Accelerating

Evolution
1
Accelerating Evolution
The world of today is changing on a scale and
at a speed that we have never experienced
before. This tide of change transcends nation-
al boundaries, languages, and ethnicities and
is gradually reshaping the world into one
common community. As a result, the founda-
tions underpinning the values we have held
until now are also undergoing a process of
transformation. The environment, infor-
mation and communications technology, and
the global community are the essential fac-
tors that both corporations and individuals
must embrace and understand in order to adapt to this era of change and pave the way
to the future. Toyota is currently focusing all of its expertise and commitment on meet-
ing the current sea changes in the automobile sector head-on. The following feature
articles give an overview of Toyota at present and in the future, as it accelerates the
pace of the Companys evolution through the pursuit of three corporate missions
developing next-generation technology, strengthening cost competitiveness, and
advancing globalization.
Gaining Competitive Edge by
Leading the Development of
Next-Generation Technology
M indful of the further progress tow ard
a reuse- and recycling-oriented soci-
ety and the ubiquitous netw orks that
are expected in the 21st century,
Toyota is w orking to develop environ-
m entally-friendly and advanced tech-
nologies that utilize IT to enhance the
pleasure, am enity, and safety of auto-
m obiles. W e believe that the level of
environm ental technology attained by
car m anufacturers w ill prove to be a
m ajor factor determ ining their com pet-
itiveness in the m arket. Accordingly,
our developm ent in this field is geared
tow ard establishing Toyotas technol-
ogy as an effective benchm ark for the
rest of the industry.
Toyotas vision for the developm ent
of environm ental technology is focused
on producing, the right cars, for the
right place, at the right tim e. The
phrase environm ental technology
actually covers an array of different
approaches for various regions around
the w orld. O ur environm ental strate-
gies vary according to such considera-
tions as the degree to w hich auto-
m obiles have penetrated a society, the
m aturity of its m arket, and the state of
its energy infrastructure. Toyota is one
of very few autom obile m anufacturers
w ith the depth of resources that allow
it to select from a w ide range of op-
tions and provide the m ost-appropriate
environm ental technologies and ve-
hicles for each region.
Hybrid Technology is the Key to
the Future of Eco Cars
O ne of Toyotas m ain strengths in
environm ental technology is its m ulti-
directional approach based on hybrid
system s. An epoch-m aking blend of
technologies allow s hybrid vehicles to
com bine a high degree of energy m an-
agem entour hybrid vehicles are not
restricted to one source of fuelw ith
high fuel efficiency, low gas em issions,
and superb driving perform ance. Since
Toyota launched the Prius in 1997, the
f i r s tm ass-produced hybrid vehicle, hy-
brid technology has been incorporated
into a w ide variety of vehicles, including
our Estim a m inivan, the C row n luxury
sedan, and full-sized buses used for
public transport. These initiatives have
established Toyotas technology as the
de facto standard in this field. Toyota
does not view hybrid technology as
m erely a transitional technology, w hich
w ill eventually be replaced as fuel cell
cars becom e predom inant. O n the
contrary, w e see hybrid technology
as a core technology w ith w hich to
establish Toyota as the leader in the
eco-car m arket. Accordingly, w e are
m oving forw ard to adapt hybrid tech-
nology for use w ith not only gasoline
and diesel but also w ith a l t e r n a t i v e
energies, electric cars, and fuel cell
v e h i c l e s .
Toyota is also accelerating develop-
m ent in the field of fuel cell vehicles.
W e are w orking to lay the technical
groundw ork in this area that w ill ena-
ble us to respond to diverse techno-
logical trends and to advances in the
creation of energy supply infrastructures.
In addition to independently develop-
ing the Toyota FC Stack (unit for elec-
tricity generation), w hich gives greater
pow er density perform ance than gaso-
line engines, w e are also pursuing
options such as fuel cell system s that
use pure hydrogen fuel and clean
hydrocarbon fuel (C H F). At present,
Toyota is proceeding w ith research
12
Devel opm ent of
Next - Gen era tion Te ch n ol o gy
As the worlds automobile manufacturers enter a phaseof mega-competition with respect to the development of
next-generation technology, Toyota is at the forefront of a diversity of technological innovations. Leveraging its
advanced technologies, derived from R&D activities spanning a broad area, we are working to build cars that
facilitate a friendlier set of relationships between people, cars, and society. At the most advanced technological
levels, Toyota will synthesize seemingly incompatible technical issues to create cars packed with originality that
inspire dreams and passion in people all over the world.
Accelerating Evolution
The Estim a H ybrid launched in June 2001
Toyotas approach to developing
environm ental technologies
(C ontinued on page 15)
Prius
13
The Prius, the worlds first mass-produced hybrid car, was launched in 1997.
Hybrid technology represents an epoch-making innovation in which both
a gasoline-burning engine and an electric motor power the vehicle. By effi-
ciently alternating the use of the engine and the motor the car is able to
achieve superb fuel efficiency and low gas emissions. The electric motor is
used when accelerating from a standstill and the system then selects the
most fuel-efficient power source during normal running. In addition, the
vehicle does not need to be externally recharged. When decelerating, the
regenerative braking system recovers and converts kinetic energy into electri-
city, which is stored in the battery for the electric motor. The main attraction
of the Prius is that it combines the benefits of an eco car with the driving
pleasure provided by a smooth and responsive engine performance. Fusing
environmental considerations with excitement, this hybrid system epitomizes
Toyotas world-renowned, advanced environmental technology. What will
cars in the 21st century be like? The Prius provides one of the answers.
Prius
ThePrius synthesizes drivingenjoy-
ment and consideration for the
environment, without sacrificing
performance. Since it was launched
in 1997, the Prius has been very
favorably received internationally
as an automobileahead of its time.
Not only in Japan but throughout the
world, thenumber of Prius owners
continues to multiply, as we export
to the United States, Canada, Europe,
Australia, and Singapore. As well as
providing sheer drivingpleasure, the
Prius allows its owners to enjoy a car
of the future.
Wo r l d s First Mass-Produced Hybrid Ve h i c l e
FCHV-4
14
Fuel cell hybrid vehicles (FCHV) are hybrid cars that use fuel cells as their
power source. Electricity to drive the motor is obtained from a chemical reac-
tion between hydrogen supplied to the fuel cell and oxygen taken from the air.
In 2001 we began development of the FCHV-4, which carries onboard high-
pressure hydrogen tanks and an FC stack (unit for electricity generation) deve-
loped independently by Toyota. The combination of this system with hybrid
technology has produced a vehicle that has superior driving performance to
conventional gasoline cars. The FCHV-4 boasts world-class specifications for
its classa maximum output of 90kw, a top speed in excess of 150km/h, and a
cruising distance of more than 250km. Moreover, its smooth, quiet running is
a testament to the high quality of the vehicle as a finished product. Having al-
ready begun public road tests of the FCHV-4 in J apan and the United States,
we plan to commercialize a car based on the FCHV-4 on a limited basis from
around the end of 2002. In addition, in October 2001, Toyota also unveiled the
FCHV-5, which runs on clean hydrocarbon fuel (CHF), and can therefore use
the existing fuel supply infrastructure.
FCHV-4
Fuel Cell Vehicles to Become a Reality
Toyota began development of fuel cell
vehicles integrated with hybrid tech-
nologies in 1992. In 1996, weunveiled
a fuel cell hybrid vehicle(FCHV),
which incorporated an independently
developed fuel cell and a hydrogen-
absorbingalloy tank. In thefollowing
year, weproduced an FCHV fitted
with a methanol reformer and in 2001
wedeveloped theFCHV-3, featuring
greatly improved power output, a fuel
cell, and hydrogen-absorbingalloy
tank. Moreover, Toyotas R&D staff
arecurrently acceleratingthepaceof
development. With a view to commer-
cialization, Toyota unveiled the
FCHV-4, which carries high-p r es s u r e
hydrogen tanks and our own FC stack
onboard, in June2001.
and developm ent related to its fuel cell
hybrid SU V FC H V-4, w hich is fueled
by high-pressure hydrogen. W ith a
view tow ard lim ited m arketing of a
v ehicle based on the FC H V-4 from
around the end of 2002, the FC H V-4 is
currently undergoing public road tests
in Japan and overseas. Further, in
O ctober 2001, as a test car for
Toyotas C H F reform er system , the
C om pany also unveiled the FC H V-5
fuel cell hybrid vehicle. In this m anner,
by prioritizing the deploym ent of its
m anagem ent and financial resources,
Toyota is leading the w orld in the
developm ent of fuel cell vehicles.
W e are also having success in
the com prehensive developm ent of
environm ental technologies, including
D iesel C lean Advanced Technology
(D -C AT), that are centered around our
D iesel Particulate N O x R eduction sys-
tem (D PN R ). The D PN R system c a n
sim ultaneously and continuously re-
m ove m ore than 80% of the nitrogen
oxides (N O x) and particulate m atter
(PM ) contained in diesel engine ex-
haust fum es. In addition, w e are w ork-
ing on recycling technologies, including
the production of biodegradable plastic
from such plants as sw eet potatoes.
Estima Hybrida Testament
to Toyotas Technological
Prowess
As in other areas of technological
i n n ovation, in its developm ent of auto-
m obiles incorporating advanced
environm ental technology Toyota
achieves high levels of driving plea-
sure and safety by finding solutions
to a host of conflicting problem s.
For exam ple, w e have greatly e n-
hanced the range of appealing qualities
of the Estim a H ybrid. This m inivan
offers excellent acceleration and its
cruise control gives a com fortable ride
at high speeds. It is also equipped w ith
our advanced safety technology V e-
hicle D ynam ics M anagem ent (VD M )
system . VD M w as created by com bin-
ing an Electronically C ontrolled B rake
(EC B ) system the w orlds first brak-
ing system in w hich four w heels are
controlled separatelyand Toyotas
ow n integrated m ovem ent control
technology, w hich m aintains ideal
stability. To ensure seam less opera-
tion along the course intended by the
driver at all tim esfrom norm al to
extrem e driving conditionsthe latest
electronic technologies, including drive
by w ire, are used to m onitor the ve-
hicle.
A More-Friendly Relationship
between People, Cars, and
Society
Toyota is also very interested in the
role of autom obiles in the context of
the ubiquitous netw ork that w ill result
from advances being m ade in in-
form ation and telecom m unication
technologies. Toyota has successfully
taken its ow n approach to services
and technologies in an endeavor to
create a m ore-friendly relationship be-
tw een the individual, the autom obile,
and society. For exam ple, the G -B O O K
is an inform ation service entirely devel-
oped by Toyota. U sers w ill be able to
connect w ith our G AZO O center and
obtain the inform ation or services they
require via onboard term inals in their
vehicles. W e w ill establish a seam less,
autom obile-oriented inform ation
service, w hich our custom ers w ill also
be able to access by m eans of their
cellular telephones or personal com -
puters. W e plan to install the G -B O O K
in one of our new m odels to be un-
veiled in 2002.
Further, w e are concentrating our
efforts on the developm ent of such
advanced technologies as back guide
m onitors, radar cruise control, and
lane m onitoring system s. M oreover,
taking full advantage of the breadth
of its technological com petence,
Toyota is also energetically develop-
ing active safety system s that inte-
grate w ith transportation infrastruc-
ture system s.
15
The FC H V-5 w ith onboard clean
hydrocarbon fuel (C H F) reform er
Frontal offset im pact collision test w ith a
Platz (im pact speed of 64km /h)
Test run of autom ated driving system
Cost ReductionsKey to
Strengthening International
Competitiveness
W e are continuing to take cost-reduc-
ing m easures to achieve our m ission
to provide the right cars, for the right
place, at the right tim e. Intensified
w orldw ide com petition, triggered
by advancing global m otorization, is
m aking it vital for com panies to p u r s u e
further cost reductions and im proved
price com petitiveness. W hether or
not com panies succeed in these
efforts is becom ing a critical factor,
im pacting m arket com petitiveness
and future grow th. O f course, the
extent to w hich m anufacturers can
produce vehicles of top quality, a t
m odest prices, is the key to success
or failure in em erging m arkets, w here
m otorization is about to get under
w ay in earnest. H ow ever, m eeting
these criteria is also crucial for com -
panies operating in the m arkets of
developed nations.
Toyotas basic philosophy for cost
reductions is the elim ination of w aste;
in other w ords, to com pletely rem ove
those elem ents that do not contribute
added value to our products. This
m indset is also conducive to im prov-
ing quality and discovering w ays to
create new added value. O ur stance is
that enhanced quality and low er costs
m ust be pursued together to help
achieve our goal of com plete custom -
e rs a t i s f a c t i o n .
A im ing to dram atically low er its
m anufacturing costs, Toyota is at pres-
ent conducting a radical review of its
operations. These endeavors involve
sim ultaneously proceeding w ith cost-
reduction initiatives from m any differ-
ent directions, including m aterials
procurem ent m ethods, product de-
sign, production m ethods, and m anu-
facturing system s. W e are convinced
that these activities are vital to im prove
our com petitiveness and achieve
further grow th in the w orld m arket in
the 21st century.
The CCC21 ProjectLeading
the Way in Toyotas Cost-
Reduction Efforts
Am ong the various cost-reducing
drives that w e are currently im plem ent-
ing, our C C C 21 (C onstruction of C ost
C om petitiveness for the 21st C entury)
three-year cost-reduction project,
launched in July 2000, has p r o d u c e d
the m ost successful results. C C C 21
is a com prehensive cost-reduction
activity, w hich also covers in-house
parts. In particular, this project aim s to
achieve large-scale cost reductions for
about 170 com ponents that account
for 90% of our total com ponent pur-
chasing costs. A core feature of the
project is sim ultaneous engineering
(SE), w hich brings together suppliers
and staff from our engineering, pro-
duction engineering, production, and
purchasing departm ents. Specifically,
w e are w orking in collaboration w ith
parts m anufacturers and m aterials
producers from the design stage of
com ponents to increase the standard-
ization of parts and fundam entally
reassess m anufacturing m ethods.
SE encom passes four different areas
for reform design and engineering,
production, purchasing, and fixed
costs.
B y the end of fiscal 2002, in only
the second year of C C C 21, the project
w as already resulting in large cost
reductions and the achievem ent of its
ultim ate reduction target w as in sight.
16
Stren g t h ening Cost Co m peti tiven e s s
To bring to market the most attractive vehicles, at the most inexpensive prices and in the most timely manner,
Toyota is tackling comprehensive cost reductions from a variety of angles, including development, production,
and purchasing. As we approach an era in which motorization will expand on a global scale, enhancing cost
competitiveness is crucial to secure an advantage in world markets. To ensure the Companys growth in the 21st
century, Toyota is employing a host of innovative ideas to accelerate its cost-reducing efforts.
Accelerating Evolution
Vitz production line
G lobal cost-reduction efforts
(C ontinued on page 19)
Corolla
17
As a perennial top-selling passenger vehicle, the Corolla has been a much-
loved car since its launch in 1966. The popularity of the Corolla is by no
means limited to J apan; over 800,000 units are sold annually in more than
140 countries and regions worldwide. Offering high performance at a reason-
able cost, the enduring appeal of the car lies in this optimal combination
of quality and price. Based on the theme of New Century Value, Toyota
completely remodeled the Corolla during the previous fiscal year, adding
improvements that break the mold for this category of automobile. As a
result of testing in Europe to bolster its driving performance and environ-
mental features, the new Corolla has continued to generate strong sales.
The value offered by the Corolla continues to ensure that our customers
are satisfied.
Corolla
One of J apans Best-Selling Cars
The Corolla is Toyotas offering as the
global standard for automobiles in the
21st century. Epitomizinghigh quality,
theCorolla features new components,
fluid styling, spacious interior, high
performancelevels, and advanced safe-
ty and environmental features. The
Corolla represents the end product of
our endeavors to attain maximum
cost performanceand giveadded
value to customers. Responding to the
needs of a wide range of people,
including couples, families, young-
sters, and senior citizens, it has
become an integral part of the lives
of many customers.
Camry
18
Following its launch in the North American market in 1983, the Camry rapidly
established itself as an undisputedly popular model, which now consistently
vies for first or second place in U.S. sales rankings. Since we started produc-
tion of the Camry in 1988 at our Kentucky plant, in the United States, we
have been working to produce cars that match local requirements. One of
the major attractions of the Camry is its comfort. Mindful of the long drives
between cities in North America, we employed the Camrys platform from the
Lexus to achieve a luxuriously comfortable interior. We also carefully designed
the dimensions of the cabin to give it a roomy, relaxing feel. Thanks to these
efforts, we were able to create a car with quality comparable to large sedans
that are one category above the Camry. In this way, Toyota tirelessly pursues
the best for its customers, making cars that deliver quality and value beyond
expectations.
Camry
A New Standard of Value in the United States
Fully remodeled in September 2001,
the Camry is an enduringfavorite
both at home and abroad. In order to
inspirepeoplearound theworld with
a senseof the attraction of sedans,
Toyota began its development of the
new Camry by rebuilding thevehicles
platform and other basic structures.
Featuring a front-engine, front-wheel-
drive layout, a longwheelbase, and a
robust monocoque body frame, the
Camry is safer and more comfortable
than ever.
Through these integrated activities,
the products of both Toyota and its
suppliers have gained international
com petitiveness w ith respect to cost
and quality. W e intend to press on
w ith C C C 21, setting ourselves higher
targets and determ inedly pursuing
Toyotas purchasing m ission to pro-
cure the best parts at the low est
prices, in the m ost rapid and tim ely
m a n n e r .
Enhancing Quality and Flexibil-
ity through Global Body Line
(GBL)
In addition to its cost-reduction efforts
through C C C 21, Toyota is also driving
forw ard production innovations aim ed
at groundbreaking reduction in m anu-
facturing costs. These innovations
include developm ent of production
equipm ent in-house, product design
that enables us to sim plify production
processes and reduce num bers of
parts, and developm ent of m anufac-
turing technology and system s that w ill
facilitate the global production of high-
quality products.
D uring fiscal 2002, w e
developed a new body
assem bly line, G B L, w hich
enables us to build high-
quality vehicles w ith
greater efficiency and
flexibility, and introduced it
in Toyota plants around the
w orld. W e developed this
system in response to our
rapidly expanding netw ork
of overseas production
bases, to enable them to quickly and
easily carry out additions or m odel
changeovers on assem bly lines. The
new system w as also designed to give
our production bases sufficient flexibili-
ty to respond to dem and fluctuations
in the m arket.
G B L, w hich is a groundbreaking
assem bly line able to adapt to produc-
tion volum es on any scale, from sm all
to large, evolved from our previous
Flexible B ody Line (FB L) system ,
w hich w as designed for m ass produc-
tion. In G B L the sam e jigs (devices for
guiding a tool or for holding m achine
w ork in place) are used all over the
w orld and the system can also be
adapted to allow m anual processes
at plants w ith sm all production v o l-
um es. Thanks to this system , w e are
able to assure the uniform quality of
Toyota-brand vehicles at all of our
production bases around the w orld.
G B L is also leading to breakthroughs
in reducing investm ent costs and other
costs. C om pared w ith its predecessor,
the new system has achieved rem ark-
able reductions: a 50% reduction in
initial investm ent; a 70% cut in costs
for m odel changes and additions; as
w ell as approxim ately halving m ainte-
nance and operating costs and the
area required to install an assem bly
line. This new m anufacturing process
also produces 50% low er C O 2 em is-
sions, a m ajor feat that also enhances
the w orking environm ent for our assem -
bly line em ployees.
Toyotas advanced digital engineer-
ing w as instrum ental in the develop-
m ent of G B L. D igital engineering
m akes it possible for our engineers to
construct virtual, three-dim ensional
factories, based on overall designs,
and run sim ulations on-screen for
integrated assem bly lines and quality
assurance. Furtherm ore, digitization
has m eant that our operations and
m anagem ent instruction m anuals
have becom e m ore visual and readily
understandable. This has enabled us
to system atize the high levels of ex-
pertise that have been acquired by
Toyota em ployees over m any years
and use it to achieve efficient m ain-
tenance, organization, and standardi-
zation. As of the end of M arch 2002,
G B L had been introduced to 30 of
our 35 body assem bly lines in Japan
and overseas, w ith the rem aining five
lines scheduled to have the system
installed to coincide w ith m odel
changes.
19 G lobal B ody Line (G B L)
Virtual factory created by digital engineering
Toyotas Accelerating Global
Strategy
A m ultitude of unique cultures and
heritages characterize the diverse and
far-flung regions of the w orld. Thus,
just as languages and custom s vary,
so do peoples autom obile require-
m ents. As an autom obile m anufacturer
that offers a full range of m odels
including everything from m inivehicles
to large trucksToyota has the capa-
city to cater to these different types of
dem and all over the w orld. At present,
our vehicles are sold in m ore than 160
countries and regions and w e have a
netw ork of production centers in 25
countries and regions. W e also em ploy
m ore than 240,000 people w orldw ide.
In the 1990s m any business sec-
tors, including vehicle m anufacturing,
finance, and telecom m unications
underw ent global realignm ent, w hile
dram atic advances in inform ation
technology (IT) leveraged structural
reform s in industries across the globe.
In addition, environm ental issues
grew to becom e m atters of urgency
in the public conscience, to such a
degree that a com panys efforts, or
lack of effort, tow ard preservation of
the w orlds environm ent could prove
a decisive factor in its survival. Against
this historical backdrop, in the 1990s
Toyota stepped up its overseas oper-
ations in earnest, achieving rapid de-
velopm ent by establishing production
centers and sales outlets in regions
all over the w orld, including N orth
Am erica, Europe, and Asia.
For exam ple, let us look at vehicle
units produced overseas. Including its
non-consolidated subsidiaries, Toyota
built 690,000 vehicles outside Japan
in fiscal 1992. H ow ever, by fiscal
2002, our overseas production figures
had increased 170% to 1.86 m illion
units. Furtherm ore, Toyota has
established a w ell-balanced sales
structure that is strategically position-
ed betw een the w orlds three m ain
m arkets. O f Toyotas consolidated
w orld sales of 5.54 m illion units in the
year under review , the Japanese m ar-
ket accounted for 2.22 m illion units,
N orth Am erica 1.78 m illion units, and
Europe and other regions 1.54 m illion
units. Toyotas strength lies in the
effective, built-in risk hedge of a truly
global sales m ix, w hich m akes our
operations structurally less susceptible
to negative foreign exchange m ove-
m ents and fluctuations in regional
dem and. Toyota intends to continue
steadily reinforcing its c o m p e t i t i v e n e s s
in the w orlds m arkets,based on an
operating platform that is globally
balanced and flexible.
Promoting Global Localization
The age of global m otorization is
alm ost upon us. H ow ever, true global
m otorization w ill not becom e a reality
unless com panies are able to offer
vehicles that m eet the distinctive re-
quirem ents of different regions.
G lobalization,as Toyota perceives
it, m eans global localization.R ather
than sim ply increasing the num ber
of production centers and expand-
ing sales netw orks around the w orld,
our concept entails localizing design,
developm ent, and purchasing in an
integrated m anner. This approach
enables us to m ake a m ultifaceted con-
tribution to local society by strength-
ening the roots of our operating bases
in the various regions, thereby bene-
fiting each areas econom y, em ploy-
m ent, and culture. O ur localization
efforts are proceeding in a sim ilar
20
Pro m oting Gl oba l i z a ti o n
Our mission is to deliver to our customers in every corner of the world high-quality, affordable vehicles incorporat-
ing modern, attractive features.This absolute commitment is the driving force behind Toyotas accelerating global-
ization. Through aggressive localization of our operations, we aim to work on the development of automobiles that
meet the diverse needs of different regions, while at the same time striving to benefit local communities. Now,
Toyotas global evolution is about to move up a gear.
Accelerating Evolution
Toyota M otor M anufacturing, Kentucky, Inc.
(TM M K)
Toyota M otor M anufacturing, Indiana, Inc.
(TM M I)
(C ontinued on page 23)
Sequoia
21
Sequoia
SUV Designed for North America
In 2000 westarted production of the
Sequoia at our Indiana plant, where
wealso producetheTundraToyotas
first full-sizepickup truck. Theconti-
nuingpopularity of SUVs in theNorth
American market has elevated the
importanceof theSequoia for Toyota
still further. Becausewearerenowned
for high quality, each team member
makes all themoreeffort to makeper-
fect products every day at our plant.
In response to the popularity of sports utility vehicles (SUVs) in the North
American market, Toyota began local production of its large SUV, the
Sequoia, and launched the model in November 2000. Boasting a 240-horse-
power engine with 4.7-liter displacement, the Sequoia gained popularity
almost as soon as it was launched. Built at our production center in Indiana,
in the United States, the Sequoia shares its platform with Toyotas Tundra
pickup truck, which is made at the same plant. One facet of the Toyota Way
involves channeling our efforts into localizing automobile productionfrom
the development stage, to components purchasing, through to manufactur-
ing. The Sequoia resulted from putting this philosophy into practice and, as
a result, it was very favorably received by the market. With 70,000 units sold i n
the North American market during fiscal 2002, the Sequoia is gradually
strengthening its position as one of our mainstay models. We will further
advance localization in this market to enhance development of cars that
meet regional needs.
Yaris
22
Premiered by Toyota in 1999 with the global market in mind, the Yaris (called
Vitz in J apan) is a small car that combines quality, performance, and fuel
efficiency, with an interior cabin of the very highest standards. Based on a
design from our ED
2
European design center in the suburbs of Nice, France,
the Yaris was also developed because of the strategic importance of the
European market for Toyota. Local production of the model got under way in
the northern French town of Valenciennes in 2001 and we are working toward
an annual output of 180,000 vehicles. A first for Toyota, the Yaris won the
European Car of the Year award in 2000, which is testimony to the popularity
of the model in the European market. The Yaris steady consolidation of its
foothold in the European small-car market, said to be the most intensely
competitive in the world, represents a major advance toward Toyotas goal of
global localization.
Yaris
Our Leading Model in Europe
In Europe, thepopularity of stylish,
small cars means that this category is
always fiercely competitive. Against
this backdrop, thestrongreputation
and popularity won by the Yaris has
been a source of great motivation to
our sales staff. In addition to creating
a small-bodied car with a spacey inte-
rior, a powerful engine, and good fuel
efficiency, thedevelopment team also
sought to create a vehiclewith eye-
catching styling. Weweredelighted
that women in Europe, many of whom
combine an appreciation of aesthetics
with astutejudgment of practicality,
fell in lovewith this car. In theyears to
come, wewill work to becomer en o w n-
ed as a manufacturer of attractive
cars that reflect European style, while
deliveringToyotas first-ratequality.
fashion in Europe. W e started produc-
tion of the Yaris in France in 2001 and
in April 2002 Toyota began m anufac-
turing transm issions at its plant in Po-
land. In addition, as of 2005, production
of sm all cars is slated to begin in the
C zech R epublic as a joint venture
betw een Toyota and P SA Peugeot
C i t r oen .
To respond to the particular require-
m ents of individual custom ers and
provide high-quality, low -cost cars,
localization of our operations plays
a vital role. In the U .S. m arket, the
C am ry consistently com petes for first
or second position in the best-selling
passenger car rankings, w hile the
Lexus is the top-selling m odel in the
luxury sedan category. In Asia, Toyota
has gained the largest m arket share
in five countriesIndonesia, Thailand,
the P hilippines, Brunei, and Vietnam .
This excellent perform ance around t h e
w orld is clear evidence of Toyotas
strong reputation in each of these
regions and of peoples endorsem ent
of the C om pany w hich, in turn, dem on-
strates the success of our steady
pursuit of localization. Toyotas p l a n s
are by no m eans lim ited to sim ply
increasing production and sales. B y
offering quality and services that
satisfy c u s t om ers, by contributing to
local com m unities, and by developing
harm onious relationships w ith our
local suppliers and dealers, our goal
is to rem ain a global corporation that
people genuinely favor.
Paving the Way in Emerging
Markets
Toyota is increasing its pace of locali-
zation in em erging m arkets, w here w e
anticipate there w ill be a groundsw ell
in dem and. In particular, in light of
current trends tow ard deregulation
and increasing free trade in the Asian
region, w hich includes C hina and India
and their potentially vast m arkets, w e
are shifting from a country-by-country
perspective to an operating approach
that view s Asia as a w hole. To this
end, w e established Toyota M otor Asia
Pacific Pte Ltd. (TM AP) in Singapore
in 2001, as an operations center that
consolidates our m anagem ent func-
tions for the Asian region.
Follow ing Toyotas announcem ent
of its intention to enter the C hinese
m arket in 1994, the C om pany w orked
to advance local production of m ajor
com ponents such as engines. And in
M ay 2000, w e obtained approval to
build passenger vehicles. After getting
production of our m id-size
bus, the C oaster, under
w ay at Sichuan Toyota
M otor C o., Ltd., in D ecem -
ber 2000, w e brought the
vehicle to m arket in April
2001. In addition, at Tianjin
Toyota M otor C o., Ltd., w e
w ill launch production of a
com pact car designed for
the C hinese m arket, w hich
uses the sam e platform as
the Vitz, from O ctober
2002. In response to the rapid grow th
of the C hinese m arket, Toyota w ill
w ork to augm ent its operating base by
further increasing its production and
sales centers in the country.
India is Asia's other huge m arket.
In addition to its production and sales
of the Q ualis, a m ultipurpose vehicle
designed exclusively for the Indian
m arket, Toyota w ill take the oppor-
tunity presented by partial deregula-
tion on im ports of com pleted vehicles
to introduce a sm all volum e of pas-
senger cars into this m arket from
O ctober 2002. W e are also consid-
ering the possibility of follow ing this up
w ith a strategic launch of com pact
cars. Sim ilarly, in C entral and South
Am erica and other em erging m arkets
around the w orld, Toyota w ill use w ell-
tim ed deploym ent of its corporate
resources to enhance its operating
infrastructures.
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The T-1 concept car scheduled for
local production in C hina
Production line for the Yaris in France