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Japan Trip Presentation: TOYOTA Jose F. Rodrigues Neto Paolo Gencarelli Greg McKelvey Giulio Pappalardo Kazutoshi Tominaga Agenda Company Background Car Industry Trends Toyota Challenges & Strategies Our Questions for Toyota Company Background Headline Facts: Toyota

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Japan Trip Presentation:TOYOTA

Jose F. Rodrigues Neto

Paolo Gencarelli

Greg McKelvey

Giulio Pappalardo

Kazutoshi Tominaga

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  • Company Background

  • Car Industry Trends

  • Toyota Challenges & Strategies

  • Our Questions for Toyota

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Headline Facts: Toyota

  • Annual sales: $114 Billion

  • Production: ~5.8 million Units/Yr.

  • Employees: ~210,000 people

  • 56 manufacturing plants in 6 continents

  • 3rd largest automotive manufacturer in the global market

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Company History

  • Established in 1937 out of Sakichi Toyoda’s weaving machine company

  • Launched first car (SA Model) in 1947

  • “Toyota Production System” formed in 1950 based on Just-In-Time principle

  • Overseas production starts in 1959 (Brazil)

  • In 1972, cumulative production >10M units

  • In 2002, entry in the Formula 1 circuit

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Business Segments - Low Diversification

  • Automotive [90.0% Sales]

    • Design, manufacture and sales of passenger cars, recreational vehicles, SUVs and related parts

  • Financial Services [4.5% Sales]

    • Provisions of loans to car buyers and car dealers

  • Others [5.5% Sales]

    • Industrial vehicles (forklifts, etc.)

    • Pre-fabricated housing

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Strong International Presence and Dominant Position in the Domestic Market

Japan Market (2000)

Int’l Market (2000)

In 1,000 Units

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Balanced Global Sales Domestic Marketvs. Predominantly Export Based Production

Toyota Production and Sales (MM Units)







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Strongest Stock Market Performance Relative to the Industry Domestic Market

3-year stock price comparison

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Strong Financial Performance Domestic Market


  • Market Cap

  • 5-Yr CAGR Revenues

  • 5-Yr Pre tax Profit Margin

  • 5-Yr CAGR Earnings

  • ROE

  • $ 102 Bn

  • 3.0%

  • 7.3%

  • 17.3%

  • 9.5%

  • $ 43 Bn (DaimC)

  • 3.8%

  • 4.5%

  • –12.63%

  • 11.8%

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Revolutionary Production System Domestic Market

  • Revolutionized manufacturing industry

  • At its core is “lean” principle

    • Relentless drive to improve efficiency and eliminate waste

  • Beginnings of TPS were born out of necessity due to lack of resources in post-war Japan

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Toyota Production System: Domestic MarketKey Main Concepts

  • JIT

  • Just In Time manufacturing

  • Small batches which reduced inventory costs, tightened relationship with suppliers and improved quality control

  • “5 Whys” Quality

  • Asking “Why?” 5 times to locate source of problems

  • Stopping the production line whenever there are quality problems to ensure they are not repeated

  • Low cost supplier

  • Long term supplier relationships

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Car Industry Trends Domestic Market

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Car Industry Trends Domestic Market

  • Consolidation

  • Push to Emerging Markets for Growth

  • Global Emphasis on Small-Size Vehicles

  • Environmentally Friendly Products

  • Internet as a Key Enabler of Change of Automotive Retailing

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Drivers of Consolidation Domestic Market




“Of the 20 auto makers in 1965, 14 have since merged or been taken over. By 2006, the top 14 VMs will account for 90% of light vehicle output.”

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Toyota Challenges Vehicle Production

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Toyota Challenges - Summary Vehicle Production

  • Industry overcapacity

  • Economic downturn

  • Globalization

  • Environmental concerns

  • The IT revolution

  • Diverse and shifting consumer demand

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Toyota’s Strategy Vehicle Production

  • Increase competitive strength through advanced technology

  • Promoting a global perspective

  • Value-driven cost reduction (CCC21 program)

  • Expanding the value chain—becoming the Total Mobility Services Provider

  • Expansion of model offerings—Quality, value, and style?

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Our Questions to Toyota Vehicle Production

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Toyota Questions Vehicle Production

  • What do you see as the key elements to succeeding in the European market?

  • After Japan, U.S., and Europe, where do you see as the next critical market to Toyota’s globalization effort?

    • Emerging markets

  • What have been the most difficult challenges in the global implementation of “The Toyota Way?”

  • While sales continue to globalize, non-Japan production footprint appears to be leveling at 35%. What is Toyota’s strategic direction on “make where sell”? Challenges?

  • Does Toyota foresee Internet as viable infrastructure in purchasing, supplier relationships? How will Toyota integrate into TPS?

  • When do you think hybrid vehicles will reach critical mass?

  • What is Toyota’s view on industry consolidation and potential benefits of acquisitions / mergers?

  • How does Toyota’s recent initiatives reflect future strategic focus (e.g. new channel brand in U.S., participation in Formula-1)