#1Toyota's Global Strategy -Moving toward Global Motorization- April 16, 2003 Toyota Motor Corporation#2Cautionary Statement with Respect to Forward-Looking Statements This presentation contains forward-looking statements that reflect Toyota's plans and expectations. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Toyota's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) changes in economic conditions affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which Toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro and the British pound; (iii) Toyota's ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management; (iv) changes in the laws, regulations and government policies affecting Toyota's automotive operations, particularly laws, regulations and policies relating to environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies affecting Toyota's other operations, including the outcome of future litigation and other legal proceedings; (v) political instability in the markets in which Toyota operates; (vi) Toyota's ability to timely develop and achieve market acceptance of new products; and (vii) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect Toyota's actual results, performance, achievements or financial position is contained in the "Operating and Financial Review and Prospects" and "Information on the Company" sections and elsewhere in Toyota's annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission. TOYOTA 2#3Fujio Cho President Toyota Motor Corporation TOYOTA 3#4I. Global Manufacturing & Marketing in 2002 Growth in Production Volume Global output (Millions of units) 6.0 13 years 5.0 4.0 Overseas output (Millions of units) 3 years 2002 Global (million units) Output: 6.31* Sales : 6.17* * includes Toyota/Lexus, Daihatsu and Hino brands. 2.17 2.0 1.62 Annual sales surpass 1 million units 1.0 0.45 3.0 0 1986 1999 2002 Corolla TOYOTA Overseas output Global output#5II. 2010 Global Vision Major change in the global economic environment <Expected society> Taking on the challenges for change Global motorization Achieve global production & sales of 6 million units * Regional strategies - North America, Europe, Asia, China and Japan * Technological innovation Market & population growth in the US Rise of markets in Eastern & Central Europe and in Russia Strong growth of Asian markets 2002 TOYOTA 2010s 5#6III. Regional Strategy (Millions of units) North American Market (1) Creating market through new product launches 2002 sales: 1.91 million units Luxury SUVs Full-sized trucks 15 Commercial vehicle Lexus GX470 Lexus RX330 Tundra Double Cab 10 (light truck) market 5 Passenger vehicle market No. 1 in 2002 passenger vehicle sales Entry-level vehicle for young drivers Scion Corolla Camry ХА xB 0 1990 1995 2000 2002 TOYOTA <US market>#7III. Regional Strategy North American Market (2): Production growth centered on light truck manufacturing #1 NUMMI #4 Indiana #5 Mexico #6 Texas <Manufacturing capacity expansion plan> (Millions of units) #3 Canada First Lexus production base #2 Kentucky TOYOTA IN NORTH AMERICA 1.65 Made-in-Texas" trucks 1.50 Texas plant (Tundra) 1.48 1.40 Canada plant Mexico plant (Tacoma) expansion (RX330) Present Fall 2003 2005 2006 7 Indiana plant expansion (Sienna) TOYOTA#8III. Regional Strategy European Market: Integrated manufacturing & marketing 2002 sales: 760,000 units ANE FOUST Marketing organization restructuring starting April 2003 Action in United Kingdom the wider EU market France Czech Republic New "Avensis" launched in March 2003 as upper core model First Japan market launch of UK-made vehicle in fall 2003 TOYOTA Toyota Motor Europe (TME) Leading marketing companies Turkey Manufacturing plants 8#9III. Regional Strategy Asian Market: Manufacturing & export base for pickups/multipurpose vehicles Development of global manufacturing base and mutual distribution network (IMV Project starts in 2004) To more than 80 nations/regions Thailand: Global manufacturing base Other Asian nations: Manufacturing bases for engines & main components South Africa & Argentina: Intra-regional Japan India manufacturing bases To Europe & Africa Thailand Others To South America Philippines TOYOTA T Argentina South Africa Indonesia Pickups & multipurpose vehicles : Engines & main components#10III. Regional Strategy Chinese Market: Manufacturing & marketing to be strengthened in response to market growth Production capacity Product lineup Luxury SUV Compact Vios Large & Luxury sedan Crown | Land Cruiser/Prado Compact (Compact) Corolla Aggressive product launches Establish full product lineup Establish Toyota brand image Daihatsu 50,000 units/year 30,000 units/year Several hundred thousand units/year 25,000 units 415,000 units/year 50,000 units/year 2002 2003 2004 2005 2006 2007 2008 2009 2010 TOYOTA 10#11III. Regional Strategy Japanese Market: Introduction of Lexus & Reorganization of Sales Channel =>Preparations for future changes (in market structure & customer values) After reorganization TOYOTA Lexus LEXUS (new) Development of new Lexus dealership network in 2005 (150 dealers) Toyota brand E TOYOTA 11#12III. Regional Strategy Japanese Market: Introduction of Lexus & Reorganization of Sales Channel =>Preparations for future changes (in market structure & customer values) After reorganization Present Toyota brand (5 channels) Lexus LEXUS (new) Development of new Lexus dealership network in 2005 (150 dealers) Vista Toyota brand Netz Netz (4 channels) Toyota D Toyopet Corolla Toyota Toyopet TOYOTA Largest volume-sales channel, Corolla Consolidation of Netz & Vista networks in spring 2004 Luxury vehicle channel for the Toyota brand Leading channel for the medium- size car market Foothold in new market segment centering on compact vehicles TOYOTA 12#13IV. Technology Strategy (1) Development of a wide range of technologies and products with focus on market creation <Technology development> Nanotechnology Material technology <Mark Next-generation Leading-edge technologies technologies Biotechnology Energy technology Engine Body Electronics Transmission Chassis Environment Safety IT TOYOTA Existing technologies Products focused on market creation "Comfort" "Kindness" "Excitement" Assessing customer needs Proposal of business vision 13#14IV. Technology Strategy (2) TOYOTA Drive Your Dreams. 2003 Harmonizing "Ecology" with "Emotion" Ecology Ecology Emotion Emotion 14#15V. Conclusion Global-scale motorization Market & population growth in the US Rise of markets in Eastern & Central Europe and in Russia Addressing challenges for change TOYOTA Strong growth of Asian markets toward further growth 15#16Toyota's Global Strategy -Moving toward Global Motorization- April 16, 2003 Toyota Motor Corporation 16#17Toyota's Financial Strategy April 16, 2003 Toyota Motor Corporation#18Ryuji Araki Executive Vice President Toyota Motor Corporation TOYOTA 2#19I. Business Performance Operating income by market segment FY 1998 FY2002 (Billions of yen) FY2003/9mos. (April-Dec., 2002) (April, 1997-March, 1998) (April, 2001-March, 2002) Japan 649 870 813 North America 175 265 268 Europe -2 -12 5 Asia & other regions 8 19 41 Consolidated -12 -19 -17 elimination Consolidated total 818 1,123 1,110 TOYOTA (Japan GAAP) 3#20II. Profit Earnings Growth and targets in operating income ratio & ROE Operating income ratio 9 (%) 7.4% 6.1% 6% 6.5% 9.1% 9% 11.3% 10 (%) 8.5% -10% ROE 6.8% 6.3% 5.8% (Billions of yen) 1,000 500 5 0 FY1999 FY2000 FY2001 FY2002 April-Dec., 2002 Target (Japan GAAP) TOYOTA Operating income Operating income ratio ROE#21III. Dividend Payments & Share Buyback (Billions of yen) 1,000 Cash flow allocated to dividend payments and share buyback 500 400 Capital expenditures R&D 0 FY1999 FY 2000 Cash flow FY2001 FY2002 Dividend & share buyback (Japan GAAP) TOYOTA * Cash flow = Current net income + Depreciation costs - Capital expenditures 5#22IV. Change in Share Ownership Shareholding by banks VS Increase in foreign shareholders (listed on NY and London exchanges in September 1999) Increase in individual shareholders (reduction in stock unit in August 2000) [Sept. 30, 1999] [March 31, 2003 (estimate)] Banks 34% Dramatic drop Approx. 15% TOYOTA#23V. Toyota's Actions on Corporate Governance and Information Disclosure Internal Mechanisms Reinforcement of internal controls <Internal/external auditing> General shareholders' meeting <Monitoring> Accounting audits based on US & Japan auditing standards Board of statutory auditors Half are external auditors Monitoring Monitoring <Internal information management> TOYOTA Board of directors Monitoring President Managing Officers Monitoring Disclosure Committee NY/London stock listing - Disclosure based on SEC standards - Identical information disclosure in New York, London and Tokyo Monitoring International Advisory Board Labor-Management Council & Forum Social Contribution Program Committee Corporate Ethics Committee Stock Option Committee#24Toyota's Financial Strategy April 16, 2003 Toyota Motor Corporation 8#25Toyota's Technology Strategy April 16, 2003 Toyota Motor Corporation#26Akihiko Saito Executive Vice President Toyota Motor Corporation TOYOTA 2#27TOYOTA#28Prius: The World's First Production Hybrid Vehicle Power train Design Packaging TOYOTA#29Development Goals of First-Generation Prius Innovative advances in fuel economy, surpassing conventional gasoline-fuel engine Fuel economy 1.5 times 2.0 times ◆ Drastically cleaner emissions 1/10 of regulation levels TOYOTA 5#30Toyota Hybrid System (THS) Generator G Battery Gasoline engine Power split device Power control unit (Inverter etc.) Electric motor Start-up Normal driving Acceleration Deceleration Stopping Engine operating Electric motor only with maximum efficiency Motor and engine Battery charging Energy recovery Engine shuts off No energy consumption TOYOTA#31*EV Drive non EV Drive HV Technology Matrix Toyota Coaster ng European Concept Vehicle Plug-in/Switching THSII SU-HV THSII NG-Prius THS Prius Estima HV Japanese M Vehicle A Japanese Vehicle B Crown Mild HV Series HV Parallel HV Series/Parallel HV (HV of Hybrids) TOYOTA * propelled by electric motor only 7 Motor Power / Vehicle Power Ratio#32Overall Efficiency < Well-to-Wheel > 10-15 mode Overall efficiency (%) Well to Tank Tank to wheel (%) (%) 0 10 20 30 Gasoline- engine 88 16 vehicle Diesel- engine 91 20 vehicle Prius 88 30 (THS) TOYOTA Estimated by Toyota 8#33Low Environmental Impacts (Emissions) ppmc 50 Gas Concentration 5 Conventional level Gasoline Engine approaching Ambient Air level Hybrids help catalyst warm up hence reach very low emission level Cold start emission Hot start emission 0 Prius City Air 96 98 00 02 04 Year TOYOTA#34Internal Development of Toyota Hybrid System Engine & Motor & Generator TOYOTA Engine Generator Motor Power Secondary control unit Hybrid ECU battery Power control unit TOYOTA Hybrid System Internally developed components ΠΠ 10#35Increased Sales of Hybrid Vehicles Units 100,000 Total vehicles 50,000 Gas turbine HV (1969) TOYOTA Paws Crown Mild Hybrid Estima Hybrid (4WD) Prius Year 2001 11#36Hybrid Synergy Drive Fuel Economy Existing hybrid vehicle TOYOTA Hybrid Synergy Drive Improvement of conventional engines Fun to Drive 12#37Next-Generation Hybrid System (THS II) Secondary battery Power control unit Voltage boost converter Engine Generator TOYOTA Inverter Power split device Motor (150% increase in output) Driving wheel Hybrid Synergy Drive 13#38Broader Application of the Next-Generation Hybrid System TOYOTA (SU-HV) 14#39TOYOTA FCHY Fuel Cell Vehicle "FCHV 15#40Development of Toyota FCHV FCHV: Fuel Cell Hybrid Vehicles 1992 Start of FCHV development 1996 Announcement of the hydrogen FCHV at the EVS-13 (Osaka) 1997 The world's first FCHV with Methanol Reformer 2001 Announcement of the FCHV-3, FCHV-4, FCHV-BUS1, and FCHV-5 2002 Announcement of FCHV-BUS2 & limited marketing with the delivery of Toyota FCHV 2002 TOYOTA 2002 201 MISSION 1996 1997 T FCHX 2001 16#41Internal Development of Core Technologies Independent In-house Development of Total System Including Fuel Cell Stacks FOW Power control unit Motor TOYOTA Motor Secondary Air battery compressor Power control unit High-pressure hydrogen storage tank ΤΟΥΟΤΑ FC Stack Air compressor HV EUC Internally developed components TOYOTA FC Stack 17#42Application of Hybrid Technology PRIUS TOYOTA FCHV CHY ICE Hybrid Vehicle (PRIUS) Toyota Fuel Cell Hybrid Vehicle Engine Fuel Cell Secondary Battery TOYOTA Power Power Control Unit Control Unit Motor Secondary Battery Motor 18#43Overall Efficiency <Well-to-Wheel> Overall efficiency (%) Well to Tank to tank(%) Wheel (%) 0 10 20 30 40 Gasoline- engine vehicle 88 16 FCV (High-pressure hydrogen) FCHV (High-pressure hydrogen) TOYOTA 38 58 50 10-15 modes Estimated by Toyota * Based on current consumption 19#44Total world vehicle ownership 0 Future Image of Powertrain Development 2 (in billions) 2000 TOYOTA Fuel cost + fuel cell cost Internal combustion engine vehicles Internal combustion engine fuel cost + Internal combustion engine cost Internal combustion engine HV Fuel cell vehicle 20X0 Year 20#45Toyota's Environmental Technology Development The Ultimate ECO-Car FCHV THS Hybrid Technology DPNR D-4 CNG Diesel DI Lean Burn EV VVT-i Alternative fuel Diesel-engine vehicle TOYOTA Gasoline-engine vehicle EV & FCV 21#46Toyota's Technology Strategy April 16, 2003 Toyota Motor Corporation 22#47Toyota's Global Strategy -Moving toward Global Motorization- April 16, 2003 Toyota Motor Corporation