Appearing together before stakeholders for the first time since the leadership change press conference, President Akio Toyoda and incoming President Koji Sato spoke about Toyota's relationship with its suppliers.
For the first time since the January 26 Toyota Times News broadcast about the company’s leadership change, President Akio Toyoda and incoming President Koji Sato appeared together before stakeholders.
They took the stage at Toyota’s global suppliers convention, held in person for the first time in four years. Speaking for some 700 representatives from around the world, the current and incoming presidents shared their thoughts on the relationship that Toyota has built with its suppliers over many years.
Toyota Times shares their messages in full.
Gratitude for those sustaining the global auto industry
I would like to begin by expressing my condolences for the many people who lost their lives in the recent earthquake that struck Turkey and Syria, and to the disaster victims and their families, please accept my heartfelt sympathy.
It is now exactly one year since the Russian invasion of Ukraine, and the war has caused enormous loss of life and damage to living conditions. I would like to convey my condolences for the people who lost their lives in this conflict.
Our customers and global members live in diverse places around the world. The names of nearby mountains and rivers may be different, but we all live under the same sun and sky.
Humanity aspires to a world where all can coexist happily with nature. I believe this is precisely Toyota’s mission as a global company.
Considering the current state of our business, with the impact of the Coronavirus and the added problems of a semiconductor shortage, over the past few years we have constantly found ourselves struggling to build or deliver cars to our customers.
Amidst such difficult times, I feel deeply grateful to all of you for your support of the global automotive industry. Thank you so very much.
Guidelines for a COVID-clouded future
I am so glad that we are all able to meet in person again after four years.
Today’s date of February 24, is also the date I took the stand at the public hearing in America. I’m truly glad to be able to share this Toyota Restart Day with all of you, our like-minded partners.
Our lives were turned upside down by the COVID pandemic that started in 2020.
In our financial results in May of that year, Toyota announced global sales of 8 million units and operating profit of 500 billion yen as a “guideline.”
I was determined to reenergize Japan and give the world strength and courage.
At the time, I thought, “I don’t know what the future holds, but I will not let Toyota fall into the red. Although I cannot make any forecasts, I would still like to show some kind of guidelines to serve as a beacon or ray of light for our partners in the automotive industry.”
The media reported it with headlines of impending doom, claiming that our “operating profit is forecast to fall 80%.” However, you were able to manage the abnormalities and flexibly respond to changes based on the guidelines we offered.
I believe that even in the midst of the pandemic, we were able to play a role as a driving force in the global economy.
And we were once again made aware of something crucial: the feeling of gratitude that comes with realizing that “automobiles are made with the support of everyone here.”
Being forced to stay apart has ended up strengthening the ties that bind us. That is how I look at it.
Appreciation for two key supporters
Looking back, there has not been a single peaceful year since I became president. Amidst the crises we faced, day after day we worked hard to survive.
Two people who supported me during those days of struggle, and to whom I am especially indebted, both recently passed away.
They were Seiichi Asaka of NSK (Nippon Seiko) and Shinji Yazaki of Yazaki Corporation.
From my tenure as Vice President in charge of Purchasing, through the recall problem just after I became president, to the time of the Great East Japan Earthquake which threatened the company’s survival, Mr. Asaka was the long-serving Chairman of Kyohokai.
Mr. Asaka always said to me, “Toyota and its suppliers share a family-like bond.” And, when he retired as Chairman, he told me this.
“The character for the word Kizuna, meaning ‘ties that bind,’ is actually a combination of ‘ito’ (string) and ‘han’ (half). Just like string, the ties that bind individuals, regardless of the other’s strength, will break if pulled. The word Kizuna refers to a relationship in which each party considers the strength of the other party. That is why the character is written in this way.”
I promise that I will continue to follow the spirit of this word.
When I was young, Mr. Yazaki advised me on various matters. I believe that he taught me how to live my life as an individual and to have pride as a manager.
When Toyota ended production in Australia, the Yazaki Corporation decided that it would also wind down operations in Samoa.
With the words of gratitude from the country and its employees, the response to their decision was a perfect example of what it means to be a “best in town” company.
Then, amidst the era of a once-in-a-century transformation, he took on the role of Kyohokai Chairman.
These two men taught me that the relationship between Toyota and its suppliers must be a relationship of trust between people, where both sides can speak candidly and feel comfortable expressing gratitude to each other.
I would like to take this opportunity to once again express our gratitude. Please accept my heartfelt thanks.
Shaping the future together with Toyota
At this point, Akio shared a video featuring snippets from his interactions with supplier representatives.
There were scenes of friendly, candid discussions and representatives riding shotgun with Akio behind the wheel.
After the video, the president continued.
I would like to have this kind of relationship with all suppliers, regardless of their country or region. Please look at this slide.
Over the past 13 years, Toyota has expanded its business with suppliers in all regions.
As a result, globally we have welcomed 3,000 new suppliers. The base for this is localization.
Different countries and regions mean different cultures and different lifestyles. If the roads are different, the way cars are used will be different. I want to make ever-better cars tailored to the country and the roads they travel on.
To do this, we want to work together with the best-in-town suppliers.
Toyota will continue to do business with suppliers around the world. At the same time, I would also like to see our suppliers work with other global car manufacturers.
In the end, I hope you will feel that you belong with Toyota. Not because of volume, but because we can take on the challenge of building the future together.
That’s the kind of relationship I have been working single-mindedly toward.
I believe our products have changed as result. The phrase that sums up Toyota today is “global full- lineup.”
I also believe this is something that Toyota has achieved together with you, our suppliers, over the past 13 years.
The Toyota of today is able to provide any type of car the world needs.
At the root of this is our desire to “leave no one behind” and to offer “mobility for all.”
Passing the baton to incoming President Sato
Finally, as you are aware, last month Toyota announced changes in our top management. I made this decision because I felt that I had laid the foundation for passing on the baton.
When I became president, I was asked, “When did Toyota become a company that was only in business to make money?”
The frustration this sparked is what drove me to make “ever-better cars.” In the beginning, it was a lonely struggle.
But things are different now. I have suppliers who are challenging the status quo with me. And I have colleagues to whom I can pass the baton.
Now, I can say with pride that we are carmakers.
The new management team led by incoming President Sato knows that making cars is a collective effort.
This is something we have learned together in the genba, through our failures as we took on the challenge of making ever-better cars.
Moving forward, as our next generation of carmakers set their sights on becoming a mobility company, I’m sure they will encounter many challenges and failures.
I ask that you be patient with them as they take on these challenges and offer them even greater support than I enjoyed.
Incoming President Sato was next to take the stage, sharing anecdotes about Akio as he spoke of his feelings for the suppliers inherited by the new management team.
The values encompassed in “making ever-better cars”
Hello everyone, I am Koji Sato. As captain of our new management team, I will assume the position of President from April. I look forward to working with you.
“Car manufacturing is a team effort.” This sentiment is at the core of the car manufacturing I have worked on under President Akio Toyoda.
We want to make ever-better cars. To do this, it will be necessary to take on challenges beyond those of today.
Taking on challenges involves failures along the way. Thankfully, we have been able to overcome our failures and make progress through the purposeful passion of our genba team members.
We are able to make good cars precisely because all of our parts and systems are interconnected under the values encompassed in “making ever-better cars.”
Over the past 13 years, Toyota has changed dramatically with the product- and region-centered management pursued by President Toyoda.
We have changed to a globally balanced company structure. The structural strengthening initiatives we undertook together improved our break-even volume by 30% compared to levels around the global financial crisis. With this profit base, we are investing in the future in areas such as CASE technology and network-building.
The supporting foundation for all of this is the change in our products.
TNGA and the in-house company system have helped create the origins for good cars and improved development efficiency by 30%.
This car manufacturing foundation has led to an attractive and diverse product lineup, including commercial vehicles and sports cars.
Leveraging the TNGA foundation and brand power of such long-selling cars as the Corolla, Yaris, and Crown, we are transforming our car manufacturing with a product group concept.
We are also pursuing region-led car-making that caters to local needs, including the IMV in Asia or the Tundra and Tacoma in North America.
Master drivers underpin transformation
This transformation has been underpinned by our master drivers, a role unique to Toyota.
Taking the wheel himself, President Toyoda has continued to stand on the frontlines to provide a vision of the cars we should be working towards.
If the qualities he demanded were absent, as a master driver his answer was “No.” This is what has enabled us to offer the public so many “ever-better cars.”
One example is a car that debuted last year, the GR Corolla. The feedback from our master driver was “It doesn’t feel wild enough.”
Under the guidance of the master driver, and with a focus on origins, the personality of the GR brand came into focus.
The same is true for Lexus.
Three years ago, when I became president of Lexus, President Toyoda told me to “break everything I have built.”
I took this to mean that creative destruction will be necessary to transform Lexus. Thanks to the brand holder’s vision, Lexus was able to enter a new chapter.
At Lexus, our electrification as a carmaker comes from the genba. As the brand that is leading electrification, and committed to the real thing, Lexus will continue taking on this challenge together with Master Driver Toyoda.
“Let’s make ever-better cars.” I believe that our unwavering commitment to this ideal over the past 13 years has transformed Toyota’s people and cars.
Our greatest legacy from Akio Toyoda’s management style is the fact that these important values have spread to every corner of the company.
Three key themes: Electrification, Intelligence, Diversification
The theme of our new management team is Inheritance and Evolution.
President Toyoda’s actions at the genba have shown the ideals for what Toyota should be, and we will continue in this spirit.
I believe the fact that we have all learned by watching him is what makes team management possible.
The evolution that the new management team will pursue is our transformation into a mobility company.
This approach to car manufacturing has three key themes: electrification, intelligence, and diversification. Electrification is a particularly significant change.
I see the goal of electrification as building cars that are more in line with the energy of the future, and with energy security in mind.
The energy situation varies around the world. This is why Toyota is committed to a multi-pathway approach that includes hybrid, electric, and hydrogen-powered vehicles.
At present, we are enhancing our hybrid and plug-in hybrid vehicles, while also working to strengthen our lineup of BEV-exclusive models to meet regional needs.
We are also preparing to make the next generation of BEVs in anticipation of more widespread adoption.
In regions with clean energy, the BEV is one effective way to help achieve a carbon-neutral society.
BEVs also provide a unique opportunity to pursue the essential values of a car, including excellent performance, driving pleasure, and advanced control.
What’s more, BEVs are the key to creating new value in mobility.
In addition to carrying people and things, BEVs also carry electric energy and information, creating a new role for software as well.
In the midst of these changes, we must also look at the evolution of elemental technology from a whole-car perspective.
This will place emphasis on the power of teamwork that Toyota has built up with our suppliers.
Shared purpose and passion lead to new products
Together with all of you, we want to continue pursuing Toyota’s multi-pathway approach.
Finally, I would like to share with you an episode that has always stayed with me.
After testing the Lexus LC development car as a master driver, President Toyoda offered words of praise, saying it had become a better car.
When I replied that this was thanks to the efforts of our 4,000-strong team, he was quick to point out my error.
“It’s just the 4,000 people at Toyota. What about the many suppliers who make those 30,000 parts? Did you think of their contribution?”
He was right.
The LC was developed to illustrate the transformation of Lexus. Initially, I myself did not believe that we could make a car with this design.
And yet, the vision became reality, through a succession of challenges and failures.
Whenever we faced difficulties during development, it was our suppliers who came up with the ideas that saved us.
It is thanks to you, our like-minded partners who share our purpose and passion, that a new product was born.
At a time when the right answers remain unknown, we will continue seeking to transform Toyota into a mobility company.
I am sure that, through our challenges and failures, the future will become clearer.
I hope that we can take on these challenges together, united as one team.
Every member of our new management team will be giving it their all, and we ask for your warm guidance and support.