Current Term Forecast Shows President Akio Toyoda's Resolve -- Kagawa Holds Remote Interview Following Financial Results

2020.05.23

In this situation, it is necessary to show some type of criteria

Event MC
From here, we’ll take your questions.

[How would you evaluate the results this time?]

Akio
But this year…with the COVID-19 crisis, things like these meetings that were taken for granted are not being able to be kept to their usual schedules under these conditions, so, first, I want to say that I have a deep appreciation for all of the people involved including the employees of the company.

That said, to summarize the outlook for this term, this so-called COVID-19 shock, if you will, appears as if it will have by far a much larger impact than what we saw during the global financial crisis. Nevertheless, in our forecast for the running term, although the number of units sold will decline at a magnitude more than following the global financial crisis, this time we anticipate being able to remain in the black. Because I previously declared that we would like the auto industry to be the best engine to revive the economy following a return to normal, the situation is that we are now prepared to start those activities from here.

[On publishing a forecast for the current running term]

Akio
And now, while we wanted to show the demand trend, actually, we had a lot of discussions internally.

Because we are an OEM, we can only have the ability to make cars if first we have customers that will buy them. Under those circumstances, by Toyota making cars, our suppliers can get their factories back up and running and regional communities will also be able to get going.

The automotive industry has an immense impact on the economy. It is said that for every vehicle (1) that is made, it has an impact of “2.5” on other manufacturing. By getting the automotive industry back up and running, it will likely have a large positive impact on helping to get various aspects of living/life back.

Because we are in these critical circumstances, we need to talk candidly about the situation as it is now, and show the criteria.

By having set this criteria, my friends and I in this vastly extensive automotive industry will be able to make some sort of plan, some sort of preparations.

[Will there be any adjustment to initiatives like Woven City, etc.?]

Akio
From my perspective, starting from last year, we started to plant seeds for the new Toyota. For these new projects, we will continue to push the accelerator pedal.

Kobayashi
Actually, before the financial results announcement, there were many discussions with executives that included the president. For the fiscal year ending in March 2021, we have forecast JPY500 billion, a figure that was unimaginable at the time of the global financial crisis. As mentioned, a lot has happened in the 11 years of Akio’s presidency. From his guidance we have been able to get where we are today. And things have gotten better.

The president is the only person who had the experience of the financial crisis. So, we had to stop our all our reflections on it. As a company we are always talking about sustainable growth, a going concern. Based on that, one of the things learned was that one thing you cannot stop is development. The reason you cannot stop this is because it is an investment in your future. This is the kind of investment that you ultimately should keep, one that needs funds to support it.

In order to do that, you need cash on hand. During the global financial crisis, we only had JPY 3 trillion on hand; this time, we have been able to raise it to about JPY 8 trillion. I still feel it is a little lower than it should be.

So, of course, companies will experience ups and downs, but anything for the future will be necessary because, by having sustainable growth into the future, we can help make the world more enriched. This is the reasoning discussed by President Akio Toyoda, which we follow as executives. You asked about the smart city, or Woven City project, and also our R&D investment, and these will not change

[Last year, there was talk about what Toyota saw as the biggest threat. What threats does Toyota face in the current running term?]

Akio
Last year, I did say that the biggest threat was people thinking that Toyota was doing well. However, speaking of new threats, or I guess, rather, more to talk about how I feel – I feel extremely calm. Instead, I think that I am having increased opportunities to say ‘thank you’ to all kinds of office employees, knowing that they are working their hardest.

More than a threat, I want to look forward to more opportunities for me to express ‘thank you’ to people as I move around.
Kagawa

Well, now the financial results announcement has wrapped up.
I must say that this was a great opportunity for me as the Editor-in-Chief of Toyota Times to take a fresh look at the path Toyota has walked on, and President Toyoda’s 11 years at the helm, through the announcement today. It wasn’t just about the numbers, but it was about where the company is going and what the company is going for.

It is a fact that over the past 11 years, the president has had some really tough challenges. But, as expected, after things have calmed down, and, including now, he has been able to express his gratitude and appreciation, especially after seeing results like we did today. But he didn’t just announce the numbers, he expressed his heart-felt feelings.

Through this formal event, so extremely formal that he naturally needs to wear a business suit and give a speech and where the stock price may change, but after the briefing, I will connect with the president via video chat, which should be a little less formal of a setting, where I hope to interview him and get even deeper into his true feelings.

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