A special feature looking back on Akio Toyoda's 14 years as Toyota's 11th president. Part two traces the changes reflected in the figures.
Returning to stakeholders
As earnings became more reliable, however, at results briefings and other events, Toyota now began to be called out for a “winner-take-all” attitude.
At the 2021 general shareholders’ meeting, Akio responded to such claims with concrete figures demonstrating Toyota’s contribution to various stakeholders, including local and national governments, employees, and suppliers.
What I would like people to understand is that our total sales over the past 12 years amounted to 300 trillion yen. The automotive industry is an industry with a broad supply chain. Because about 70% of the parts we use are purchased from suppliers, about 70% of our sales was how much we paid to purchase such parts. The cumulative total of that amount was 230 trillion yen.
Considering that the national budget of Japan is 100 trillion yen a year, I think that a considerable amount of money was moved around outside of Toyota.
I have heard some people say that Toyota has much in terms of retained earnings and might not be allocating those earnings correctly. What I would like people to understand is that over the past 12 years, Toyota’s consolidated workforce has increased by 50,000 people, and I would like people to consider the kind of economic impact this has had.
If we assume that an annual household income is 5 million yen, 50,000 people times 5 million yen equates to 250 billion yen going to household budgets.
Also, among calls for an increase in the consumption tax in Japan, as it is said that a 1% increase in the consumption tax contributes about 2 trillion yen to the national wealth, a 20 trillion yen increase in market capitalization is worth a 10% consumption tax.
(General shareholders’ meeting, June 2021)
The auto industry consists of more than just the manufacturers who make finished vehicles; it is sustained by various interwoven stakeholders, creating vast economic ripple effects.
Although Akio rarely talks about numbers, he cited actual results to emphasize that these benefits stem from Toyota’s commitment to “purposeful passion and action” together with dealers and suppliers.
During labor-management discussions in 2023, Toyota also reported that distributions to stakeholders had increased over Akio’s tenure, showing how the company has grown together with its employees and suppliers.
The profits earned through making “ever-better cars” become investments in the future through R&D expenses and are distributed among stakeholders, a virtuous cycle that strengthens the foundations for sustainable growth.
Sowing seeds for the future
The simplicity of Akio’s call for “ever-better cars” made it hard to grasp, at times leading to criticism about the lack of numerical targets.
However, as Akio’s genchi genbutsu-driven efforts to reform the organization and develop its people—as Morizo, as a master driver, and as president of Toyota—began to bear fruit, such voices gradually fell silent.
During the January livestream announcing the leadership change, Akio remarked that “as a result of the 370,000 members of Toyota striving in their various roles all around the world to make ever-better cars, our products have been greatly transformed.”
The results for fiscal 2022 announced in May revealed profits of 2.725 trillion yen, even after materials costs jumped to 1.545 trillion.
Koji Sato, who has taken up the baton as Toyota’s 12th president, attributed these results to an increase in the company’s product-driven earnings power. He also announced a boost in future investment, namely in electrification and software, for the year ahead.
Akio often likens management to farming. Having himself inherited a well-reaped field, he was determined to set up the next generation with a good balance of ripened crops and seeds in the ground. This was the mindset with which he ran the company for 14 years.
In this cultivated soil, Toyota will forge its transformation into a mobility company. That is the challenge taken up by the new leadership team, as they carry Akio’s vision forward into the future.
