Working Toward the Mobility Society of the Future

Message from the President The Source of Our Value Creation: What Makes Us Toyota Value Creation Story: Working toward the Mobility Society of the Future Business Foundations for Value Creation Corporate Data > Making Ever-better Cars > Initiatives to Achieve Carbon Neutrality Software and Connected Initiatives > Commercial Sector Initiatives > Woven City Making Ever-better Cars: Product-centered Management At the November 2021 Nationwide Toyota Dealers Convention, President Toyoda Spoke About Product- centered Management. Over the decades, Toyota has provided society with a wide range of products aimed at meeting customer needs, begin- ning with the Toyoda Model AA in 1936. Looking back on our history of car marking, I see two key themes. The first is "sports cars." The 1960s were a key era for Toyota's sports cars. This decade saw the birth of many sports cars that would eventually achieve legendary status, such as the Publica Sports, Sports 800, and 2000GT. Then, in the 1980s, Toyota launched the Supra, MR2, Celica, and Levin/Trueno. In this way, Toyota has created sports cars that bring together the most cut- ting-edge technological prowess of the era every two decades. Why is that? I think it is because Toyota treats sports car development as the front line for developing the skills and knowledge that will be passed down as well as for human resource development. For Toyota, sports car development has been like a rite of renewal and rebirth carried out every 20 years. Following this cycle, the next generation of Toyota sports cars should have hit the scene in the 2000s. They did not. Around that time, Toyota was growing its vehi- cle sales, mainly outside Japan, and pursuing scale expansion. Amid that push, the role of its old renewal rite was forgotten, and sports cars disappeared from Toyota's vehicle lineup. I was not the only one who sensed how dangerous this was. Our test drivers, in fact, felt the danger more keenly than I did. I think that feeling was part of why Hiromu Naruse, then Toyota's chief test driver, told me, very frankly, that he didn't want to be preached to about cars by someone who didn't know anything about them. But, he said, if I was interested, he would teach me to drive. That was the start of my journey, under the new nickname Morizo, to becoming a master driver. From there, though a decade late, Toyota went on to develop the LFA in the 2010s, recapturing the "secret sauce," that flavor unique to Toyota and Lexus cars. We went on to revive the 86 and the Supra as well, but all of these were made in collabo- ration with outside partners. We still wanted to once again make a sports car that would be all our own. This dream led to the devel- opment of the GR Yaris. For years, I have constantly been talking about "ever-better car making." Now, as the number of my colleagues taking action with me has grown, this has evolved into "ever-better car making from a starting point in motorsports." The second key theme is "long sellers." Toyota's long sellers have included the Crown and Corolla, which drove the motorization of Japan, as well as the Prius, which created the hybrid electric vehicle market. More rug- ged long sellers include the Land Cruiser, Hiace, and Probox. The Coaster and Century were long sellers, too. Indeed, Toyota boasts numerous models that have been beloved by customers for decades. Despite this, when Toyota was focusing on the number of vehicles sold and making vehi- cles mainly for overseas markets, the position of long-selling cars within the Company shift- ed greatly. The Crown and Corolla began to undergo regular model changes based solely on an annual schedule, while rugged vehicles like the Land Cruiser and Hiace no longer had model changes at all. These long-selling cars had been beloved by customers and an integral part of their lives for so long, but now it was considered unimportant for them to change or evolve. 1960s Sports 800 1980s Publica Sports 2000GT Celica Supra Levin/Trueno MR2 2010s GR Yaris LFA TOYOTA MOTOR CORPORATION 8 INTEGRATED REPORT

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