please? Yasui is my name. Thank you for this opportunity, for asking a question

about the Toyota philosophy. The company that mass-produces the

vehicles for the market, that's very good to define your company as such. But the important thing is whether you can sustain that and if you can remain such a company over a long period of time. Looking at the Japanese companies in the past, of course the founding spirit talks about very lofty ideals, but companies tend to change over the years, focusing on

profits and thinking

about their new companies and such. And Toyota does have this Toyota precept, but there may have been some less emphasis placed on that. And I really think it's a very good thing that they have decided to have this Toyota philosophy, but I don't know how long and until when we will continue to be in the current position, and you never know when Toyota's performance deteriorates in the future. So when those things happen, for this to remain the unwavering value of the company, to make sure that that is going to be the case,

is

it

safe,

whether having the current situation to make sure that the philosophy lingers on, or if the environment changes or conditions change, do you think that things could change and the company, the values and focuses may change? Is that how you think?

So you are still thinking what is further needed to ensure focusing on this Toyota

precept, which leads on to go to the philosophy. And one other question which is addressed to Mr. Kobayashi, and you are now called Banto, and I saw a little smile, right now, when you are called Banto.

What is

the definition of Banto, Mr. Kobayashi?

And what is the role of

Banto, or what is it that Banto should never do? What is your view on that? Could you share your thoughts on that? So sorry for asking two questions at a time. So let us start with the answer on Banto. Kobayashi, Banto.

Now, Banto, actually, actually existed until the fourth

year of Showa, that is, in 1929. And it disappeared because of the change of the commercial code, because it may be considered as segregation. And when I wanted to introduce Banto and the HR people objected that, I used to

be President of Toyota's

boss.

And both Kawaii

-san and myself seemed to be very difficult, superior to the President. And therefore, he didn't want to call us executive vice president, because he is the President. He may be looking down on those if they are vice presidents. So we eliminated the system of EVPs. And once the EVP position was eliminated, our President started calling us Banto and Oyaji. So this will just be the system for my own generation. And Banto's role is to help and assist the President, and to convey the philosophy of the President to employees in an -to-understand manner.

And whatever employees are thinking

about,

to make

sure that those ideas of employees are reflected and embodied in the strategy. And those, I think, are the most important role of Banto. So in that sense,

I make sure when I

have lunch, whenever I make sure that I have lunch with executive or key employees, because And this leads to your

first question. To have

good and correct understanding of the top executive is the key to ensuring the good running of the company. That's most important. I joined Toyota once again at a higher age.

And there are numerous people who are capable

and with great ability, with great caliber. But whether you have the same vector as the top executive, your idea is aligned with the top executive. Actually, the alignment of philosophy is very important, and I personally feel very strongly about that. I mean, whether one is performing well or not is up to others to evaluate.

But to have aligned value is different.

So in the general context, I wanted to convey and communicate what the President is thinking to younger employees or younger executives.

So by doing so,

and you talked about the philosophy and you said you may only be focused on profit in the future. The companies tend to change. We refer to that in your question. But including younger members of the society,

as the

company itself has an index understanding of that, that will ensure sustainable

practice

of this philosophy itself in the company. And actually, in the past, we created many missions or philosophies. We had Toyota Way, Qualified, but none of that had really permeated throughout the company because once those are qualified and printed and distributed to employees, that was the end of those Toyota Way and other documents. But we wanted to use a new philosophy in a different manner, reconsidering our own happiness and what we should be doing. I mean, Toyota precept is the backbone, bone, which reflects the thinking idea of the company. And we wanted to translate that Toyota precept, which is written in the rather

arcane Japanese into easier to understand Japanese.

So in translating that, the role that I play is very important. So in that sense, I reprimand and scold all the executives almost every day, and that raised my blood pressure significantly. The younger employees have nothing to be blamed. But when I discuss those

things with the employees,

I think I now, for the first time, understand what the president had in mind. So I'm not quite sure I'm responding to Mr. Yasui's question, but that, I think, is the role of a bantou.

One of the points which relates to the philosophy, this is not a goal. The philosophy is

not a goal itself. It's only a starting point, in my view.

As I mentioned earlier, to a certain extent, going forward, I mean,

conditions and environment will change. And when those changes take place,

the next generation

top executive may face difficult challenges. And probably to have some guiding post when they find themselves in difficult situations, I think this philosophy could serve a useful purpose. If it could be used in that manner, I think it would be really good. Mr. Yasui talked about focus on profit. I don't think it's wrong, and it's a bad thing to pursue profit.

Being a

company means

to make profit and pay tax. That, I think, is very important,

actually.

And that's the best way

to contribute to the society,

in our view. So seeking only profit doesn't

mean the company is

wrong.

The important thing is what that profit is used for, for whom the profit is going to be used. And having people have full understanding of the importance of who, for whom the profit is used and how the profit is used to generate such people as many as possible is very important.

It is generally speaking in the society

that making profit is something wrong, but a company not making profit cannot make any investment for its future and the future in general.

When I became president at the commission stage, the company was booking

deficits. We were a loss-making company at the time. And when we were still making losses, we had to

stop and put in break on everything we had been engaged

in. And in that general context, we went through that. But today, we find ourselves capable of making investment of the future. We can secure good employees, and we can shift to those

works and jobs that people can fully enjoy. Unless you're making profit,

you won't be able to do all those. You'll simply continue putting your foot on the brake pedal. So, Mr. Yasui and all those stakeholders,

I would like to ask all of you

not to criticize or

put in break on Toyota trying to seek profit or making profit. But please question us what those profit is used for, for what purpose, and what sort of determination and

intention that we are making some of those profits. You can be critical in that. But please look at us from that light. Faced with such criticism or advice, we are willing to listen to those that come times and

over and over again.

If we are said that decision made at that time is now paying off, and although everybody was against that decision made at the time, but looking back, that really represented the turning point. I would like to continue making decisions day in, day out, that the decision we make today could be looked at from that perspective. So I hope you'll continue

to give us rather strict but also very encouraging support. Thank you very much, Mr. Yasui, for your question.

With this, we would like to complete this

financial results announcement.

Thank you very much for

your participation and your attention.