As filed with the U.S. Securities and Exchange Commission on June 21, 2019

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F(Mark One)‘REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934È

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934‘

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934‘SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

OR
For the fiscal year ended: March 31, 2019
OR
OR
Commission file number: 001-14948

TOYOTA JIDOSHA
KABUSHIKI KAISHA(Exact name of registrant as specified in its charter)
TOYOTA
MOTOR CORPORATION(Translation of registrant’s name into English)
Japan(Jurisdiction of incorporation or organization)
1 Toyota-cho, Toyota City
Aichi Prefecture 471-8571
Japan+81 565 28-2121(Address of principal executive offices)
Nobukazu Takano
Telephone number: +81 565 28-2121
Facsimile number: +81 565 23-5800
Address: 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan(Name, telephone, e-mail and/or facsimile number and address of registrant’s contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)Name of each exchange on which registered
Title of each class
American Depositary Shares*
TM
The New York Stock Exchange
Common Stock*** American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing two shares of the registrant’s Common Stock.
** No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the U.S. Securities andExchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
2,832,439,167 shares of common stock (including 45,459,183 shares of common stock in the form of American Depositary Shares) and 47,100,000 First
Series Model AA class shares as of March 31, 2019
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:Yes È No ‘
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934:
Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days:Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See
definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È
Accelerated filer ‘
Non-accelerated filer ‘
Emerging growth company ‘
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to
use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act:‘† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP È
International Financial Reporting Standards as issued by the International Accounting Standards Board ‘
Other ‘If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow:
Item 17 ‘ Item 18 ‘
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ‘ No ÈTABLE OF CONTENTSITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS . . . . . . . . . .

1

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

ITEM 3.

KEY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CAPITALIZATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
REASONS FOR THE OFFER AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
4
4
4

INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

4.A
4.B
4.C
4.D

HISTORY AND DEVELOPMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ORGANIZATIONAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY, PLANTS AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8
8
49
50

ITEM 4A.

UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . .

51

OPERATING RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES . . . . . . . . . . . . . . . . .
TREND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OFF-BALANCE SHEET ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS . . . . . . . . . . . . . . . . .
SAFE HARBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51
82
84
87
87
88
89

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . .

89

DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BOARD PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SHARE OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89
96
99
100
101

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . .

102

MAJOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTERESTS OF EXPERTS AND COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102
103
103

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION . . . . .
SIGNIFICANT CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103
103

THE OFFER AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104

9.A
9.B
9.C
9.D
9.E
9.F

LISTING DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MARKETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPENSES OF THE ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104
104
104
104
104
104

ITEM 10.

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104

SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MEMORANDUM AND ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . .
MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104
104
112
112

3.A
3.B
3.C
3.D
ITEM 4.

5.A
5.B
5.C
5.D
5.E
5.F
5.G
ITEM 6.
6.A
6.B
6.C
6.D
6.E
ITEM 7.
7.A
7.B
7.C
ITEM 8.
8.A
8.B
ITEM 9.

10.A
10.B
10.C
10.D

10.E
10.F
10.G
10.H
10.I

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIVIDENDS AND PAYING AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATEMENT BY EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DOCUMENTS ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUBSIDIARY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113
119
120
120
120

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . .

120

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . .

121

12.A
12.B
12.C
12.D

DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
WARRANTS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
OTHER SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
AMERICAN DEPOSITARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . .

123

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123

ITEM 15.

CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123

ITEM 16.

[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124

ITEM 16B.

CODE OF ETHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . .

124

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . .

126

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . .

127

ITEM 16G.

CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127

ITEM 16H.

MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

130

ITEM 17.

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

131

ITEM 18.

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

131

ITEM 19.

EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

132

As used in this annual report, the term “fiscal” preceding a year means the twelve-month period ended
March 31 of the year referred to. All other references to years refer to the applicable calendar year, unless thecontext otherwise requires. As used herein, the term “Toyota” refers to Toyota Motor Corporation and its
consolidated subsidiaries as a group, unless the context otherwise indicates.
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Written forward-looking statements may appear in documents filed with the U.S. Securities and Exchange
Commission, or the SEC, including this annual report, documents incorporated by reference, reports toshareholders and other communications.
The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking
information to encourage companies to provide prospective information about themselves without fear of
litigation so long as the information is identified as forward looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual results to differ materially from thoseprojected in the information. Toyota relies on this safe harbor in making forward-looking statements.
Forward-looking statements appear in a number of places in this annual report and include statements
regarding Toyota’s current intent, belief, targets or expectations or those of its management. In many, but not allcases, words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “hope,” “intend,” “may,” “plan,”“predict,” “probability,” “risk,” “should,” “will,” “would,” and similar expressions, are used as they relate to
Toyota or its management, to identify forward-looking statements. These statements reflect Toyota’s current
views with respect to future events and are subject to risks, uncertainties and assumptions. Should one or more ofthese risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may varymaterially from those which are anticipated, aimed at, believed, estimated, expected, intended or planned.
Forward-looking statements are not guarantees of future performance and involve risks and uncertainties.
Actual results may differ from those in forward-looking statements as a result of various factors. Importantfactors that could cause actual results to differ materially from estimates or forecasts contained in the forwardlooking statements are identified in “Risk Factors” and elsewhere in this annual report, and include, among
others:(i) changes in economic conditions, market demand, and the competitive environment affecting theautomotive markets in Japan, North America, Europe, Asia and other markets in which Toyota operates;(ii) fluctuations in currency exchange rates (particularly with respect to the value of the Japanese yen,
the U.S. dollar, the euro, the Australian dollar, the Russian ruble, the Canadian dollar and the British
pound), stock prices and interest rates fluctuations;(iii) changes in funding environment in financial markets and increased competition in the financial
services industry;(iv) Toyota’s ability to market and distribute effectively;(v) Toyota’s ability to realize production efficiencies and to implement capital expenditures at thelevels and times planned by management;(vi) changes in the laws, regulations and government policies in the markets in which Toyota operates
that affect Toyota’s automotive operations, particularly laws, regulations and government policies relating
to vehicle safety including remedial measures such as recalls, trade, environmental protection, vehicle
emissions and vehicle fuel economy, as well as changes in laws, regulations and government policies that
affect Toyota’s other operations, including the outcome of current and future litigation and other legal
proceedings, government proceedings and investigations;(vii) political and economic instability in the markets in which Toyota operates;(viii) Toyota’s ability to timely develop and achieve market acceptance of new products that meetcustomer demand;

(ix) any damage to Toyota’s brand image;(x) Toyota’s reliance on various suppliers for the provision of supplies;(xi) increases in prices of raw materials;(xii) Toyota’s reliance on various digital and information technologies;(xiii) fuel shortages or interruptions in electricity, transportation systems, labor strikes, work stoppages
or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota
purchases materials, components and supplies for the production of its products or where its products areproduced, distributed or sold; and(xiv) the impact of natural calamities including the negative effect on Toyota’s vehicle production andsales.

PART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3.A SELECTED FINANCIAL DATA
You should read the U.S. GAAP selected consolidated financial information presented below together with“Operating and Financial Review and Prospects” and Toyota’s consolidated financial statements contained in thisannual report.
U.S. GAAP Selected Financial Data
The following selected financial data have been derived from Toyota’s consolidated financial statements.
These financial statements were prepared in accordance with U.S. GAAP.
2015

Consolidated Statement of Income Data:
Automotive:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Elimination of intersegment:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Company:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and equity in earnings
of affiliated companies . . . . . . . . . . . . . . . . . . . .
Net income attributable to Toyota Motor
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Toyota Motor Corporation
per common share (yen):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares used in computing net income attributable to
Toyota Motor Corporation per common share, basic(in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares used in computing net income attributable to
Toyota Motor Corporation per common share, diluted(in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,
2016
2017
2018
(Yen in millions, except share and per share data)

2019

25,062,129
2,325,310

25,977,416
2,448,998

25,081,847
1,692,973

26,397,940
2,011,135

27,079,077
2,038,884

1,661,149
361,833

1,896,224
339,226

1,823,600
222,428

2,017,008
285,546

2,153,547
322,8211,255,791
65,6501,177,387
66,507

1,321,052
81,327

1,646,118
100,812

1,676,377
105,538(744,548)(2,229)(647,909)(760)(629,306)(2,356)(681,556)
2,369(683,320)302

27,234,521
2,750,564

28,403,118
2,853,971

27,597,193
1,994,372

29,379,510
2,399,862

30,225,681
2,467,545

2,892,828

2,983,381

2,193,825

2,620,429

2,285,465

2,173,338

2,312,694

1,831,109

2,493,983

1,882,873

688.02687.66741.36735.36605.47599.22842.00832.78650.55645.11

3,158,851

3,111,306

3,008,088

2,947,365

2,871,534

3,160,429

3,144,947

3,055,826

2,994,766

2,918,674

1

Year Ended March 31,
2015
2016
2017
2018
2019
(Yen in millions, except per share and numbers of vehicles sold data)

Consolidated Balance Sheet Data (end of period):
Total Assets: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,729,830 47,427,597 48,750,186 50,308,249 51,936,949
Short-term debt, including current portion of long-term
debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,963,492
8,521,088
9,244,131
9,341,190
9,599,233
Long-term debt, less current portion . . . . . . . . . . . . . . . . 10,014,395
9,772,065
9,911,596 10,006,374 10,550,945
Toyota Motor Corporation shareholders’ equity . . . . . . . 16,788,131 16,746,935 17,514,812 18,735,982 19,348,152
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397,050
397,050
397,050
397,050
397,050
Other Data:
Dividends per share (yen) . . . . . . . . . . . . . . . . . . . . . . . . ¥200.0 ¥
210.0 ¥
210.0 ¥
220.0 ¥
220.0
Number of vehicles soldJapan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,153,694
2,059,093
2,273,962
2,255,313
2,226,177
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,715,173
2,839,229
2,837,334
2,806,467
2,745,047
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
859,038
844,412924,560
968,077994.060
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,488,922
1,344,836
1,587,822
1,542,806
1,684,494
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,755,037
1,593,758
1,347,182
1,391,731
1,327,017
Worldwide total . . . . . . . . . . . . . . . . . . . . . . . .

8,971,864

8,681,328

8,970,860

8,964,394

8,976,795* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

Dividend Information
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend.
Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to a
resolution of its board of directors. Toyota’s board of directors resolves to pay year-end dividends to holders ofcommon shares and registered pledgees of common shares of record as of March 31, the record date, in eachyear.
At the 111th Ordinary General Shareholders’ Meeting held in June 2015, Toyota’s shareholders approved
amendments to Toyota’s articles of incorporation permitting the issuance of Model AA Class Shares in the
future. The articles of incorporation currently provide that in the event that Toyota pays a year-end dividend toholders of common shares, it will pay a year-end dividend to any holders of Model AA Class Shares or registeredpledgees of Model AA Class Shares of record as of the record date for the year-end dividend, in the amountpayable on the Model AA Class Shares pursuant to their terms (“AA Dividends”), in preference to holders ofcommon shares or registered pledgees of common shares.
In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash
distributions from its distributable surplus to holders of common shares and pledgees of common shares of record
as of September 30, the record date, in each year by a resolution of its board of directors. The articles ofincorporation currently provide that in the event that Toyota pays such interim dividends, Toyota will pay anamount equivalent to one-half of the AA Dividends (“AA Interim Dividends”) as an interim dividend to any
holders of Model AA Class Shares or registered pledgees of Model AA Class Shares of record as of the record
date for the interim dividend, in preference to holders of common shares or registered pledgees of commonshares.
If the amount of the dividends from surplus paid to holders of Model AA Class Shares or registeredpledgees of Model AA Class Shares is less than the prescribed amount of AA Dividends in any fiscal year, theamount of the shortfall will be carried forward to and accumulate in the following fiscal year and thereafter.
Dividends from surplus will be paid to holders of Model AA Class Shares or registered pledgees of Model AA
Class Shares in preference to the payment of interim and year-end dividends until such payment reaches theamount of the accumulated unpaid dividends on the Model AA Class Shares.
2For a further discussion of Model AA Class Shares, please see “Additional Information—Memorandum andArticles of Association.”
In addition, under the Companies Act of Japan (the “Companies Act”), dividends may be paid to holders ofcommon shares and pledgees of record of common shares as of any record date, other than those specified above,
as set forth in Toyota’s articles of incorporation or as determined by its board of directors from time to time.
Under the Companies Act, dividends may be distributed in cash or (except in the case of interim dividends
mentioned in the third preceding paragraph) in kind, subject to limitations on distributable surplus and to certain
other conditions.
The following table sets forth the dividends declared per common share by Toyota for each of the periods
shown. The periods shown are the six months ended on that date. The U.S. dollar equivalents for the cash
dividends shown are based on the noon buying rate for Japanese yen on the last date of each period set forth
below.
Cash Dividends per Common
Share
Yen
U.S. dollars

Period Ended

September 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65.0
100.0
75.0
125.0
100.0
110.0
100.0
110.0
100.0
120.0
100.0
120.0

0.66
0.97
0.68
1.04
0.83
0.97
0.98
0.98
0.88
1.12
0.88
1.08

Toyota deems the benefit of its shareholders as one of its priority management policies, and it continues towork to improve its corporate structure to realize sustainable growth in order to enhance its corporate value.
Toyota will strive to continue to pay stable dividends on its common shares aiming at a consolidated dividend
payout ratio, defined as dividends per common share divided by net income attributable to Toyota Motor
Corporation per common share, of 30%. Toyota will pay dividends on the First Series Model AA Class Shares inaccordance with a prescribed calculation method.
In order to successfully compete in this highly competitive industry, Toyota plans to utilize its internal funds
for the early commercialization of technologies for next-generation environment and safety giving priority tocustomer safety and sense of security. Considering these factors, with respect to the dividends for fiscal 2019,
Toyota has determined to pay a year-end dividend of 120 yen per common share by a resolution of the board of
directors pursuant to Toyota’s articles of incorporation. As a result, combined with the interim dividend of 100
yen per common share, the annual dividend will be 220 yen per common share, and the total amount of thedividends on common shares for the year will be 626.8 billion yen. Furthermore, Toyota will flexibly repurchaseshares with the aim to promote capital efficiency by comprehensively taking into consideration cash reserves,
stock price levels and the like.
In fiscal 2019, Toyota repurchased 36 million common shares, for an aggregate purchase price of
249.9 billion yen, in order to return to shareholders the profits derived from Toyota’s business operations in theinterim period.

3

Furthermore, Toyota has determined to repurchase 50 million common shares (maximum), for an aggregate
purchase price of 300.0 billion yen (maximum), in order to return to shareholders the profits for the fiscal year
ended March 31, 2019 by a resolution of the board of directors on May 8, 2019.
3.B CAPITALIZATION AND INDEBTEDNESS
Not applicable.
3.C REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
3.D RISK FACTORS
Industry and Business Risks
The worldwide automotive market is highly competitive.
The worldwide automotive market is highly competitive. Toyota faces intense competition from automotive
manufacturers in the markets in which it operates. Although the global economy continues to recover gradually,
competition in the automotive industry has further intensified amidst difficult overall market conditions. In
addition, competition is likely to further intensify in light of further continuing globalization in the worldwide
automotive industry, possibly resulting in industry reorganizations. Factors affecting competition include productquality and features, safety, reliability, fuel economy, the amount of time required for innovation anddevelopment, pricing, customer service and financing terms. Increased competition may lead to lower vehicle
unit sales, which may result in a further downward price pressure and adversely affect Toyota’s financial
condition and results of operations. Toyota’s ability to adequately respond to the recent rapid changes in theautomotive market and to maintain its competitiveness will be fundamental to its future success in existing andnew markets and to maintain its market share. There can be no assurances that Toyota will be able to compete
successfully in the future.
The worldwide automotive industry is highly volatile.
Each of the markets in which Toyota competes has been subject to considerable volatility in demand.
Demand for vehicles depends to a large extent on economic, social and political conditions in a given market andthe introduction of new vehicles and technologies. As Toyota’s revenues are derived from sales in markets
worldwide, economic conditions in such markets are particularly important to Toyota.
Reviewing the general economic environment for the fiscal year ended March 2019, although there weresome weaknesses, the world economy, as a whole, showed moderate recovery. The Japanese economy has been
on a moderate recovery due to improvements in employment and income conditions. For the automotive markets,
although markets have progressed in a steady manner in developed countries, markets in China, which had
experienced continued growth, and some resource-rich countries have slowed down.
The changes in demand for automobiles are continuing, and it is unclear how this situation will transition in
the future. Toyota’s financial condition and results of operations may be adversely affected if the changes indemand for automobiles continues or progresses further. Demand may also be affected by factors directly
impacting vehicle price or the cost of purchasing and operating vehicles such as sales and financing incentives,
prices of raw materials and parts and components, cost of fuel and governmental regulations (including tariffs,
import regulation and other taxes). Volatility in demand may lead to lower vehicle unit sales, which may result in
downward price pressure and adversely affect Toyota’s financial condition and results of operations.

4Toyota’s future success depends on its ability to offer new, innovative and competitively priced products thatmeet customer demand on a timely basis.
Meeting customer demand by introducing attractive new vehicles and reducing the amount of time requiredfor product development are critical to automotive manufacturers. In particular, it is critical to meet customer
demand with respect to quality, safety and reliability. The timely introduction of new vehicle models, atcompetitive prices, meeting rapidly changing customer preferences and demand is more fundamental to Toyota’s
success than ever, as the automotive market is rapidly transforming in light of the changing global economy.
There is no assurance, however, that Toyota will adequately and appropriately respond to changing customer
preferences and demand with respect to quality, safety, reliability, styling and other features in a timely manner.
Even if Toyota succeeds in perceiving customer preferences and demand, there is no assurance that Toyota will
be capable of developing and manufacturing new, price competitive products in a timely manner with its
available technology, intellectual property, sources of raw materials and parts and components, and production
capacity, including cost reduction capacity. Further, there is no assurance that Toyota will be able to implement
capital expenditures at the level and times planned by management. Toyota’s inability to develop and offer
products that meet customers’ preferences and demand with respect to quality, safety, reliability, styling andother features in a timely manner could result in a lower market share and reduced sales volumes and margins,and may adversely affect Toyota’s financial condition and results of operations.
Toyota’s ability to market and distribute effectively is an integral part of Toyota’s successful sales.
Toyota’s success in the sale of vehicles depends on its ability to market and distribute effectively based on
distribution networks and sales techniques tailored to the needs of its customers. There is no assurance that
Toyota will be able to develop sales techniques and distribution networks that effectively adapt to changing
customer preferences or changes in the regulatory environment in the major markets in which it operates.
Toyota’s inability to maintain well-developed sales techniques and distribution networks may result in decreased
sales and market share and may adversely affect its financial condition and results of operations.
Toyota’s success is significantly impacted by its ability to maintain and develop its brand image.
In the highly competitive automotive industry, it is critical to maintain and develop a brand image. In orderto maintain and develop a brand image, it is necessary to further increase customers’ confidence by providing
safe, high-quality products that meet customer preferences and demand. If Toyota is unable to effectively
maintain and develop its brand image as a result of its inability to provide safe, high-quality products or as aresult of the failure to promptly implement safety measures such as recalls when necessary, vehicle unit sales
and/or sale prices may decrease, and as a result revenues and profits may not increase as expected or may
decrease, adversely affecting its financial condition and results of operations.
Toyota relies on suppliers for the provision of certain supplies including parts, components and raw materials
Toyota purchases supplies including parts, components and raw materials from a number of external
suppliers located around the world. For some supplies, Toyota relies on a single supplier or a limited number ofsuppliers, whose replacement with another supplier may be difficult. Inability to obtain supplies from a single orlimited source supplier may result in difficulty obtaining supplies and may restrict Toyota’s ability to produce
vehicles. Furthermore, even if Toyota were to rely on a large number of suppliers, first-tier suppliers with whom
Toyota directly transacts may in turn rely on a single second-tier supplier or limited second-tier suppliers.
Toyota’s ability to continue to obtain supplies from its suppliers in a timely and cost-effective manner is subject
to a number of factors, some of which are not within Toyota’s control. These factors include the ability of
Toyota’s suppliers to provide a continued source of supply, and Toyota’s ability to effectively compete andobtain competitive prices from suppliers. A loss of any single or limited source supplier or inability to obtainsupplies from suppliers in a timely and cost-effective manner could lead to increased costs or delays orsuspensions in Toyota’s production and deliveries, which could have an adverse effect on Toyota’s financial
condition and results of operations.
5

The worldwide financial services industry is highly competitive.
The worldwide financial services industry is highly competitive. Increased competition in automobile
financing may lead to decreased margins. A decline in Toyota’s vehicle unit sales, an increase in residual value
risk due to lower used vehicle prices, an increase in the ratio of credit losses and increased funding costs are
additional factors which may impact Toyota’s financial services operations. If Toyota is unable to adequately
respond to the changes and competition in automobile financing, Toyota’s financial services operations may
adversely affect its financial condition and results of operations.
Toyota’s operations and vehicles rely on various digital and information technologies.
Toyota depends on various information technology networks and systems, some of which are managed bythird parties, to process, transmit and store electronic information, including sensitive data, and to manage or
support a variety of business processes and activities, including manufacturing, research and development,
supply chain management, sales and accounting. In addition, Toyota’s vehicles may rely on various digital andinformation technologies, including information service and driving assistance functions. Despite security
measures, Toyota’s digital and information technology networks and systems may be vulnerable to damage,disruptions, shutdowns due to unauthorized access or attacks by hackers, computer viruses, breaches due tounauthorized use, errors or malfeasance by employees and others who have or gain access to the networks andsystems Toyota depends on, service failures or bankruptcy of third parties such as software development or cloudcomputing vendors, power shortages and outages, and utility failures or other catastrophic events like natural
disasters. In particular, cyber-attacks or other intentional malfeasance are increasing in terms of intensity,
sophistication and frequency, and Toyota may be the subject of such attacks. Such attacks could materiallydisrupt critical operations, disclose sensitive data, interfere with information services and driving assistancefunctions in Toyota’s vehicles, and/or give rise to legal claims or proceedings, liability or regulatory penalties
under applicable laws, which could have an adverse effect on Toyota’s brand image and its financial condition
and results of operations.
Financial Market and Economic Risks
Toyota’s operations are subject to currency and interest rate fluctuations.
Toyota is sensitive to fluctuations in foreign currency exchange rates and is principally exposed tofluctuations in the value of the Japanese yen, the U.S. dollar and the euro and, to a lesser extent, the Australian
dollar, the Russian ruble, the Canadian dollar and the British pound. Toyota’s consolidated financial statements,
which are presented in Japanese yen, are affected by foreign currency exchange fluctuations through translation
risk, and changes in foreign currency exchange rates may also affect the price of products sold and materials
purchased by Toyota in foreign currencies through transaction risk. In particular, strengthening of the Japanese
yen against the U.S. dollar can have an adverse effect on Toyota’s operating results.
Toyota believes that its use of certain derivative financial instruments including foreign exchange forward
contracts and interest rate swaps and increased localized production of its products have reduced, but noteliminated, the effects of interest rate and foreign currency exchange rate fluctuations. Nonetheless, a negative
impact resulting from fluctuations in foreign currency exchange rates and changes in interest rates may adversely
affect Toyota’s financial condition and results of operations. For a further discussion of currency and interest rate
fluctuations and the use of derivative financial instruments, see “Operating and Financial Review andProspects — Operating Results — Overview — Currency Fluctuations,” “Quantitative and Qualitative
Disclosures About Market Risk,” and notes 21 and 22 to Toyota’s consolidated financial statements.
High prices of raw materials and strong pressure on Toyota’s suppliers could negatively impact Toyota’s
profitability.
Increases in prices for raw materials that Toyota and Toyota’s suppliers use in manufacturing their products
or parts and components such as steel, precious metals, non-ferrous alloys including aluminum, and plastic parts,
6

may lead to higher production costs for parts and components. This could, in turn, negatively impact Toyota’s
future profitability because Toyota may not be able to pass all those costs on to its customers or require its
suppliers to absorb such costs.
A downturn in the financial markets could adversely affect Toyota’s ability to raise capital.
Should the world economy suddenly deteriorate, a number of financial institutions and investors will facedifficulties in providing capital to the financial markets at levels corresponding to their own financial capacity,
and, as a result, there is a risk that companies may not be able to raise capital under terms that they would expect
to receive with their creditworthiness. If Toyota is unable to raise the necessary capital under appropriate
conditions on a timely basis, Toyota’s financial condition and results of operations may be adversely affected.
Regulatory, Legal, Political and Other Risks
The automotive industry is subject to various governmental regulations and actions.
The worldwide automotive industry is subject to various laws and governmental regulations including thoserelated to vehicle safety and environmental matters such as emission levels, fuel economy, noise and pollution. In
particular, automotive manufacturers such as Toyota are required to implement safety measures such as recallsfor vehicles that do not or may not comply with the safety standards of laws and governmental regulations. In
addition, Toyota may, in order to reassure its customers of the safety of Toyota’s vehicles, decide to voluntarily
implement recalls or other safety measures even if the vehicle complies with the safety standards of relevant laws
and governmental regulations. If Toyota launches products that result in safety measures such as recalls, Toyota
may incur various costs including significant costs for free repairs. Many governments also impose tariffs andother trade barriers, taxes and levies, or enact price or exchange controls. Toyota has incurred significant costs in
response to governmental regulations and actions, including costs relating to changes in global trade dynamics
and policies, and expects to incur such costs in the future. Furthermore, new legislation or regulations or changes
in existing legislation or regulations may also subject Toyota to additional costs in the future. If Toyota incurs
significant costs related to implementing safety measures or responding to laws, regulations and governmental
actions, Toyota’s financial condition and results of operations may be adversely affected.
Toyota may become subject to various legal proceedings.
As an automotive manufacturer, Toyota may become subject to legal proceedings in respect of various
issues, including product liability and infringement of intellectual property. Toyota may also be subject to legal
proceedings brought by its shareholders and governmental proceedings and investigations. Toyota is in factcurrently subject to a number of pending legal proceedings and government investigations. A negative
outcome in one or more of these pending legal proceedings could adversely affect Toyota’s financial condition
and results of operations. For a further discussion of governmental regulations, see “Information on the
Company — Business Overview — Governmental Regulation, Environmental and Safety Standards” and forlegal proceedings, please see “Information on the Company — Business Overview — Legal Proceedings.”
Toyota may be adversely affected by natural calamities, political and economic instability, fuel shortages orinterruptions in social infrastructure, wars, terrorism and labor strikes.
Toyota is subject to various risks associated with conducting business worldwide. These risks include
natural calamities; political and economic instability; fuel shortages; interruption in social infrastructure
including energy supply, transportation systems, gas, water, or communication systems resulting from natural
hazards or technological hazards; wars; terrorism; labor strikes and work stoppages. Should the major markets inwhich Toyota purchases materials, parts and components and supplies for the manufacture of Toyota products orin which Toyota’s products are produced, distributed or sold be affected by any of these events, it may result in
disruptions and delays in the operations of Toyota’s business. Should significant or prolonged disruptions ordelays related to Toyota’s business operations occur, it may adversely affect Toyota’s financial condition andresults of operations.
7

ITEM 4. INFORMATION ON THE COMPANY
4.A HISTORY AND DEVELOPMENT OF THE COMPANY
Toyota Motor Corporation is a limited liability, joint-stock company incorporated under the Commercial
Code of Japan and continues to exist under the Companies Act. Toyota commenced operations in 1933 as theautomobile division of Toyota Industries Corporation (formerly, Toyoda Automatic Loom Works, Ltd.). Toyota
became a separate company in August 1937. In 1982, the Toyota Motor Company and Toyota Motor Sales
merged into one company, the Toyota Motor Corporation of today. As of March 31, 2019, Toyota operated
through 608 consolidated subsidiaries (including variable interest entities) and 201 affiliated companies, of which
63 companies were accounted for through the equity method.
See “— Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s
principal capital expenditures and divestitures between April 1, 2016 and March 31, 2019 and information
concerning Toyota’s principal capital expenditures and divestitures currently in progress.
Toyota’s principal executive offices are located at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571,
Japan. Toyota’s telephone number in Japan is +81-565-28-2121.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements,and other information regarding issuers that file electronically with the SEC. Toyota also maintains a website(https://global.toyota/en/) through which its annual reports on Form 20-F and certain of its other SEC filings may
be accessed. Information contained on or accessible through Toyota’s website is not part of this annual report on
Form 20-F.
4.B BUSINESS OVERVIEW
Toyota primarily conducts business in the automotive industry. Toyota also conducts business in financeand other industries. Toyota sold 8,977 thousand vehicles in fiscal 2019 on a consolidated basis. Toyota had net
revenues of ¥30,225.6 billion and net income attributable to Toyota Motor Corporation of ¥1,882.8 billion in
fiscal 2019.
Toyota’s business segments are automotive operations, financial services operations and all otheroperations. The following table sets forth Toyota’s sales to external customers in each of its business segments
for each of the past three fiscal years.
Yen in millions
Year Ended March 31,
2017
2018
2019

Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,032,229
1,783,697
781,267

26,347,229
1,959,234
1,073,047

27,034,492
2,120,343
1,070,846

Toyota’s automotive operations include the design, manufacture, assembly and sale of passenger vehicles,
minivans and commercial vehicles such as trucks and related parts and accessories. Toyota’s financial services
business consists primarily of providing financing to dealers and their customers for the purchase or lease of
Toyota vehicles. Toyota’s financial services business also provides mainly retail installment credit and leasing
through the purchase of installment and lease contracts originated by Toyota dealers. Related to Toyota’s
automotive operations, Toyota is working towards having all of its vehicles become connected vehicles, creating
new value and reforming businesses by utilizing big data obtained from those connected vehicles, andestablishing new mobility services. Toyota’s all other operations business segment includes the design andmanufacture of prefabricated housing and information technology related businesses including a web portal for
automobile information called GAZOO.com, etc. Please see “— Automotive Operations — Realizing a Smart
Mobility Society that expands through connected car technologies — Connected with people (COMFORT) —Connected Service” for details on GAZOO.com.
8Toyota sells its vehicles in approximately 190 countries and regions. Toyota’s primary markets for its
automobiles are Japan, North America, Europe and Asia. The following table sets forth Toyota’s sales to externalcustomers in each of its geographical markets for each of the past three fiscal years.
Yen in millions
Year Ended March 31,
2017
2018
2019

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,798,903
10,033,419
2,517,601
4,279,617
1,967,653

9,273,672
10,347,266
2,940,243
4,497,374
2,320,955

9,520,148
10,585,934
3,055,654
4,832,392
2,231,553* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
During fiscal 2019, 24.8% of Toyota’s automobile unit sales on a consolidated basis were in Japan, 30.6%
were in North America, 11.1% were in Europe and 18.7% were in Asia. The remaining 14.8% of consolidated
unit sales were in other markets.
The Worldwide Automotive Market
Toyota estimates that annual worldwide vehicle sales totaled approximately 97 million units in 2018.
Automobile sales are affected by a number of factors including:•social, political and economic conditions;•introduction of new vehicles and technologies; and•costs incurred by customers to purchase and operate automobiles.

These factors can cause consumer demand to vary substantially from year to year in different geographic
markets and in individual categories of automobiles.
In fiscal 2019, the U.S. saw steady employment growth which supported consumer spending, economies in
Europe remained solid under monetary easing measures, and Japan continued to experience a favorable
employment environment supporting consumption. On the other hand, China slowed down due to credit
contraction triggered by interest-rate hikes in the U.S., and emerging countries in Asia and other regions also saw
a slowdown in consumption owing to a concern over a possible recession.
In the automotive industry during 2018, with respect to developed countries, the automotive market
remained unchanged from the previous year in the United States mainly due to the effect of interest-rate hikes,
while it also remained flat in Europe as the U.K. market shrank. In Japan, demand expanded due primarily to theintroduction of new models. The automotive market in China shrank for the first time in 20 years, and as a result,even though India and other emerging countries saw their markets expand, the automotive markets as a wholeremained unchanged from the previous year.
In the medium- to long-term, Toyota expects the automotive market to continue growing driven principallyby growth in China and other emerging markets. Global competition is expected to be severe, as competition incompact and low-price vehicles intensifies, and the pace of technological advancement and development of new
products quickens, including in response to a heightened global awareness of the environment and more stringent
fuel economy standards.
In 2018, China, North America, Europe and Asia were the world’s largest automotive markets. The share ofeach market across the globe, which Toyota estimates based on the available automobile sales data in each9

country and region information, was 29% for China, 22% for North America (21% excluding Mexico and Puerto
Rico), 22% for Europe and 11% for Asia. In China, new vehicle sales decreased to approximately 28.2 million
units. In North America, new vehicle sales were approximately 21.2 million units, largely unchanged from theprevious year. In Europe, new vehicle sales also remained largely flat at approximately 21.3 million units. In
Asia (including India but excluding Japan and China), new vehicle unit sales increased from the previous year to
approximately 10.7 million units.
The worldwide automotive industry is affected significantly by government regulations aimed at reducing
harmful effects on the environment, enhancing vehicle safety and improving fuel economy. These regulations
have added to the cost of manufacturing vehicles. Many governments also mandate local procurement of partsand components and impose tariffs and other trade barriers, as well as price or exchange controls as a means ofcreating jobs, protecting domestic producers or influencing their balance of payments. Changes in regulatory
requirements and other government-imposed restrictions can limit or otherwise burden an automaker’s
operations. Government laws and regulations can also make it difficult to repatriate profits to an automaker’s
home country.
The development of the worldwide automotive market includes the continuing globalization of automotive
operations. Manufacturers seek to achieve globalization by localizing the design and manufacture of automobiles
and their parts and components in the markets in which they are sold. By expanding production capabilities
beyond their home markets, automotive manufacturers are able to reduce their exposure to fluctuations in foreignexchange rates as well as to trade restrictions and tariffs.
Over the years, there have been many global business alliances and investments entered into between
manufacturers in the global automotive industry. There are various reasons behind these transactions including
the need to address excessive global capacity in the production of automobiles, and the need to reduce costs andimprove efficiency by increasing the number of automobiles produced using common vehicle platforms and by
sharing research and development expenses for environmental and other technology, the desire to expand acompany’s global presence through increased size and the desire to expand into particular segments orgeographic markets.
Toyota believes that its research and development initiatives, particularly the development ofenvironmentally friendly new vehicle technologies, vehicle safety and information technology, provide it with astrategic advantage.
Toyota’s ability to compete in the global automotive industry will depend in part on Toyota’s successful
implementation of its business strategy. This is subject to a number of factors, some of which are not in Toyota’s
control. These factors are discussed in “Operating and Financial Review and Prospects” and elsewhere in thisannual report.
Toyota Global Vision
In March 2011, Toyota unveiled its “Toyota Global Vision” corporate outline for the future, which serves
not only to give direction to Toyota employees around the world, but also to convey such direction to customers
and to the public at large. Toyota will work to achieve sustained growth through the realization of the following
ideals which are parts of the Vision:
Toyota Global Vision
Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most
responsible ways of moving people.
Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed
expectations and be rewarded with a smile.
10

We will meet challenging goals by engaging the talent and passion of people, who believe there is always abetter way.
“The safest and most responsible ways of moving people”•

Safety is Toyota’s highest priority, and Toyota will continue to provide world-class safety.

•

Toyota will also continue to contribute to environmental quality and to human happiness by using
leading environmental technology and by deploying that technology in a growing line of vehicle
models. At the same time, Toyota will work through the provision of products, sales and services thatexceed customer expectation to offer a rewarding experience for customers.

“Enriching lives around the world”•

Toyota has been consistently true to its founding spirit of serving society through conscientious
manufacturing, and it will continue working in that spirit to contribute to enhance the quality of life
wherever it has operations.

•Toyota will strive to continue contributing to economic vitality wherever it has operations by generating
stable employment and by participating in mutually beneficial business relationships with dealers andsuppliers. It will also strive to continue to actively engage in initiatives for human resources
development and the promotion of cultural activities of its host communities.

“Lead the way to the future of mobility”•

Toyota will lead the industry in technological development that will spawn next-generation mobility.
For example, it will explore possibilities in personal mobility and in the convergence of information
technology for automobiles and “smart grids” for optimizing energy generation and consumption.
Toyota will strive to offer products and services that match the needs in each market.

•

Toyota will strive to advance environmental technology and develop low-carbon technologies andtechnologies for maximizing safety through interaction with the transport infrastructure to lay afoundation for sustainable and amenable future mobility.

“Our commitment to quality, constant innovation”•

Toyota is committed to providing quality vehicles that are highly reliable and driven with a sense ofsafety and reliability.

•

Toyota will constantly reinvent itself and continue to engage in cutting-edge technology development.
Toyota will work towards offering vehicles around the world that address the needs of today and of
tomorrow at affordable prices.

“Respect for the planet”•

Toyota will continue working to minimize environmental impact in its manufacturing and otheroperations, as well as in its products.

•

Toyota’s activities will include conserving energy and reducing output of carbon dioxide, as well as
conserving material resources through recycling; it will also include establishing mindsets andproduction methods appropriate for coexistence with nature.

“Exceed expectations and be rewarded with a smile”•

Everyone at Toyota will continuously maintain a sense of gratitude to customers and will strive to earnsmiles with products and services that are stimulating and inspiring and exceed customer expectations.

11

“There is always a better way”•

All Toyota employees will share the recognition that there is always a better way and share acommitment to continuous improvement, which are fundamental to The Toyota Way.

“Meet challenging goals by engaging the talent and passion of people”•

Toyota will nurture a corporate culture where teamwork and individual creativity thrive and where
people will approach their work with pride and passion.

•

Toyota will honor the spirit of diversity in recruiting, training and promoting capable individuals aroundthe world. Human resources development at Toyota will continue to promote the transfer of thecompany’s monozukuri spirit of conscientious manufacturing and related skills and know-how from one
generation to the next.

Based on these initiatives, the Toyota group will contribute to “enriching lives of communities” byproviding “ever-better cars.” This is expected to encourage more customers to purchase Toyota cars and thereby
lead to the establishment of a stable business base. The automotive industry is facing a time of profoundtransformation that could happen only once in a hundred years in response to significant technological innovationsuch as electrification, connected vehicles and automated driving. Toyota is committed to realizing a mobility
society of the future that enables everyone to enjoy freedom of movement beyond the conventional concept ofvehicles.
Toyota Environmental Challenge 2050
Positioning responding to environmental issues as one of the most prioritized challenges for management,
Toyota has tackled head-on activities such as the development and promotion of next-generation vehicles
including hybrid vehicles (“HVs”) and fuel cell vehicles (“FCVs”), efficient production that puts less of a burden
on the environment, the recycling of end-of-life vehicles and hybrid vehicle batteries, planting trees for thecoexistence of humans and nature in harmony, and conservation of ecosystems.
However, in recent years, the seriousness and reach of environmental issues has increased, as evidenced by
global warming, water shortages, resource depletion, and degradation of biodiversity. In response to the situation,
Toyota believes it is necessary to take on new challenges that consider the world 20 or 30 years in the future, inorder to remain closely aligned with the global environment. Accordingly, Toyota announced Toyota
Environmental Challenge 2050 in October 2015.
In order to contribute to the realization of a sustainable society, the Toyota Environmental Challenge 2050
has set forth the following six challenges for Toyota to address. Those challenges are to reduce CO2 emissions
from driving and producing, as well as throughout the lifecycle of, vehicles, and to ensure a net positive impact
on the Earth and society toward 2050.
1.

New Vehicle Zero CO2 Emissions Challenge

2.

Life Cycle Zero CO2 Emissions Challenge

3.

Plant Zero CO2 Emissions Challenge

4.

Challenge of Minimizing and Optimizing Water Usage

5.

Challenge of Establishing a Recycling-Based Society and Systems

6.

Challenge of Establishing a Future Society in Harmony with Nature

Further strengthening collaboration with the Toyota group and all other stakeholders, Toyota willconsolidate new ideas, dynamism and technology to tackle together the realization of a truly sustainable society
from a long-term perspective.
12

Automotive Operations
Toyota’s revenues from its automotive operations were ¥27,079.0 billion in fiscal 2019, ¥26,397.9 billion in
fiscal 2018 and ¥25,081.8 billion in fiscal 2017.
Toyota produces and sells passenger vehicles, minivans and commercial vehicles such as trucks. Toyota
Motor Corporation’s subsidiary, Daihatsu Motor Co., Ltd. (“Daihatsu”), produces and sells mini-vehicles andcompact cars. Hino Motors, Ltd. (“Hino”), also a subsidiary of Toyota Motor Corporation, produces and sells
commercial vehicles such as trucks and buses. Toyota also manufactures automotive parts, components andaccessories for its own use and for sale to others.
Vehicle Models
Toyota’s vehicles (produced by Toyota, Daihatsu and Hino) can be classified into three categories: HVs,
conventional engine vehicles, and FCVs. Toyota’s product line-up includes subcompact and compact cars, minivehicles, mid-size, luxury, sports and specialty cars, recreational and sport-utility vehicles, pickup trucks,
minivans, trucks and buses.
Toyota has set, as a milestone to strive towards in seeking to realize a low-carbon, sustainable society, atarget of “annual global sales of more than 5.5 million electrified vehicles by 2030.”
Hybrid Vehicles
The world’s first mass-produced hybrid car was Toyota’s Prius. It runs on an efficient combination of agasoline engine and motor. This system allows the Prius to travel more efficiently than conventional engine
vehicles of comparable size and performance. The hybrid design of the Prius also results in the output of
75% less emission than the maximum amount allowed by Japanese environmental regulations. Toyota views thePrius as the cornerstone of its emphasis on designing and producing eco-friendly automobiles.
In the last three years, Toyota has strengthened its hybrid lineup by introducing Auris HV in April 2016,
Prius PHV and the new model C-HR HV in October 2016, the new model LC HV in March 2017, the fully
remodeled Camry HV in June 2017, the fully remodeled LS HV in October 2017 and JPN TAXI, which employs
a newly developed LPG HV, in October 2017, as well as adding the fully remodeled Avalon HV in April 2018,
the fully remodeled Corolla Sport in May 2018, the fully remodeled Crown HV and Century HV in June 2018,
the new model ES HV in October 2018, the new model UX HV in November 2018, the fully remodeled RAV4
HV in December 2018 and the fully remodeled Corolla SD and WG HV in February 2019. In the area of HVs,
where strong growth is seen, Toyota aims to continue its efforts to offer a diverse line-up of HVs, enhance engine
power while improving fuel economy and otherwise work towards increasing the sales of HVs.
Fuel Cell Vehicles
Toyota began limited sales of a fuel cell vehicle in Japan and the United States in December 2002. Since
then, Toyota has made advances by solving technological issues such as the above and worked towards thepractical use of such solutions, culminating in the general sale of the world’s first mass produced fuel cell vehicle
MIRAI in Japan beginning in December 2014, in the United States beginning in June 2015 and in Europe
beginning in September 2015. Toyota also launched “SORA,” the first production model fuel cell bus to receive
vehicle type certification in Japan, in March 2018.
Conventional Engine Vehicles
Subcompact and Compact
Toyota’s subcompact and compact cars include the four-door Corolla sedan, which is one of Toyota’s
bestselling models. The Yaris, marketed as the Vitz in Japan, is a subcompact car designed to perform better and13

offer greater comfort than other compact cars available in the market with low emissions that are particularly
attractive to European consumers. In Europe, Toyota introduced the fully remodeled Corolla in January 2019. In
Japan, Toyota introduced, in addition to the Corolla Sport and Yaris (named Vitz in Japan) which was introducedin May 2018, the Prius C (named Aqua in Japan), as well as Passo, Roomy and Tank, which three vehicles are
OEM vehicles supplied by Daihatsu. In India, Asia, China and other markets, Toyota introduced the Etios andVios, as well as the AGYA and Rush, which are designed and manufactured by Daihatsu, and Yaris iA, which isdesigned and manufactured by Mazda Motor Corporation (“Mazda”).
Mini-Vehicles
Mini-vehicles are manufactured and sold by Daihatsu. Daihatsu manufactures mini-vehicles, passenger
vehicles, commercial vehicles and auto parts. Mini-vehicles are passenger vehicles, vans or trucks with engine
displacements of 660 cubic centimeters or less. Daihatsu sold approximately 577 thousand mini-vehicles and242 thousand automobiles on a consolidated basis during fiscal 2019. Daihatsu’s largest market is Japan, which
accounted for approximately 80% of Daihatsu’s unit sales during fiscal 2019. From 2011, Toyota began to sellsome mini-vehicles manufactured by Daihatsu under the Toyota brand.
Mid-Size
Toyota’s mid-size models include the Camry, which has been the bestselling passenger car in the
United States for 21 of the past 22 calendar years (from 1997 to present) and also for the last 17 consecutive
years. The Camry was fully remodeled in June 2017. Camry sales in the United States for 2018 wereapproximately 343 thousand units (including Camry hybrids). In addition, Toyota’s other mid-size models
include the REIZ for the Chinese market.
Luxury and Large
In North America, Europe, Japan and other regions, Toyota’s luxury lineup consists primarily of vehicles
sold under the Lexus brand name. Lexus passenger car models include the LS, the GS, the ES, the IS, the CT, theLC and the RC. Lexus models also include the LX, the GX, the RX, the NX and the UX sold as luxury sportutility vehicles. Toyota commenced sales of its luxury automobiles in Japan under the Lexus brand in
August 2005. As of March 31, 2019, the Lexus brand lineup in Japan includes the LS, the GS, the ES, the IS, theCT, the LX, the RX, the NX, the UX, the LC and the RC. The Toyota brand’s full-size luxury car, the Avalon,
was remodeled in April 2018, and the Crown was fully remodeled in June 2018. The Lexus brand’s passenger
vehicle ES was fully remodeled in October 2018. Toyota also fully remodeled the Century limousine in Japan inJune 2018.
Sports and Specialty
In March 2017, Toyota introduced LC, the new model flagship coupe for Lexus. Furthermore, in May 2019,
Toyota introduced a new Supra for the first time in 17 years.
Recreational and Sport-Utility Vehicles and Pickup Trucks
Toyota sells a variety of sport-utility vehicles and pickup trucks. Toyota’s sport-utility vehicles available inNorth America include the Sequoia, the 4Runner, the RAV4, the Highlander and the Land Cruiser, and pickup
trucks available are the Tacoma and Tundra. The Tacoma, the Tundra, the Highlander and the Sequoia are
manufactured in the United States. Toyota also offers five types of sport-utility vehicles under the Lexus brand,
including the LX, the GX, the RX, the NX and the UX. Toyota also manufactures the RX and RAV4 models in
Canada. Toyota’s pickup truck, the Hilux, has been the bestselling model of all Toyota cars sold in Thailand. In
May 2015, Toyota introduced the fully remodeled Hilux and in September 2015, it introduced the fully
remodeled RX of the Lexus brand. In October 2016, Toyota introduced C-HR, a model with a focus on bothdesign and drive. Toyota introduced the Lexus brand’s new model UX in November 2018 and the fully
remodeled RAV4 in January 2019.
14

Minivans and Cabwagons
Toyota offers several basic models for the global minivan market. Its largest minivans in Japan, the Alphardand the Vellfire, were remodeled in January 2015. In addition, the Noah/Voxy was remodeled in January 2014
and the new model Esquire was introduced in October 2014 in Japan. The new model Calya, an original
equipment manufacturing (“OEM”) vehicle by Daihatsu, was introduced in July 2016 in Indonesia. Toyota’s
other minivan models include, in Japan, the Estima and the Sienta, and, in North America, the Sienna.
Trucks and Buses
Toyota’s product lineup includes trucks (including vans) up to a gross vehicle weight of five tons and microbuses that are sold in Japan and in overseas markets. Toyota launched “SORA,” a production model fuel cell bus,in Japan in March 2018. Trucks and buses are also manufactured and sold by Hino, a subsidiary of Toyota.
Hino’s product lineup includes large trucks with a gross vehicle weight of over eleven tons, medium trucks witha gross vehicle weight of between five and eleven tons and small trucks with a gross vehicle weight of up to
five tons. Hino’s bus lineup includes medium to large buses used primarily as tour buses and public buses, aswell as small buses and micro-buses.
Product Development
New cars introduced in Japan during fiscal 2019 and thereafter include the new Supra. The remodeled car inJapan during fiscal 2019 and thereafter is the RAV4. New cars introduced outside of Japan during fiscal 2019
and thereafter include the Lexus UX. Remodeled cars outside of Japan during fiscal 2019 and thereafter include
the Corolla, the RAV4, the Hiace, and the Lexus ES.
In addition, the IMV product lineup based on the IMV project to optimize global manufacturing and supply
systems is a lineup of strategic multipurpose vehicles produced from a single platform to meet market demand.
The IMV product lineup includes, as of March 31, 2019, the Hilux, Fortuner, and Innova, one or all of which areavailable in all regions.
Markets, Sales and Competition
Toyota’s primary markets are Japan, North America, Europe and Asia. The following table sets forth
Toyota’s consolidated vehicle unit sales by geographic market for the periods shown. The vehicle unit sales
below reflect vehicle sales made by Toyota to unconsolidated entities (recognized as sales under Toyota’s
revenue recognition policy), including sales to unconsolidated distributors and dealers. Vehicles sold by Daihatsu
and Hino are included in the vehicle unit sales figures set forth below.
2015
Units

MarketJapan . . . . . . . . . . . 2,153,694
North America . . . . 2,715,173
Europe . . . . . . . . . . 859,038
Asia . . . . . . . . . . . . 1,488,922
Other* . . . . . . . . . . 1,755,037

%

2016
Units

24.0% 2,059,093
30.3 2,839,229
9.6
844,41216.6 1,344,836
19.5 1,593,758%

Year Ended March 31,
2017
Units
%

23.7% 2,273,962
32.7 2,837,334
9.7
924,560
15.5 1,587,822
18.4 1,347,182

2018
Units

25.4% 2,255,313
31.6 2,806,467
10.3
968,07717.7 1,542,806
15.0 1,391,731

%

2019
Units

25.2% 2,226,177
31.3 2,745,047
10.8
994,060
17.2 1,684,494
15.5 1,327,017

%

24.8%
30.6
11.1
18.7
14.8

Total . . . . . . . . . . . . . . . . 8,971,864 100.0% 8,681,328 100.0% 8,970,860 100.0% 8,964,394 100.0% 8,976,795 100.0%* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

15

The following table sets forth Toyota’s vehicle unit sales and market share in Japan, North America, Europe
and Asia on a retail basis for the periods shown. Each market’s total sales and Toyota’s sales represent new
vehicle registrations in the relevant year (except for the Asia market where vehicle registration does notnecessarily apply). All information on Japan excludes mini-vehicles. The sales information contained below
excludes unit sales by Daihatsu and Hino, each a consolidated subsidiary of Toyota. Vehicle unit sales in Asia do
not include sales in China.

2015

Japan:
Total market sales (excluding mini-vehicles) . . . . . . . . . . . . .
Toyota sales (retail basis, excluding mini-vehicles) . . . . . . . .
Toyota market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Thousands of Units)
Fiscal Year Ended March 31,
2016
2017
2018

2019

3,126
3,126
3,360
3,340
3,339
1,439
1,462
1,607
1,565
1,532
46.0% 46.8% 47.8% 46.9% 45.9%(Thousands of Units)
Calendar Year Ended December 31,
2014
2015
2016
2017
2018

North America:
Total market sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota sales (retail basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,597 20,804 21,191 20,887 21,186
2,670
2,817
2,798
2,791
2,798
13.6% 13.5% 13.2% 13.4% 13.2%

Europe:Total market sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota sales (retail basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,397 18,971 19,968 20,721 21,324
888
874
928
1,002
1,035
4.8%
4.6%
4.6%
4.8%
4.9%

Asia (excluding China):
Total market sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota sales (retail basis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,785
9,287
9,541 10,078 10,710
1,324
1,249
1,305
1,318
1,365
15.1% 13.4% 13.7% 13.1% 12.7%

Japan
Japan is one of the leading countries with respect to technological advancements and improvements in theautomotive industry and will continue to demonstrate such strength. Toyota strives to earn customer satisfaction
by introducing products distinctive of Japan’s manufacturing ability such as value-added products including
Lexus models, FCVs, plug-in hybrid vehicles (“PHVs”) and HVs, vehicles with 3-seat rows and mini-vehicles.
Toyota’s consolidated vehicle sales in Japan in fiscal 2019 was 2,226 thousand units, a decrease of 29 thousand
units in comparison with the previous year. Toyota endeavors to secure and maintain its large share of andposition atop the Japanese market. Toyota held a domestic market share (excluding mini-vehicles) on a retailbasis of 47.8% in fiscal 2017, 46.9% in fiscal 2018 and 45.9% in fiscal 2019.
Although Toyota’s principle is to conduct production in regions where it enjoys true competitiveness, itconsiders Japan to be the source of its good manufacturing practices. Toyota supports its operations worldwide
through measures such as the development of new technologies and products, low-volume vehicles tocomplement local production, production of global vehicle models which straddle multiple regions andsupporting overseas factories. Toyota will continue the implementation of the new platform and the new unit for
the Toyota New Global Architecture (“TNGA”) globally, with Japan at the core. In Japan, Toyota is
implementing flexible production based on market needs, in order to support its large share of domestic sales.
Toyota also plans to close the Higashi Fuji plant of Toyota Motor East Japan, Inc. at the end of December 2020and consolidate its production in northeastern Japan so that the competitiveness of the Japanese “manufacturing(monozukuri)” will be further strengthened on a continuing basis.
16

Since Toyota formed an alliance with SUBARU CORPORATION (“SUBARU”) in 2005, Toyota and
SUBARU have utilized each other’s resources in development and production. In July 2008, SUBARU
transferred 61 million SUBARU shares owned by SUBARU to Toyota with the aim to promote smoothcollaboration. As a result of this transfer, Toyota owns 16.5% of SUBARU issued shares. While Toyota vehicles
had been manufactured at SUBARU’s North American production center, Subaru of Indiana Automotive, Inc.
(“SIA”), since 2007, Toyota and SUBARU ceased such production in May 2016, and the collaboration between
Toyota and SUBARU shifted to collaboration focusing on products and technology.
In 2011, Toyota and the BMW Group agreed to conduct collaborative research in the field of nextgeneration lithium-ion battery technologies and for BMW to supply diesel engines to Toyota Motor Europe,
Toyota’s European subsidiary. In 2013, as part of their strategic long-term cooperation in the field of sustainablemobility, Toyota and BMW Group entered into agreements for the joint development of a fuel cell system, joint
development of architecture and components for sports vehicles and joint research and development oflightweight technologies. The two companies completed collaborative research on lithium-air batteries, a postlithium-battery solution as planned by conducting the second phase of collaborative research into next-generation
lithium-ion battery cells. The supply of diesel engines by BMW from 2014 through 2018 was completed asplanned under the agreement. As a result of the joint development of sports vehicles, the production of new
Supra commenced in March 2019.
Toyota and Mazda have been engaged in collaboration such as the licensing of Toyota’s hybrid technologies
to Mazda and the production of compact cars for Toyota at Mazda’s plant in Mexico. In May 2015, towards thegoal of making cars with more appeal, Toyota and Mazda entered into an agreement to build a long-term
partnership that would create synergies for both companies through such means as leveraging the resources ofboth companies and complementing each other’s products and technologies. After subsequent discussions,Toyota signed an agreement to enter into a business and capital alliance with Mazda in August 2017. As part ofthis business and capital alliance, the companies agreed to mutually acquire shares of the other company with theaim of advancing and strengthening their long-term collaboration, as well as to: 1) establish a joint venture that
produces vehicles in the United States, 2) jointly develop technologies for electric vehicles (“EVs”), 3) jointly
develop connected-car technology, 4) collaborate on advanced safety technologies and 5) expand replenishmentof products. Pursuant to this agreement, in October 2017 Toyota and Mazda mutually acquired 50 billion yen
worth of shares of each other. Toyota also established EV C.A. Spirit Corporation with Mazda and Denso
Corporation (“Denso”) to jointly develop basic structural technologies for EVs. Furthermore, in March 2018,
Toyota and Mazda established Mazda Toyota Manufacturing, U.S.A., Inc., a new joint venture company, toproduce vehicles in the United States starting in 2021.
In February 2017, Toyota and Suzuki Motor Corporation (“Suzuki”), aiming to contribute jointly toresolution of social issues and achievement of the sound and sustainable development of an automobile-basedsociety, entered into a memorandum of understanding on beginning concrete examination of a business
partnership. In November 2017, the two companies agreed to move forward in considering a cooperative
structure for introducing EVs in India, and in March 2018, concluded a basic agreement toward the mutual
supply of products. In May 2018, Toyota and Suzuki agreed that Toyota will provide Suzuki development
support for a compact, ultrahigh-efficiency powertrain, to have Toyota Kirloskar Motor Private Ltd. (“TKM”)
produce models developed by Suzuki and to collaborate with respect to African markets. In addition, in March
2019, Toyota and Suzuki began considering the concrete details of collaboration in new areas, such as
collaboration in the area of production and promotion of the widespread use of electrified vehicles, by bringing
together Toyota’s strength in technologies for electrification and Suzuki’s strength in technologies for compact
vehicles.
In December 2017, Toyota and Panasonic entered into an agreement to study the feasibility of a joint
automotive prismatic battery business. Having repeatedly held discussions since then on the concrete details of
their collaboration to achieve high-capacity and high-output automotive prismatic batteries that lead the industry
in terms of both performance and cost as well as to contribute to the popularization of Toyota’s and other17

automakers’ electrified vehicles, in January 2019, Toyota and Panasonic agreed to establish a joint venture
related to the automotive prismatic battery business. Specifically, the two companies agreed that the scope of thejoint venture’s business operations will cover research, development, manufacturing and others, related toautomotive prismatic lithium-ion batteries, solid-state batteries and next-generation batteries and that the joint
venture will integrate management and other resources from both companies. Toyota and Panasonic are working
to establish the joint venture (pending approval from competition-law authorities in relevant countries andregions) by the end of 2020.
In June 2018, Toyota and Denso agreed to begin to consider consolidating the core electronic component
operations of both companies within Denso, and entered into a formal agreement concerning this in April 2019.
On April 1, 2020, the production of electronic components at Toyota’s Hirose Plant, as well as the electronic
components development functions, will be consolidated within Denso. In doing so, the companies aim toestablish a speedy and competitive development and production structure.
In April 2019, as part of the initiative to further promote the widespread use of EVs, Toyota announced that
it will grant royalty-free licenses on the patents it holds (including some pending applications) for vehicle
electrification-related technologies, such as electric motors, power control units (PCUs), and system controls.
Toyota also announced that it will provide technical support to other manufacturers developing andmanufacturing electrified vehicles when they utilize Toyota’s power train systems.
In Japan, there are five major domestic manufacturers, five specialized domestic manufacturers and a
growing volume of imports from major United States and European manufacturers. The prolonged economic
slump in the Japanese economy and the recent increases in environmental awareness have also shifted consumer
preference towards more affordable automobiles such as compact and subcompact vehicles and towards utility
vehicles such as mini-vans. For more than 40 years, Toyota has maintained its position as the largest automobile
manufacturer in Japan. Every year since fiscal 1999, Toyota, excluding Daihatsu and Hino, has achieved amarket share (excluding mini-vehicles) of over 40%, reflecting in part the success of the introduction of newmodels for subcompact and compact cars, mini-vans and sedans. In August 2005, Toyota launched the Lexus
brand in Japan and achieved a record top market share of 25.6% in the luxury market in 2011. Toyota aims tofurther distinguish the Lexus brand by continuing to attract new and affluent customers including customers thattypically had purchased imported vehicles.
North America
The North American region is one of Toyota’s most significant markets. Toyota has reorganized its
production structure and made improvements to its product lineup. In addition, Toyota is actively working topromote increased local operations independence in North America, in accordance with the Toyota Global
Vision, announced in 2011.
In the North American region, of which the U.S. is the main market, Toyota has a wide product lineup(excluding large trucks and buses), and sold 2,745 thousand vehicles on a consolidated basis in fiscal 2019. This
represents approximately 31% of Toyota’s total unit sales on a consolidated basis. The U.S., in particular, is thelargest market in the North American region, which accounts for 86% of the retail sales of Toyota in such region.
Sales figures for fiscal 2019 were 97.8% of those in the prior fiscal year.
Toyota commenced sales of the first-generation Prius hybrid model in North America in 2000. The Prius
became Toyota’s bestselling model behind the Corolla and Camry, having gained particular support amongcustomers concerned with the environment. Toyota continued further expansion of its environmentally friendly
vehicles with the introduction of models such as, the fully remodeled all-new Prius and the all-new fuel cellvehicle MIRAI in 2015, the Prius PHV in 2016, the Camry HV in 2017 and the fully remodeled Avalon HV andRAV4 HV in 2018.
18

Since the introduction of the LS and ES models under the premium brand model, Lexus, in the United Statesin 1989, Toyota has expanded its Lexus sales with models including the GS, IS and RX. Toyota sold
311 thousand units through the introduction of the new NX and RC models in 2014, 344 thousand units throughthe introduction of the new RX model in 2015, 352 thousand units in 2016, 305 thousand units in 2017 and298 thousand units in 2018, when the new model UX and the fully remodeled ES were introduced.
Toyota is continuing to revise its vehicle models and North American production capacities in response tochanges in market conditions. Through the business alliance with Mazda Motor Corporation, the production of
Toyota brand compact cars for sale mainly in North America began at Mazda’s plant in Mexico in June 2015. In
addition, Toyota commenced production of the Lexus ES350 at its Kentucky plant for sale in the North America
market starting in October 2015. Toyota also launched the all-new Camry with the first TNGA platform in North
America at the Kentucky plant in 2017 and redesigned Avalon into an all-new model in 2018. Toyota plans toincrease the production capacity of the Tacoma from 100,000 to 160,000 in Baja California, Mexico in 2018 andof the Highlander at its Indiana plant in 2019. Toyota’s Mississippi plant started production of the remodeled
new Corolla with the TNGA platform in 2019. In the meantime, consignment production that started at SIA in2007 ceased in May 2016.
In terms of auto parts, Toyota increased production capacity of engine plants in Kentucky and Alabama in2013 and 2014, respectively, to meet rising demand, and also increased production capacity of auto parts at its
automatic transmission plant in West Virginia in 2014.
In order to further strengthen competitiveness in North America, Toyota will continue the realignment ofNorth American manufacturing operations going forward. As part of this effort, a new plant will be built in
Mexico in 2019 to produce the Tacoma. Furthermore, production of the Corolla is planned to commence at a newplant in Alabama that will be established by the joint venture with Mazda around 2021. In addition to the plant in
Mississippi, compact cars will also be produced at the new plant in Alabama. Toyota will focus its production of
mid-sized vehicles in the plant in Canada, along with the plants in Indiana and Kentucky, by commencing
production of the mid-sized SUV RAV4 instead of the Corolla in Canada starting in 2019. Toyota is also
considering production of the RAV4 at the Kentucky plant in order to catch up with the expanding SUV market.
For powertrains, Toyota plans to start producing 120,000 hybrid transaxles (hybrid vehicle transmissions)
per year at its West Virginia plant starting in 2020 and further increase the production capacity by 120,000 units
per year in 2021. Toyota also plans to raise the production capacity of four-cylinder engines and V6 engines by
230,000 units by 2021.
As for Toyota’s vehicle development in North America, the Toyota Technical Center spearheads the design,planning, and evaluation of vehicles and parts as to their ability to meet customer needs. Toyota will continue topromote self-reliance towards producing even better cars in the future.
In July 2017, Toyota launched its new North American headquarters in Plano, Texas and unified its North
American manufacturing, sales and marketing, financial services and other functions. Toyota plans to promotecollaboration and efficiencies across functions, position itself to deliver “ever-better cars” to customers and work
towards realizing sustainable growth in the North America market.
EuropeToyota’s principal European markets are Germany, France, the United Kingdom, Italy, Spain and Russia.
Toyota’s principal competitors in Europe are Volkswagen, Renault, Ford, Opel and Peugeot, as well as Korean
manufacturers Hyundai and Kia.
While competition in Europe continues to intensify, Toyota has expanded its lineup of hybrid models tofurther strengthen its sales operations, and has entered into supply agreements with PSA for light commercial
vehicles. To strengthen its business setup so that it is less likely to be affected by exchange rates, Toyota
19launched RAV4 for Russia at OOO “TOYOTA MOTOR” (“TMR”) and C-HR at Toyota Motor Manufacturing
Turkey Inc. (“TMMT”) in 2016 in the form of local production. In addition, Toyota is actively promoting
production and sales measures that meet local demand by strengthening its value chain including used car
dealerships, after-sales services and finance and insurance services.
In 2018, the European automotive market remained unchanged from the previous year as the growth of theRussian, French, Spanish, Polish and other European markets made up for the sluggish market in Turkey and theUnited Kingdom.
Toyota sales in 2018 in Europe exceeded the previous year due to an increase in units sold for the Camryand the Fortuner in Russia as well as higher sales in principal markets such as France and Spain from the sales
expansion of hybrid core models including C-HR and Yaris. Sales in Poland, Baltic countries, Hungary and
Kazakhstan hit a new record. Toyota’s consolidated vehicle sales in Europe in fiscal 2019 was 994 thousand
units, an increase of 2.7% from fiscal 2018.
Toyota has increased European production capacity in response to sales growth. For example, in August
2016, Toyota increased the production capacity in Russia to 100,000 units and the production of the RAV4
commenced in addition to the Camry. Also, Toyota commenced production of the compact crossover C-HR byincreasing the annual production capacity of TMMT from 150,000 units to 280,000 units (three-shift) in
September 2016.
In terms of model change, Toyota Motor Manufacturing (UK) Ltd. (“TMUK”) and TMMT implemented amodel change for the Corolla in 2018 and 2019, respectively. Also, in Russia, Toyota redesigned the Camry into
an all-new model with the TNGA platform in April 2018.
In terms of auto parts, in October 2016, Toyota decided to produce hybrid transaxles and gasoline engines in
Poland. Toyota started production of hybrid transaxles in 2018 at Toyota Motor Manufacturing Poland(“TMMP”), a production plant for transmissions and engines, and add two gasoline engines — a 1.5L in 2017and a 2.0L in 2019 — at Toyota Motor Industries, Poland (“TMIP”), a production plant for diesel engines. In
concert with the enhancement of the gasoline engine business, the two companies were integrated in April 2017.
Asia
Toyota’s consolidated vehicle sales in Asia (including China) in fiscal 2019 was 1,684 thousand units, anincrease of 9.2% from fiscal 2018.
In light of the importance of the Asian market that is further expected to grow in the long term, Toyota aims
to build an operational framework that is efficient and self-reliant as well as a predominant position in theautomotive market in Asia. Toyota has responded to increasing competition in Asia by making strategic
investments in the market and developing relationships with local suppliers. Toyota believes that its existing
local presence in the market provides it with an advantage over new entrants to the market and expects to be able
to promptly respond to demand for vehicles in the region.
In this region, Toyota has been further strengthening its business foundations by improving its productline-up, expanding local procurement and increasing production capacities.
Toyota’s principal Asian markets are Thailand, India, Indonesia, Malaysia and Taiwan.
In Thailand, Toyota has three plants capable of producing approximately 800 thousand units per year, notonly to meet domestic demands but to serve as a production base for regions inside and outside the ASEAN
region, and produces and exports the Hilux, the Hiace, the Corolla, the Camry and the Vios. In February 2018,
Toyota started production of the C-HR at its second Gateway plant, in response to the diversification of market
needs. Regarding the existing models, Toyota implemented a model change for the Camry in 2018 and for the
Hiace in 2019, and is steadily working on the redesigning of such models.
20

In India, Toyota constructed a second plant with an annual production capacity of 70 thousand units in 2011and has increased the production capacity as necessary up to 210 thousand units. In 2018, Toyota newly launched
the Yaris compact model in such second plant. Moreover, in line with the global redesigning of the Camry,
Toyota implemented a model change in India and began producing the TNGA model as well.
In Indonesia, Toyota introduced the Etios and commenced operation of a second plant in Karawang in 2013
in order to meet the diverse customer needs and the expanding market. Currently, Toyota is producing the Vios,
the Yaris and the Sienta, and the initial production capacity of 70 thousand units per year has become
120 thousand units per year. Similar to the plant in Thailand, PT Toyota Motor Manufacturing Indonesia(“TMMIN”) is positioned as a production base for regions inside and outside of the ASEAN region, including the
production of Innova and the Fortuner at the first plant. Toyota also constructed a passenger vehicle engine plantthat commenced production in February 2016.
In Malaysia, Toyota built a new plant dedicated to passenger vehicles to transfer the production of the Vios
thereto in 2019. The existing plant was converted into a plant dedicated to commercial vehicles and the
production framework was reorganized accordingly. In addition, in 2016 Toyota began production and sales of
the Sienta in Taiwan in response to diversifying demands.
In March 2019, Toyota implemented a model change for Corolla in Taiwan.
China
Toyota has been conducting operations in China through joint ventures, and its success in producing
products that meet local demands and in establishing its sales and service network has significantly contributed to
Toyota’s profits. Based on the firm business foundation that it has established, Toyota is conducting its
operations with the aim of promoting further growth and increasing profitability through further development of
its sales and service network and expansion of its product lineup.
In China, Toyota has been conducting joint ventures with two major partners, namely, China FAW Group
Corporation and Guangzhou Automobile Group Co., Ltd. First, with respect to the joint venture with China FAWGroup Corporation, from when production and sales of the Vios started in 2002, production and sales of the Land
Cruiser Prado, the Corolla, the Crown, the Coaster and the RAV4 has expanded to include such models. The joint
venture has developed production bases in three regions, namely, Tianjin, Changchun and Sichuan, and in
Tianjin, the joint venture completed the construction of a new production line to replace an aging existing line in
the Teda area in June 2018, and introduced the new-model SUV IZOA, which is a TNGA platform vehicle. In
Changchun, where the new plant was launched in 2012, the initial production capacity of 100 thousand units per
year has now become 130 thousand units per year. The joint venture also increased annual production capacity ofthe plant in Sichuan from 30 thousand units to 50 thousand units in the spring of 2015 to increase production of
the Prado, and is steadily increasing its production capacity of these three plants, which on an aggregate basis iscurrently approximately 690 thousand units per year. In addition, the joint venture sought to improve production
efficiency by closing small, aging production lines at the Changchun East Plant of Sichuan FAW Toyota MotorCo., Ltd. in December 2016 and the Xiqing Plant of Tianjin FAW Toyota Motor Co., Ltd. in February 2017.
GAC Toyota Motor Co., Ltd. (“GAC Toyota”), a joint venture between Toyota and Guangzhou Automobile
Group Co., Ltd., expanded the production and sales of the Camry, the Yaris, the Highlander, the Levin, etc. With
regard to production capacity, GAC Toyota has an annual production capacity of approximately 560 thousand
units in total due to starting a third plant in early 2018 in addition to the existing first and second plant. GAC
Toyota redesigned the Camry in 2017 and the C-HR in 2018 into an all-new model with the TNGA platform as
well as launched new models.
In terms of auto parts, in 2014, Toyota opened a plant in Changshu in Jiangsu, China for the production of
the Continuously Variable Transmission (“CVT”) as the first CVT plant outside of Japan and in September 2015,
Toyota also began production of HV Transaxles at the CVT plant. Toyota also launched a plant to produce
hybrid vehicle batteries in October 2015.
21

Total vehicle sales in the Chinese market decreased 4% from 29.28 million in 2017 to 28.23 million in 2018.
In this market, Toyota’s sales in 2018 were 1.48 million vehicles, up 14% from the previous year. In thedomestically produced passenger vehicle market in mainland China (22.85 million units), Toyota had a market
share of 6%. In 2018, sales of SUVs expanded as a result of customers’ value diversification. As for Toyota’s
distribution network, Toyota has been expanding the distribution network for locally produced vehicles incooperation with Chinese joint venture partners under Tianjin FAW Toyota Motor Co., Ltd. and Guanqi Toyota
Motor Co., Ltd., and for imported vehicles, Toyota has also been expanding primarily the Lexus brand sales
network. Toyota plans to further increase sales by expanding the number of dealers and the product lineup forboth locally produced and imported vehicles. In addition, as the market in China develops and becomes moresophisticated, Toyota plans to promote the so-called “Value Chain” businesses such as used cars, services,financing and insurance so as to contribute to the development of a mobility society.
South and Central America, Oceania, Africa and the Middle East
Toyota’s consolidated vehicle sales in South and Central America, Oceania, Africa and the Middle East
(collectively, the “Four Regions”) in fiscal 2019 were 1,327 thousand units, a decrease of 4.6% from fiscal 2018.
In these regions, which are expected to become increasingly important to Toyota’s business strategy, Toyota
aims to develop new products which meet the specific demands of each region, increase production and further
promote sales.
Toyota’s principal markets in the Four Regions are Brazil in South and Central America, Australia in
Oceania, South Africa in Africa and Saudi Arabia in the Middle East.
The core models in this region are global models such as the Corolla, IMV (the Hilux) and Camry. In order
to increase production of IMVs, Toyota increased annual production capacity of the plant in Argentina to
140 thousand units per year at the end of 2015. In order to expand business in Brazil, Toyota constructed a newfactory in Sorocaba with an annual production capacity of 70 thousand units, and in 2012, began production andsales of compact vehicles. Starting from the beginning of 2016, Toyota increased production capacity to
110 thousand units per year and started production of the Yaris from June 2018.
Moreover, in terms of auto parts, Toyota commenced production at a plant in Brazil for passenger vehicle
engines in February 2016.
Production
Toyota and its affiliated companies produce automobiles and related parts and components through morethan 50 overseas manufacturing companies in 27 countries and regions besides Japan. Toyota’s major
manufacturing facilities include plants in Japan, the United States, Canada, the United Kingdom, France, Turkey,
Thailand, China, Taiwan, India, Indonesia, South Africa, Argentina and Brazil. Daihatsu brand vehicles areproduced at four factories in Japan and two manufacturing companies in two other countries of Indonesia andMalaysia. Hino brand vehicles are produced at four factories in Japan and 11 manufacturing companies in
11 countries, including Indonesia and Thailand, and Toyota is planning to increase the bases in the U.S. andRussia. For a listing of Toyota’s principal production facilities, see “Information on the Company — Property,
Plants and Equipment.”
In promoting a sustainable growth strategy, establishing a system capable of providing optimal supply of
products in the global market is integral to Toyota’s strategy.
In line with its basic policy of manufacturing in countries or regions where there is demand and where
Toyota is truly competitive, Toyota will make efficient use of and maximize capacity utilization at its existing
plants to respond to the expanding market and will continue to focus on making efficient capital investments asnecessary. Furthermore, Toyota will continue to place top priority on safety and quality in strengthening truecompetitiveness with the aim of achieving sustainable growth.
22

In 2017, 75.9% of Toyota vehicles sold in overseas markets were manufactured in overseas plants by
Toyota and its unconsolidated affiliated companies. In 2017, approximately 71.1% of Toyota vehicles sold in
North America were produced in North America. Of the vehicles sold in Europe in 2017, approximately 81.5%
were produced in Europe. In fiscal 2019, Toyota produced on a consolidated basis 4,309 thousand vehicles inJapan and 4,676 thousand vehicles overseas, compared to 4,286 thousand vehicles in Japan and 4,678 thousand
vehicles overseas in fiscal 2018.
The following table shows Toyota’s worldwide vehicle unit production by geographic market for theperiods shown. These production figures do not include vehicles produced by Toyota’s unconsolidated affiliatedcompanies. The sales unit information elsewhere in this annual report includes sales of vehicles produced bythese affiliated companies. Vehicles produced by Daihatsu and Hino are included in the vehicle production
figures set forth below.

Units Produced
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,
2017
2018

2015

2016

4,124,593
1,932,618
556,462
1,829,048
487,166
8,929,887

3,980,576
1,970,053
564,934
1,605,345
454,991
8,575,899

4,109,038
2,062,862
637,352
1,674,468
491,789
8,975,509

4,285,844
1,902,304
681,048
1,601,473
493,464
8,964,133

2019

4,308,903
1,840,502
679,380
1,681,783
474,618
8,985,186* “Other” consists of Central and South America, Oceania and Africa.
Toyota closely monitors its actual units of sale, market share and units of production data and uses thisinformation to allocate resources to existing manufacturing facilities and to plan for future expansions.
See “— Capital Expenditures and Divestitures” for a description of Toyota’s recent investments incompleted plant constructions and for a description of Toyota’s current investments in ongoing plant
constructions.
The Toyota Production System
Toyota pioneered the internationally recognized production system known as the “Toyota Production
System” (“TPS”). The TPS is based on Toyota’s own concepts of efficient production of only necessary andquality products and efficient cost reduction, and has the following two principal elements:•“Just-in-Time,” and•“Jidoka.”

Just-in-Time is an approach in which necessary parts and components are manufactured and delivered in justthe right quantity in a timely manner just as they are needed. This allows Toyota to maintain low levels of
inventory while maintaining operating efficiency.
Jidoka is a production concept which involves immediate stop of work when problems arise in the
production line in order to stop the production of defective items from being passed on to subsequent stages ofthe process, and therefore making quality assurance an inherent part of the production process. To achieve this,Toyota’s equipment is designed to detect and highlight abnormalities and to stop whenever abnormalities occur.
Toyota also authorizes its machine operators and other members of its production team to stop production
whenever they note anything suspicious. This helps Toyota to build quality into the production process by
avoiding defects and preventing the waste that would result from producing a series of defective items.
23

Toyota believes that the TPS allows it to achieve mass-production efficiencies even in high-mix,
low-volume production. This belief gives Toyota the flexibility to respond to changing consumer demand
without significantly increasing production costs. While the TPS remains the basis of Toyota’s automobile
production, the system has been expanded for use in Toyota’s parts production, logistics and customer service
activities as well.
Through the TPS, issues are identified and analyzed at the actual site, the entire production process is madevisible and production efficiency as well as product quality are improved through the application of measures toaddress the sources of problems. As one method to implement these measures, Toyota utilizes sophisticatedinformation technologies to improve each step of its vehicle development process, from product planning tocommencement of mass-production. These technologies are intended to enhance flexibility, simplification,
quality, cost competitiveness and speed. Specifically, detailed virtual assembly and other simulations of
manufacturing processes are conducted on computers for a new vehicle or new production equipment/systems
before a prototype is made. An actual prototype is made only after defects and related issues have been identified
and resolved by computer simulation, thereby minimizing the time required for rebuilding prototypes andsignificantly shortening the time required before starting mass production. Moreover, this system is used toprepare virtual factories and other visual aids in order to facilitate training and communication at overseas plants
and enable the efficient transfer of necessary technology and skills.
In January 2018, Toyota established the TPS Group, and in order to stay true to itself, Toyota has gone backto its roots, positioning TPS as the bedrock of its management, and is moving forward with initiatives to ensurethat TPS is passed on to the future as part of Toyota’s DNA. Specifically, Toyota will have the concepts of“Just-in-Time” and “jidoka,” which are the two main pillars of the TPS, spread within the entire company andhave all divisions, including technical and administrative divisions, work to reduce lead time and ensure that
abnormalities are made visible, through which Toyota will achieve results by both cost reduction throughimproved productivity as well as improved work quality.
Toyota is currently working towards producing even better cars across the company. With the aim ofrealizing “cars that offer a rewarding experience for customers” through “truly competitive manufacturing” interms of production technology and manufacturing, Toyota is developing innovative production systems,
equipment and processing technology and introducing them to its mass-production line in due course.

Distribution
Toyota’s automotive sales distribution network is the largest in Japan. As of March 31, 2019, this network
consisted of 279 dealers employing approximately 32 thousand sales personnel and operating approximately
4.7 thousand sales and service outlets. Toyota owns 13 of these dealers and the remainder is independent.
Toyota believes that this extensive sales network has been an important factor in its success in the Japanesemarket. A large number of the cars sold in Japan are purchased from salespersons who visit customers in theirhomes or offices. In recent years, however, the traditional method of sales through home visits is being replacedby showroom sales and the percentage of automobile purchases through showrooms has been gradually
increasing. Toyota expects this trend to continue, and accordingly, is working to improve its sales activities suchas customer reception and meticulous service at showrooms to increase customer satisfaction.
Sales of Toyota vehicles in Japan are conducted through four sales channels — “Toyota,” “Toyopet,”“Corolla” and “Netz.” In addition, Toyota introduced the Lexus brand to the Japanese market in August 2005,
and currently distributes the Lexus brand vehicles through a network of 168 sales outlets in order to enhance its
competitiveness in the domestic luxury automotive market. The following table provides information for eachchannel as of March 31, 2019.
24

In April 2019, Toyota merged four dealers that were wholly owned subsidiaries in Tokyo, with the merged
company being renamed “Toyota Mobility Tokyo Co., Ltd.” (“TMT”) At the same time, Toyota abolished thesales channels system in Tokyo; TMT has started, ahead of other areas in Japan, distributing all Toyota vehicle
models.
Dealers
ChannelToyota . . . . . . . . . . . . . .
Toyopet . . . . . . . . . . . . .
Corolla . . . . . . . . . . . . .
Netz . . . . . . . . . . . . . . . .

ToyotaOwned

Independent

Total

Market Focus

3
4
3
3

46
48
70
102

49
52
73
105

Luxury channel for Toyota brand vehicles
Leading channel for the medium market
Volume retail channel centering on compact models
Sales channel targeting customers with new values forthe 21st century

Sales
Outlets

Brand

Lexus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

168

Market Focus

Premium brandOutside Japan, Toyota vehicles are sold through approximately 169 distributors in approximately
194 countries and regions. Through these distributors, Toyota maintains networks of dealers. The chart below
shows the number of Toyota distributors as of March 31, 2019 by country and region:
Country/Region

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia (excluding China) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oceania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Central and South America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of Countries

Number of Distributors

3
53
1
19
17
16
55
30

5
29
4
13
15
14
49
40

Improving Efficiency
Toyota is working on the following to create a corporate structure allowing for efficient development,
production and sales that can respond flexibly to changes in the external environment:•

working with suppliers as one team to dramatically increase the efficiency of development;•

creating a production structure that can better withstand fluctuations in demand and currency exchange
rates; and•strengthening sales capabilities in line with local conditions.

Toyota also plans to improve profitability and enhance operating efficiency by continuing to pursue
aggressive cost reduction programs, including:•

improving product development and production efficiencies through the re-integration and improvementof vehicle platforms and power trains as well as through the development of electronic platforms whichorganize electronic devices of vehicles as a package and standardize electronic structure andinfrastructure;•

reinforcing and promoting Ryohin-Renka Cost Innovation (“RR-CI”) activity, which aims for theelimination of waste in all processes from design to production while ensuring the reliability and safetyof each part;•“developing a real cost-competitive structure” by working together with suppliers;25

•

applying advanced information technologies to improve efficiency throughout the product development
and production processes;•

globally reinforcing the supply base under an open and fair purchasing policy;•

streamlining production systems; and•improving the efficiency of domestic and international distribution.

Toyota is further improving production efficiency by installing more versatile equipment and systems,
modifying vehicle body designs to allow for a greater variety of models on each production line and sharing
more parts among vehicles, not simply among different models but also among different platforms.
In April 2012, Toyota announced a new development framework, the TNGA, which reconciles sweeping
advances in product appeal with cost reductions. The new framework sets forth an architecture that incorporates
not only the three fundamental vehicle functions of moving, turning and stopping, but also ergonomics such as
driving position as well as freedom of design. Toyota plans to efficiently develop cars with high basicperformance attributes by developing parts and modules based on this architecture. The TNGA provides forhandling multiple models simultaneously in grouped development projects that will increase the sharing of partsand core vehicle components. This sharing, carried out in cooperation with suppliers, will result in lowered costs,
thereby allowing developmental manpower and funds to be reinvested in R&D to meet consumer preferences andR&D to meet regional needs, resulting in further product improvement.
By April 2013, Toyota established systems to rapidly promote the TNGA and carried out productdevelopment under this new way of doing business. As a result, Toyota realized high basic performance andmarketability in the Prius that was introduced in Japan in December 2015. Toyota subsequently applied the
TNGA initiatives to the Camry, Lexus LC and LS in 2017 and the Crown and Corolla Sport in 2018. Toyota hasrolled out, and plans to continue to roll out, the results of such development to other vehicles as well.
Realizing a Smart Mobility Society that expands through connected car technologies
In the midst of rapidly changing societies, including the falling birth rate and aging populations indeveloped nations, an increasingly diverse range of energy sources and the evolution of IoT, among others, theautomotive industry is facing a time of profound transformation that could happen only once in a hundred years.
As a company responsible for the freedom of mobility, which is one aspect of social infrastructure, Toyota isfirmly determined to contribute to solving social issues by changing the very ways in which people, things, andinformation flow through the world. Based on this commitment, Toyota is moving forward with initiatives
striving to realize a smart mobility society, in which people can “enjoy freedom of movement and feel at easeand excited,” by connecting vehicles, people and communities with its connected car technologies.
Our Connected Strategy for Realizing Connected Platforms
Connecting cars is not only providing new value and services to customers, but creating new modes of use andnew roles in society for cars. To stay at the forefront of this evolution, Toyota established an in-house ConnectedCompany in April 2016 and announced its Connected Strategy in November of the same year. This strategy
comprises three pillars that we initiated almost simultaneously.
•

Pillar 1 — Connect All Cars
The key to connecting all cars is on-board data communication modules (“DCMs”), which connect cars
to data centers. In 2002, Toyota commercialized its DCMs and launched the G-BOOK service for
Toyota vehicles (this service was replaced by T-Connect in 2014). In 2005, DCMs became a standard
feature in Lexus cars, and Toyota launched the G-Link service in Japan before expanding it to North
America and China. As the first step towards connecting all vehicles, in June 2018, Toyota also26

launched sales in Japan of the new Crown and Corolla Sport with DCMs as standard features for all
vehicles. This marked the start of Toyota’s full-scale roll out of connected cars. Toyota plans to adopt
common standards worldwide for its DCMs by 2019, equip virtually all passenger vehicles it sells inJapan and the United States with DCMs by 2020, and steadily equip more vehicles with DCMs in othermajor markets around the world going forward.
•

Pillar 2 — Creation of New Value and Business Revolution
As the number of connected cars on the road increases, so does the big data they generate and Toyota isusing this data to contribute to the good of customers and society while revolutionizing its own
businesses. Aggregate route history maps were made publicly available after the Great East Japan
Earthquake, and such data has subsequently been used in evacuation, response, and recovery operations
following several natural disasters. Furthermore, by analyzing the diverse information collected fromcars on the road using big data approaches, Toyota will be able to utilize that information to create andenhance services that provide safety and peace of mind. Making DCMs standard features also makes
Toyota’s online services more convenient and easier to use. The voice recognition-enabled artificial
intelligence (AI) virtual agent understands passengers’ natural speech and performs tasks such as setting
the destination for the navigation system. Toyota also has operators standing by 24 hours a day,365 days a year, to provide a more in-depth response to customer requests. By offering both virtual (AI)and real-world (operators) services, Toyota seeks to provide what it calls “Human Connected Services.”•

Pillar 3 — Creation of New Mobility Services
Toyota will accelerate cross-industry collaboration through the Mobility Service Platform (MSPF).
Using the MSPF, Toyota is taking an open approach and working together with all kinds of service
providers to contribute to the creation of new mobility services. Toyota has already begun a range ofcollaborative initiatives. In May 2016, Toyota and Uber Technologies, Inc. (“Uber”) began to consider apartnership in ride-sharing. In 2017, Toyota conducted a pilot program for its Smart Key Box with theUnited States car-sharing company Getaround, Inc.; began a partnership with Grab Holdings Inc.
(“Grab”), the leading ride-hailing service company in Southeast Asia; and began verification testing of
connected taxis with the Tokyo Taxi-Hire Association. Going forward, Toyota will work to deepen
these and other initiatives in order to create new mobility services and accelerate theircommercialization.

As practical measures for realizing a Smart Mobility Society based on the Connected Platforms, Toyota is
promoting: 1. “Connected with vehicles and roads (SAFETY) — Cooperative ITS, driving assistance functions
and automated driving”; 2. “Connected with people (COMFORT) — Connected Service”; and 3. “Connectedwith society and the community (ECO & CONVENIENCE) — Maas (Mobility as a Service).”
Connected with vehicles and roads (SAFETY) — Cooperative ITS
Enhancing transport systems requires taking a general approach that addresses various factors across a wide
scope that are pertinent not only to vehicles but also roads, people and public transport systems in order to ensuresmooth and efficient movement of people and vehicles and to build a safe transportation environment. In addition
to VICS and ETC (Electronic Toll Collection System), which are already standard in Japan, “Cooperative ITS,”
which combines cutting edge IT and vehicle technology, is in development and has begun to be partially
implemented.
•

The operation of “ETC2.0” commenced in 2009 and corresponding products are available for purchase.
Mainly for use on highways, this service provides drivers with information related to road traffic andsafe driving that is transmitted from road infrastructures to car navigation systems via video and voice.

•In the summer of 2011, Toyota introduced products corresponding to the driving safety support system,“DSSS,” which the National Police Agency has started operating. Mainly for use on general roads, this27

system supports safe driving, including by preventing the driver from overlooking red lights, bytransmitting traffic control information (such as traffic lights and signs) and peripheral information fromroad infrastructures to automobiles.
•

Aiming at further reducing accidents, “ITS Connect,” a driving safety support system that uses a
dedicated ITS frequency of 760 MHz, was introduced in the fall of 2015. Through direct and continuous
exchange of information between vehicles and the road and among vehicles, this system aims to
mitigate accidents near intersections, which have been difficult to mitigate to date. The system also
includes Communicating Radar Cruise Control features, which supports smooth acceleration anddeceleration when following behind another vehicle. In addition, from August 2017, Toyota and Mazda
started a partnership in the field of advanced safety technologies and a collaboration between the twocompanies concerning Toyota’s vehicle-to-vehicle and vehicle-to-infrastructure technologies isundergoing. Going forward, Toyota will aim at the realization of automated driving in which all drivers
can move safely, smoothly and freely by harmonizing ITS technology and vehicle control technology.

Toyota is committed to developing new ITS products. Toyota believes that intelligent transport systems will
become an integral part of its overall automotive operations and enhance the competitiveness of its vehicles. As
familiarity with and demand for ITS products grow, Toyota expects an increasing number of ITS products tobecome commercially available and achieve greater acceptance each year.
Connected with vehicles and roads (SAFETY) — driving assistance functions and automated driving
Toyota’s driving assistance functions offer functions that assist drivers with an aim to lessen the burden ofdriving, enhance safety and provide to everyone the pleasure of driving. Toyota has commercializedenhancements to various functions that assist the driver in sensing external information, avoiding danger andmaking appropriate maneuvers.
In 2015, Toyota commercialized the Toyota Safety Sense, a package that includes the Pre-collision Systemand driving assistance functions. In 2018, Toyota commercialized the new-generation Toyota Safety Sense(Toyota Safety Sense 2.0 in the United States), which has brakes capable of mitigating collision damage andadvanced driving assistance functions. The most recent Toyota Safety Sense 2.0 has the following functions:•“Pre-collision System” is a system that perceives possibilities of a crash with obstacles, cars in front,
crossing pedestrians during both day and night as well as crossing bicycles in daytime, all through asensor installed in a vehicle. If a collision seems likely, it proceeds to activate warnings as well as brakeassistance, which aids the driver’s operation of the brake, or the automatic braking system, which aids inavoiding the collision altogether or mitigates any damage.

•“Radar Cruise Control (with all-speed tracking function)” allows the vehicle to keep a constant distance
between itself and the preceding vehicle within a speed range from zero to a preset speed, automaticallyslowing down and stopping if necessary to avoid collision. When the car in front speeds up, it allows thedriver to accelerate.

•“Lane Tracing Assist” is a system that, when the Radar Cruise Control function is running, uses acamera to detect white or yellow lane markers while driving and assists the driver’s operation of thesteering wheel by controlling the electric power steering in order to help keep the vehicle travelingbetween lane markers.

•“Automatic High Beam” detects the headlights of oncoming vehicles or taillights of vehicles running infront and adjusts the headlight range, automatically switching to low beam or high beam, in order toavoid blinding the visions of drivers with bright lights, as well as to secure drivers’ forward vision atnight.

Toyota has completed installation of Toyota Safety Sense on nearly all models sold in Japan, the UnitedStates and Europe at an affordable price aimed at widespread adaption. The accumulated global shipments of28

vehicles with Toyota Safety Sense installed exceeded 10 million vehicles (of which approximately 5 million
vehicles were shipped to the United States) as of the end of October 2018.
In addition to the above, with the aim to realize the ultimate goal of zero casualties from traffic accidents,
Toyota is promoting the development of technologies such as “Parking Support Brake (pedestrians),” which
supports avoiding collisions by detecting pedestrians in the rear of the vehicle using a camera, and “Active
Steering Assist — Pre-Collision System,” which is a system that, in situations where the system decides that acollision cannot be avoided by automatic braking alone and there is room in the driver’s lane to avoid a collision,
supports avoiding collisions by automatically controlling the steering after the Pre-Collision System controls thebrake.
Connected with people (COMFORT) — Connected Service
The driving experience can be enriched and its convenience can be improved through information
communication technologies that add a new “connecting” function to the basic vehicle functions of “running,turning and stopping.” Examples of the connecting function include the following:•

Toyota is advancing enhancement of car navigation systems, such as car parking maps that display
detailed information inside car parks, as well as the VICS system (Vehicle Information andCommunication System) that provides real-time road traffic information such as congestion, accidents,
traffic restrictions and parking. Car navigation systems play an increasingly important role in providing
drivers with various types of information on safety, smooth traveling, comfort and convenience.

•

T-Connect/G-BOOK is the latest information network service that merges the latest network
technologies and car multimedia a step ahead of the arrival of the ubiquitous network society.
T-Connect/G-BOOK provides various types of information useful for driving, as well as safety andsecurity services that detect unusual conditions in the vehicle, thereby supporting a lifestyle with one’s
vehicles anytime and anywhere through a network. In 2005, Toyota started G-BOOK ALPHA and
G-Link for Lexus, each with additional various features including traffic congestion forecast service. In
2007, Toyota launched G-BOOK mX, which in addition to the well-received conventional safety andsecurity services of G-BOOK, introduced even more useful car navigation services such as“Map-on-Demand” — the world’s first technology for automatically updating map data — and “Probe
Communication Traffic Information” that provides drivers with highly precise information on traffic
congestion. In 2014, Toyota launched T-Connect, which in addition to conventional telematics services,
provides new services and functions through the distribution of applications to on-board device, as well
as destination and other information searches through the adoption of a voice recognition system. In
2018, Toyota made efforts to further enhance T-Connect and added services such as the “e-Care Driving
Guidance,” which diagnoses the condition of a car from the vehicle data and an operator advises thedriver in the event of abnormality, and further guides the driver to a dealer if necessary, and “Tsunagaru(Connected) Car Insurance Plan,” which is an insurance plan based on driving behavior data.
Furthermore, by standardizing the DCM, Toyota improved online services such as the “Voice
Recognition-enabled AI Virtual Agent” and “Hybrid Navi.”•

HELPNET is an emergency dial system that, in the event of a traffic accident or medical emergency,transmits information required for emergency rescue, such as present-location data and vehicle details,
either automatically or with the touch of a button. It immediately contacts police and fire departments
through the HELPNET Operation Center. This system is integrated into T-Connect/G-BOOK and
G-Link to improve the quality of services. In 2018, Toyota newly developed the “D-Call Net,” which isa rescue service that is interlocked with the activation of the airbag. It instantly analyzes the damages tocar occupants from the car data at the time of the collision, and with the cooperation of the fire
departments, dispatches helicopter ambulances if it is diagnosed that the possibility of serious injury ishigh. HELPNET shortens the time taken to report following an emergency situation, which contributes
to decreasing the number of traffic accident fatalities and reducing the level of impact, while at the sametime aiming to prevent secondary disasters and ease traffic congestion.
29

In addition to the above, Toyota also operates a Japanese-language web portal for automobile information,GAZOO.com. The name “GAZOO” originates from the Japanese word gazo, meaning images. GAZOO wasestablished as an Internet membership service linking Toyota, its national dealer network and GAZOO members,
and has provided information on new and used Toyota vehicles and related services, as well as online shopping
services. GAZOO later expanded to include information on other automakers, as well as a rich blog feature as asocial networking portal site on automobiles.
Furthermore, in 2010, by utilizing technology cultivated through the Internet and telematics services, Toyota
developed the Toyota Smart Center (“TSC”) that optimally controls electricity and links EVs and PHVs withhomes. Toyota aims to offer new services, achieve better vehicle quality and enhance product attractiveness aswell as contribute further to society by utilizing the vehicle information, road conditions and other parameterscollected via telematics services and stored at the TSC. With regard to contribution to society, Toyota beganoffering the Big Data Traffic Information Service in June 2013, through which traffic information, statistics andother related information are provided to local governments, universities and businesses to support traffic flow
improvement and assist disaster prevention measures. In December 2016, Toyota launched the TC Smartphone
Navigation free-of-charge to users, including those other than Toyota users, to provide readily usable route
history maps. Toyota plans to continue to work with new information technologies and the IT industry toestablish a framework for TSC’s global implementation and to realize a mobility society of the future.
In 2016, Toyota has been working actively on “connected car technology” and alliances with othercompanies for effective vehicle data utilization to “make ever-better cars” and for safer and securer “connected”
service. In January 2016, Toyota announced a “connected vehicle framework” to increase installation of DCMs
into a broader range of its vehicles starting in the United States from 2017. In April 2016, Toyota established a
new company, “Toyota Connected, Inc.,” in the United States to consolidate and analyze information collectedfrom vehicles and to develop new products, and thereby promoting “making ever-better cars” through utilizing
big data.
As a further engagement in the insurance industry, Toyota established Toyota Insurance Management
Solutions USA, LLC (“TIMS”), a new U.S. telematics car insurance services company, to promote analysis of
big data and development of algorithms. TIMS provides telematics insurance services best suited to Toyota’s
customers by consolidating Toyota’s data, financing and insurance knowhow.
Connected with society and the community (ECO & CONVENIENCE) — MaaS (Mobility as a Service)
In November 2016, based on the proliferation and popularity of mobility services such as car-sharing,
Toyota started to establish MSPF, which has various functions to support mobility services. MSPF is a platformthat aggregates and covers individual business functions, such as vehicle management systems and leasing
programs, that Toyota developed and offered to mobility service providers such as ride-sharing operators whenworking together with them. In addition, as one example of the functions that MSPF offers, Toyota developed thesmart key box (“SKB”) that enables users to lock and unlock doors and to start the engine with theirsmartphones — thus providing a safer and more secure way of locking/unlocking doors and starting the engine.
Using the MSPF and SKB, Toyota started a pilot program in collaboration with Getaround, a venture company
providing car-sharing services targeted at individuals in the United States, in March 2017 in San Francisco,California. In addition, Toyota is working with Toyota Financial Services Corporation (“TFSC”) to makevehicles with expired leases available on Getaround, in order to effectively utilize TFSC’s assets. Toyota is also
examining the viability of car sharing using SKBs. Furthermore, Servco Pacific Inc., a Toyota dealer in Hawaii,
began a car-sharing services program in July 2018.
In terms of ride-sharing, in May 2016, Toyota and Uber entered into a memorandum of understanding to
explore collaboration with respect to ride-sharing. In August 2018, the scope of collaboration was expanded:
Toyota and Uber will be developing vehicles utilizing the technologies of both companies and used exclusively
for ride-sharing, and introducing the same into Uber’s ride-share network. Technology establishment of the30

in-vehicle equipment and control interface is underway. Furthermore, in April 2019, in order to accelerate thedevelopment and practical realization of automated driving vehicles for ride-sharing, Toyota announced that it
will invest in Uber Advanced Technologies Group together with Denso Corporation and SoftBank Vision
Fund L.P.
In Southeast Asia, Toyota started to collaborate with Grab in August 2017, and commenced a pilot programin Singapore to collect driving data generated from vehicles owned by Grab. In June 2018, Toyota further
expanded the collaboration with Grab, invested in Grab, and moved forward with providing various connected
services that use MSPF to Grab. As a specific example of such services, in December 2018 Toyota provided the
Toyota-developed total care service for vehicles to 1,500 vehicles owned by Grab and started both to provide
high-efficiency maintenance reflecting TPS as well as to cooperate with local insurance companies with the aim
to effectively utilize driving data collected from MSPF in insurance services.
In August 2016, Toyota and Japan Federation of Hire-Taxi Associations entered into a memorandum of
understanding to explore areas for collaboration, so as to develop and introduce the “Japanese taxi of the future.”
Through use of taxis to collect and analyze information concerning the road traffic environment, and applying
those results to the development of the Mobility Teammate Concept, which embodies Toyota’s vision of
automated driving, Toyota and the Japan Federation of Hire-Taxi Associations will continue to be importantpartners in helping to develop Japanese taxis into the “world’s safest, most pleasant, world-class public
transportation service” and to strengthen the Japanese transportation infrastructure.
In October 2018, Toyota agreed with SoftBank Corp. (“SoftBank”) in the realization of a Mobility Networkthat delivers safe and comfortable mobility to all people. In February 2019, Toyota and SoftBank established ajoint venture, MONET Technologies Inc. (“MONET”). Anticipating the realization of an automated drivingsociety, cooperation with 17 local governments in Japan to provide next-generation on-demand mobility service
began. In March 2019, MONET established the Monet Consortium with the participation of 88 companies in aneffort to promote inter-corporate cooperation as a way of ‘team building’ that aims for the realization of mobility
innovation.
With the background of expanding mobility services and the tightening of data regulations in Europe,
Toyota has established Toyota Connected Europe, Limited in April 2018, and plans to utilize MSPF in Europe aswell to promote car-sharing businesses in coordination with local dealers.
In January 2018, at “2018 International CES” held in Las Vegas, Nevada in the United States, Toyota
announced the “e-Palette Concept,” a next generation EV designed exclusively for MaaS, leveraging
electrification, connected vehicles and automated driving technologies. The e-Palette Concept can be adapted forvarious services, such as passenger transportation, logistics services or retail services, and is the embodiment of
Toyota’s concept of “new mobility” that supports the lifestyles of its customers. Amazon.com, Inc., DiDi
Chuxing, Pizza Hut, LLC, Uber and Mazda Motor Corporation are collaborating with Toyota as initial launch
partners in order to explore vehicle specifications that are even more practical and to ensure the realization of a
new mobility service. Going forward, Toyota is planning to support the transportation of athletes and staff in the
Olympic and Paralympic village in the 2020 Tokyo Olympic and Paralympic Games, as well as
commercialization around 2023 upon conducting a pilot program with alliance partners.
In addition, Toyota joined the “Toyota City Low-Carbon Society Verification Council” (established inAugust 2010), and carried out experiments relating to the “Establishment of a System for Low-Carbon Emission
Transportation” until March 2015. As a way of building on the results of such experiments, Toyota launched anexperimental ultra-compact electric vehicle sharing program in Tokyo from April 2015. It also launched anexperimental ultra-compact electric vehicle program for tourism using a Toyota developed car-sharing system in
Okinawa from January 2016. Furthermore, in Toyota City and Okinawa in April 2017, and in Tokyo in April
2019, these experimental programs were commercialized, and management was transferred to local companies
and organizations.
31Financial Services
Toyota’s financial services include loan programs and leasing programs for customers and dealers. Toyota
believes that its ability to provide financing to its customers is an important value-added service. In July 2000,
Toyota established a wholly-owned subsidiary, TFSC, to oversee the management of Toyota’s finance companies
worldwide, through which Toyota aims to strengthen the overall competitiveness of its financial business,
improve risk management and streamline decision-making processes. Toyota has expanded its network offinancial services, in accordance with its strategy of developing auto-related financing businesses in significant
markets. Accordingly, Toyota currently operates financial services companies in 37 countries and regions, which
support its automotive operations globally.
Toyota’s revenues from its financial services operations were ¥2,153.5 billion in fiscal 2019,¥2,017.0 billion in fiscal 2018 and ¥1,823.6 billion in fiscal 2017. In fiscal 2018, weak used vehicle prices in the
United States resulted in increased disposal losses for vehicles with expired leases as well as losses on
depreciation compared with the past. Interest rates also increased in the United States and some emerging
countries. This market environment exerted downward pressure on revenue in the financing business. In fiscal
2019, the trends of rising interest rates and increases in lease-up vehicles continued, but because used vehicle
prices in the United States remained higher than expected, the financial business as a whole was generally stable.
Under such circumstances, as a result of Toyota’s continued collaboration with dealers in various countries andregions and efforts to expand products and services that meet customer needs, Toyota’s share of financing
provided for new car sales of Toyota and Lexus vehicles in regions where TFSC operates remained at a highlevel of approximately 35% and the balance of loan receivables continued to steadily increase globally, with the
exception of some countries. In addition, Toyota is making efforts to provide both its customers and dealers withstable financial services by diversifying its funding methods such as issuing Green Bonds in Japan in addition tousing already existing means as commercial paper, corporate bonds, bank borrowings, ABCP (Asset Backed
Commercial Paper) and ABS (Asset Backed Securities). Furthermore, Toyota continued to perform detailed
credit appraisals and serve customers by monitoring bad debt and loan payment extensions, and the percentage ofcredit losses remained low, at 0.27% and 0.30% in fiscal years 2019 and 2018, respectively. Toyota continues towork towards improving its risk management measures in connection with credit and residual value risks.
Toyota Motor Credit Corporation is Toyota’s principal financial services subsidiary in the United States.
Toyota also provides financial services in 36 other countries and regions through various financial services
subsidiaries, including:•

Toyota Finance Corporation in Japan;•

Toyota Credit Canada Inc. in Canada;•

Toyota Finance Australia Ltd. in Australia;•

Toyota Kreditbank GmbH in Germany;•

Toyota Financial Services (UK) PLC in the United Kingdom;•

Toyota Leasing (Thailand) Co., Ltd. in Thailand; and•Toyota Motor Finance (China) Co., Ltd. in China.

Toyota Motor Credit Corporation provides a wide range of financial services, including retail financing,retail leasing, wholesale financing and insurance. Toyota Finance Corporation also provides a range of financial
services, including retail financing, retail leasing and credit cards. Toyota’s other finance subsidiaries provide
services including retail financing, retail leasing and wholesale financing.
In September 2018, Toyota established Toyota Fleet Mobility GmbH in Germany to provide full service
leasing. Going forward, Toyota is planning to develop bases in each European country. In addition, Toyota
established KINTO Corporation, which provides full service leasing (subscription service), in Japan in January32

2019. Furthermore, in January 2019, Toyota established a finance leasing business for commercial trucks andbuses as a subsidiary of Toyota Finance Corporation. This subsidiary is a joint venture with Sumitomo Mitsui
Auto Service Company, Limited and Hino Motors, Ltd.
Net finance receivables for all of Toyota’s dealer and customer financing operations were ¥16,928.8 billion
as of March 31, 2019, representing an increase of 6.9% as compared to the previous year. The majority of
Toyota’s financial services are provided in North America. As of March 31, 2019, 55.2% of Toyota’s financereceivables were derived from financing operations in North America, 13.0% from Asia, 12.3% from Europe,
8.2% from Japan and 11.3% from other areas.
Approximately 45% of Toyota’s unit sales in the United States during fiscal 2019 included a finance orlease arrangement with Toyota. Because the majority of Toyota’s financial services operations are related to thesale of Toyota vehicles, a decrease in vehicle unit sales may lead to a contraction of Toyota’s financial services
operations.
The worldwide financial services market is highly competitive. Toyota’s competitors in retail financing andretail leasing include commercial banks, credit unions and other finance companies. Commercial banks and otherautomobile finance subsidiary companies serving their parent automobile companies are competitors of Toyota’s
wholesale financing activities. Competitors in Toyota’s insurance operations are primarily national and regional
insurance companies.
For information on Toyota’s finance receivables and operating leases, please see “Operating and Financial
Review and Prospects — Operating Results — Financial Services Operations.”
Retail Financing
Toyota’s finance subsidiaries acquire new and used vehicle installment contracts primarily from Toyota
dealers. Installment contracts acquired must first meet specified credit standards. Thereafter, the financecompany retains responsibility for installment payment collections and administration. Toyota’s financesubsidiaries acquire security interests in the vehicles financed and can generally repossess vehicles if customers
fail to meet their contractual obligations. Almost all retail financings are non-recourse, which relieves the dealers
from financial responsibility in the event of repossession. In most cases, Toyota’s finance subsidiaries require
their retail financing customers to carry automobile insurance on financed vehicles covering the interests of boththe finance company and the customer.
Toyota has historically sponsored, and continues to sponsor, special lease and retail programs by subsidizing
below market lease and retail contract rates.
Retail Leasing
In the area of retail leasing, Toyota’s finance subsidiaries acquire new vehicle lease contracts originatedprimarily through Toyota dealers. Lease contracts acquired must first meet specified credit standards after which
the finance company assumes ownership of the leased vehicle. The finance company is generally permitted totake possession of the vehicle upon a default by the lessee. Toyota’s finance subsidiaries are responsible forcontract collection and administration during the lease period. The residual value is normally estimated at thetime the vehicle is first leased. Vehicles returned to the finance subsidiaries at the end of their leases are sold byauction. For example, in the United States, vehicles are sold through a network of auction sites as well as throughthe Internet. In most cases, Toyota’s finance subsidiaries require lessees to carry automobile insurance on leased
vehicles covering the interests of both the finance company and the lessee.
Wholesale Financing
Toyota’s finance subsidiaries also provide wholesale financing primarily to qualified Toyota dealers tofinance inventories of new Toyota vehicles and used vehicles of Toyota and others. The finance companies
33

acquire security interests in vehicles financed at wholesale. In cases where additional security interests would be
required, the finance companies take dealership assets or personal assets, or both, as additional security. If adealer defaults, the finance companies have the right to liquidate any assets acquired and seek legal remedies.
Toyota’s finance subsidiaries also make term loans to dealers for business acquisitions, facilities
refurbishment, real estate purchases and working capital requirements. These loans are typically secured withliens on real estate, other dealership assets and/or personal assets of the dealers.
Insurance
Toyota provides insurance services in the United States through Toyota Motor Credit Corporation’s whollyowned subsidiary, Toyota Motor Insurance Services, Inc. (“TMIS”) and its wholly-owned insurance company
subsidiaries. Their principal activities include marketing, underwriting and claims administration. TMIS also
provides coverage related to vehicle service agreements through Toyota dealers to customers. In addition, TMIS
also provides coverage and related administrative services to affiliated companies of Toyota Motor Credit
Corporation. Toyota dealers in Japan and in other countries and regions also engage in vehicle insurance sales.
Other Financial Services
Toyota Finance Corporation launched its credit card business in April 2001 and began issuing Lexus credit
cards in 2005 when the Lexus brand was introduced in Japan. As of March 31, 2018, Toyota Finance Corporationhas 15.8 million card holders (including Lexus credit card holders).
All Other Operations
In addition to its automotive operations and financial services operations, Toyota is involved in a number ofother non-automotive business activities. Net sales for these activities totaled ¥1,676.3 billion in fiscal 2019,¥1,646.1 billion in fiscal 2018 and ¥1,321.0 billion in fiscal 2017.
Housing
Toyota established its subsidiary Toyota Housing Corporation (“Toyota Housing”) in April 2003 and has
transferred to it product planning and sales operations related to the manufacture and sale of housing.
Furthermore, in order to quickly and accurately grasp clients’ needs and to plan, develop and sell products on atimely basis, in April 2008, Toyota transferred the product development operation to Toyota Housing. In
October 2010, Toyota spun-off its housing operations (project planning, technology development andmanufacturing) through a statutory demerger and integrated them into Toyota Housing. Toyota conducted this inorder to quickly respond to the needs of even more customers in a vastly changing housing market, through rapid
decision-making and flexible business operations based on the integration of the development, manufacture andsales functions. In March 2005, Toyota, together with institutional investors, agreed to jointly invest in Misawa
Home Holdings, Inc. (“Misawa”; renamed Misawa Homes Co., Ltd.) pursuant to its request for assistance in its
rehabilitation. In April 2010, determining that a stronger collaboration with Misawa would be desirable in orderto achieve further growth in the difficult operating environment of the housing industry, Toyota Housing agreed
to purchase Misawa shares from an institutional investor. In addition, Toyota transferred ownership of Misawa to
Toyota Housing in October 2010. Through these activities, Toyota has strengthened the housing business of bothcompanies.
In May 2019, Toyota entered into agreements with Panasonic Corporation to establish a new joint venture
related to the town development business (scheduled for January 2020). The joint venture will set the sameownership ratio between Panasonic group and Toyota in order to secure its autonomous management while
continuing to receive support from Toyota as a shareholder and is expected to be out of the scope of
consolidation for Panasonic Corporation and Toyota. In connection with the establishment of the joint venture,
Toyota will temporarily make Toyota Housing and Misawa its wholly owned subsidiaries and thereafter transfer
all of the outstanding shares in those two subsidiaries to the joint venture by a joint share transfer.
34

Information Technology
See “— Enhancing Vehicle Functionality and Intelligent Transport Systems” for a description of Toyota’s
information technology.
Governmental Regulation, Environmental and Safety Standards
Toyota is subject to laws in various jurisdictions regulating the levels of pollutants generated by its plants.
In addition, Toyota is subject to regulations relating to the emission levels, fuel economy, noise and safety of its
products. Toyota has incurred significant costs in complying with these laws and regulations and expects to incur
significant compliance costs in the future. Toyota’s management views leadership in environmental protection as
an important competitive factor in the marketplace.
Vehicle Emissions
Japanese Standards
The Air Pollution Control Act of Japan and the Road Transport Vehicle Act and the Act Concerning Special
Measures for Total Emission Reduction of Nitrogen Oxides and Particulate Matter from Automobiles inSpecified Areas regulate vehicle emissions in Japan. In addition, both the Noise Regulation Act and the Road
Transport Vehicle Act provide for noise reduction standards on automobiles in Japan. Toyota’s vehicles
manufactured for sale in Japan comply with all Japanese exhaust emission and noise level standards.
U.S. Federal Standards
The federal Clean Air Act directs the Environmental Protection Agency (“EPA”) to establish and enforce air
quality standards, including emission control standards on passenger vehicles, light-duty trucks and heavy-duty
vehicles. Manufacturers are not permitted to sell vehicles in the United States that do not meet the standards. In
March 2014, the EPA finalized new “Tier 3” tailpipe emission and evaporative emission standards for passenger
vehicles, light-duty trucks, medium-duty passenger vehicles and some heavy-duty vehicles. Under the new rule,
tailpipe emission standards for volatile organic compounds, nitrogen oxides, and particulate matter, as well as
standards for evaporative emissions, will become increasingly stringent in phases from 2017 to 2025, bringing
the federal emission standards in line with California’s emission standards. The harmonization of the federal and
California emission standards is expected to lead to reductions in the burden on development, such as a reductionin the number of tests required for certification and standardization of emission reduction systems. The new Tier
3 rule also required reductions in gasoline’s sulfur content beginning in 2017.
On August 28, 2012, the EPA and the federal National Highway Traffic Safety Administration (“NHTSA”)
jointly issued the final rule to reduce greenhouse gas emissions and improve fuel economy for passenger
vehicles, light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. In the final
rule, these vehicles are required to meet an estimated combined average emission level of 163 grams of carbon
dioxide per mile in model year 2025, equivalent to 54.5 miles per gallon if these requirements were met throughimprovements in fuel economy standards. The NHTSA also issued Corporate Average Fuel Economy (“CAFE”)
standards for passenger vehicles and light-duty trucks that would require manufacturers to meet an estimatedcombined average fuel economy level of 49.6 miles per gallon in model year 2025.
On January 12, 2017, the EPA, as part of a Midterm Evaluation of the rule, issued a final determination tomaintain the final rule for model years 2022 through 2025. On March 13, 2017, however, the newly-appointed
Administrator of the EPA and the newly-appointed Secretary of the Department of Transportation issued a noticethat they were reconsidering the final determination. On May 1, 2018, California and 16 other states filed suit in
the U.S. Court of Appeals for the District of Columbia to oppose the EPA and NHTSA’s decision to repeal thegreenhouse gas emission standards. On August 2, 2018, the EPA and the NHTSA issued a joint Notice of
Proposed Rulemaking. The Administration’s proposed rule would freeze the vehicle fuel economy and CAFE
35

standards at 2020 levels for model years 2021-2026. The rule would also revoke the waiver granted to California
to establish more stringent standards for vehicle emissions. In response to the Administration’s proposed rule, on
August 7, 2018 the California Air Resources Board (“CARB”) posted a proposal to ensure that cars and lightduty trucks for model years 2021-2025 would continue to meet California’s more stringent standards. The EPA
and California had been in discussions regarding their differences over vehicle emission standards, but these
discussions broke off without resolution on February 20, 2019.
In addition, in July 2015 the EPA adopted a final rule to limit and eventually phase out, on account of theircontribution to global warming, the use of hydroflourocarbons (“HFCs”) and HFC-containing refrigerant blends
in, among other systems, the air conditioning systems of new vehicles. In August 2017, however, the D.C.
Circuit Court of Appeals ruled that the EPA, which had based the rule on a section of the Clean Air Act which
relates to the control of ozone depleting substances and not greenhouse gasses, had overstepped its authority. In
October 2018, the Supreme Court of the United States declined to hear an appeal of the Circuit Court’s decision,and the rule is therefore no longer in effect. The EPA is working on formulating new rules to limit the use of
HFCs. Toyota purchases air conditioning systems from third parties for use in its vehicles. Feasible alternatives
to HFC refrigerants that may be prohibited by any future EPA rules may be costly or present other risks, such as
flammability or other safety concerns.
California Standards
Under the federal Clean Air Act, the State of California is permitted to establish its own vehicle emission
control standards if it receives a waiver from the EPA. As a result, the CARB required that a specified percentage
of a manufacturer’s passenger vehicles and light-duty trucks sold in California be “zero-emission vehicles”(vehicles producing no emissions of regulated pollutants) as well as permitted certain advanced technology
vehicles such as PHVs, and alternative fuel vehicles that meet “partial zero-emission vehicles requirements” tobe granted partial qualification as EVs or FCVs. Toyota’s MIRAI qualifies as a zero-emission vehicle. The
current Prius Prime has been certified as a partial zero-emission vehicle. Toyota intends to continue to develop
additional advanced technologies and alternative fuel technologies that will allow other vehicles to qualify as
zero-emission vehicles or partial-zero-emission vehicles.
In January 2012, the CARB adopted the Advanced Clean Cars (“ACC”) program. The ACC program
includes new Low-Emission Vehicle regulations that reduce smog-causing pollutants (including nitrogen oxides
and particulate matter) and greenhouse gas emissions from cars and light-duty trucks for model years 2015 to2025, and more stringent zero-emission vehicle regulations which will require increased production of
zero-emission vehicles and partial zero-emission vehicles for model years 2018 to 2025. The ACC program also
lowers allowable smog-forming particulate emissions to one mg/mile or lower, to be phased in beginning withmodel year 2015.
In February 2010, the CARB had enacted a “deemed to comply” rule that provided that compliance withfederal greenhouse gas emission standards for model years 2017 through 2025 would also satisfy California’s
greenhouse gas emissions standards. However on March 14, 2017, in reaction to the EPA Administrator’s and theDepartment of Transportation Secretary’s decision to reconsider the EPA’s prior final determination to maintainthe final rule for greenhouse gas emissions for model years 2022 through 2025, California petitioned the U.S.
Court of Appeals for the District of Columbia to protect its interests in the final rule. Moreover, in a March 24,2017 ACC Midterm Review, the CARB affirmed the ACC program’s requirements, and suggested that its
decision to follow the federal final rule might change if the federal standards “were substantially changed.”On April 2, 2018, upon the EPA and NHTSA’s announcement that it would repeal and replace thegreenhouse gas emission standards for model years 2022 through 2025, the CARB stated that, regardless of thisfederal action, it would not change California’s more stringent standards. On May 1, 2018, California and 16
other states filed suit in the U.S. Circuit Court of Appeals for the District of Columbia to oppose the EPA andNHTSA’s decision to repeal and replace the greenhouse gas emission standards. On August 2, 2018, the EPA and36

the NHTSA issued a joint Notice of Proposed Rulemaking. The Administration’s proposed rule would freeze thevehicle fuel economy and CAFE standards at 2020 levels for model years 2021-2026. The rule would also revoke
the waiver granted to California to establish more stringent standards for vehicle emissions. In response to the
Administration’s proposed rule, on August 7, 2018 the CARB posted a proposal to ensure that cars and light-duty
trucks for model years 2021-2025 would continue to meet California’s more stringent standards. The EPA andCalifornia had been in discussions regarding their differences over vehicle emission standards, but these
discussions broke off without resolution on February 20, 2019.
Other States’ Standards
Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont
have adopted regulations substantially similar to California’s zero-emission vehicles requirement, and in January
2019 the Governors of Colorado and New Mexico took executive actions requiring their relevant administrative
agencies to establish equivalent requirements. Colorado, Connecticut, Delaware, Maine, Maryland,
Massachusetts, New Jersey, New York, Pennsylvania, Oregon, Rhode Island, Vermont and Washington haveadopted regulations substantially similar to California’s low emission vehicle and greenhouse gas emission
regulations, and the Governor of New Mexico’s January 2019 executive action directed its relevant
administrative department to adopt regulations equivalent to California’s low emission vehicle regulations.
Canadian Standards
Canada has finalized vehicle emission standards equivalent to the federal standards in the United States in
October 2014, in response to the strengthening of the federal greenhouse gas emission standards in the UnitedStates applicable to model years 2017 to 2025. Furthermore, certain Canadian provinces are currently
considering enacting their own regulations on vehicle emissions of greenhouse gases. On January 11, 2018, theMinistry of Sustainable Development, Environment and the Fight against Climate Change of the Province ofQuebec issued regulations on zero-emission vehicles including EVs, FCVs and PHVs, among others. In
November 2018, the premier of British Columbia announced that the government would introduce legislation
concerning zero-emission vehicles (indicating the phase-in introduction starting from model year 2020). Canada
also adopted a more stringent fuel rule, which is based on the fuel rule in the United States, that reduces
refineries’ annual average sulfur concentration of gasoline to 10mg/kg from 2017 with a new addition of credit
system to secure compliance.
European Standards
In 2007, the European Parliament adopted more stringent emission standards for passenger vehicles andlight commercial vehicles. The effective date for phasing in these stricter standards for passenger vehicles was
September 2014 for Euro 6. For light commercial vehicles, the effective date was September 2015 for Euro 6.
The primary focus of Euro 6 is to limit further emissions of diesel powered vehicles and bring them down toa level equivalent to gasoline powered vehicles. In addition, Euro 6 is being implemented in two stages, andbeginning with the second stage (September 2017 for passenger vehicles and September 2018 for commercial
vehicles), the EU is implementing the Real Driving Emission (“RDE”) regulations, which requires manufactures
to conduct on-road emissions tests using portable emissions testers. Since September 2017, manufacturers havebeen required to reduce the divergence between the regulatory limit tested in laboratory conditions and the valuesof RDE tests. The EU has also decided to implement the Worldwide harmonized Light vehicles Test Procedure(WLTP), which were introduced on September 1, 2017 and will be phased in for all new cars between 2018 and2019.
Chinese Standards
Emissions regulations are being implemented throughout China pursuant to the Chinese National Standards(GB) of the Ministry of Environmental Protection of the People’s Republic of China, and the manufacture andsale of models not meeting these regulations are prohibited.
37For passenger vehicles, pursuant to GB18352.5-2013, it has been decided that Level 5 Emissions
Regulations (China 5) (corresponding to Euro 5 standards) are to be implemented throughout China for allmodels that are sold and registered after January 2018.
In an effort to improve the fuel quality in the market, stricter China 5 gasoline and diesel fuel standards havebeen stipulated in GB17930-2013 and GB19147-2013 to achieve the Level 5 Emissions Regulations, and it has
been decided that these standards will be implemented from January 2018. Following that, however, given theaccelerated improvement in fuel quality in the market, new China 5 fuel standards (corresponding to Euro 5)
have been implemented in 11 provincial capitals in eastern China from January 2016 and nationwide in China
from January 2017, as opposed to January 2018 as initially determined. In connection with this, the Ministry ofEnvironmental Protection and the Ministry of Industry and Information Technology issued a directive on theimplementation timing of the Level 5 Emissions Regulations, in accordance with which, the implementation
started for gasoline-powered passenger vehicles in the 11 provincial capitals from April 2016 and nationwide in
China from January 2017, as well as for diesel passenger vehicles nationwide in China pursuant to theregulations of GB18352.5-2013 from January 2018. The next-generation emissions regulations for passenger
vehicles, or Level 6 Emissions Regulations (China 6), were issued as GB18352.6-2016 at the end of 2016,
pursuant to which tighter requirements will be implemented in two steps, depending on the regulated subjects
and the implementation timing. Specifically, China 6a will apply to all models to be sold or registered in July
2020 and beyond, and China 6b will apply to all models to be sold or registered in July 2023 and beyond. With
respect to fuels in the market, the quality standards and the implementation from January 2019 for China 6
gasoline fuel and China 6 diesel fuel have been provided in GB17930-2016 and GB19147-2016 so as to keep up
with the implementation timing of China 6 emissions regulations. Moreover, for areas where the air quality
improvement is an urgent necessity, China 6 is scheduled to be implemented from July 2019 ahead of theimplementation throughout China.
For heavy-duty diesel-powered commercial vehicles, pursuant to GB17691-2005, the China V Emissions
Regulations are being implemented from July 2017. With the establishment of GB17691-2018, which provides
next-level China VI Emissions Regulations (China VI), it has been decided that China VIa will be implemented
from July 2021 and China VIb from July 2023 (these regulations will apply to gas-fueled vehicles and publicvehicles for urban areas earlier than those dates). For heavy-duty gasoline-powered commercial vehicles,
pursuant to GB14762-2008, Level IV Emissions Regulations (China IV) apply to new models after July 2012.
After the first day the regulation is implemented to a new model, all new models released during the following
one-year period also become subject to the regulation. Tightening of the next-generation emissions regulations(China V and China VI) is currently considered for heavy-duty gasoline-powered commercial vehicles.
Standards of Other Countries or Regions
In particular, in India, given the worsening air pollution, in December 2015, the Supreme Court banned theregistration of diesel cars with engines that are two liters or larger in the National Capital Region, including theDelhi metropolitan area. In August 2016, the ban on registration was lifted on the condition that a deposit equal
to 1% of the vehicle’s retail price is to be paid to the Environment Pollution Control Authority. Furthermore, thegovernment accelerated the implementations of BS-6 (equivalent to EURO6) to 2020.
Vehicle Fuel Economy
Japanese Standards
The Act on Rationalizing Energy Use requires automobile manufacturers to improve their vehicles to meet
specified fuel economy standards. Fuel economy standards are established according to the types of vehicles, andare required to be met by either fiscal 2011 (April 2010-March 2011), fiscal 2016 (April 2015-March 2016),
fiscal 2021 (April 2020-March 2021), fiscal 2023 (April 2022-March 2023) or fiscal 2026 (April 2025March 2026).
Toyota is promoting the improvement of its vehicles in order to achieve compliance with these standards.
38

U.S. Standards
The Federal Motor Vehicle Information and Cost Savings Act requires automobile manufacturers to comply
with CAFE standards. A manufacturer is subject to substantial civil penalties if, in any model year, its vehicles
do not meet the CAFE standards. Manufacturers that exceed the CAFE standards earn credits determined by thedifference between the average fuel economy performance of their vehicles and the CAFE standards. Credits
earned for the five model years preceding the current model year, and credits projected to be earned for the next
three model years, can be used to meet CAFE standards in a current model year.
In December 2011, the EPA and the NHTSA issued a joint proposed rule to further reduce greenhouse gas
emissions and improve fuel economy for passenger vehicles, light-duty trucks and medium-duty passenger
vehicles for model years 2017 through 2025. In the rule, which was finalized in August 2012, these vehicles are
required to meet an estimated combined average emission level of 163 grams of carbon dioxide per mile inmodel year 2025, equivalent to 54.5 miles per gallon if these requirements are met through improvements in fueleconomy standards. At the same time, the NHTSA also issued CAFE standards for passenger vehicles and lightduty trucks that would require manufacturers to meet an estimated combined average fuel economy level of
49.6 miles per gallon in model year 2025. As discussed above, however, on April 2, 2018, the EPA announced
that the greenhouse gas emission standards for model years 2022 through 2025 would be repealed and replacedwith new, presumably less-stringent standards, and that the EPA and NHTSA would jointly commence drafting a
new rule that would set new and presumably less stringent CAFÉ standards for these model years. On May 1,
2018, California and 16 other states filed suit in the U.S. Circuit Court of Appeals for the District of Columbia tooppose the EPA and NHTSA’s decision to repeal and replace the standards. On August 2, 2018, the EPA and the
NHTSA issued a joint Notice of Proposed Rulemaking. The Administration’s proposed rule would freeze thevehicle fuel economy and CAFE standards at 2020 levels for model years 2021-2026. The rule would also revoke
the waiver granted to California to establish more stringent standards for vehicle emissions. In response to the
Administration’s proposed rule, on August 7, 2018 the CARB posted a proposal to ensure that cars and light-duty
trucks for model years 2021-2025 would continue to meet California’s more stringent standards. The EPA andCalifornia had been in discussions regarding their differences over vehicle emission standards, but these
discussions broke off without resolution on February 20, 2019. Whatever the outcome of the EPA and NHTSA’s
new rule making efforts or the related litigation, Toyota will continue to strive to meet applicable fuel economy
standards by further developing fuel-efficient technology, alternative fuel technology and other advanced
technology.
In April 2018, the NHTSA reviewed the penalties on nonconformity of CAFE standards and proposed to
re-impose a fine of $5.5 for each inadequate fuel economy level of 0.1 mile per gallon and invited commentsfrom the general public on the Federal Register.
European Standards
In February 2014, the European Parliament and Council reduced the average carbon dioxide emissions
target for light commercial vehicles to 147 grams per kilometer beginning in 2020. In March 2014, the European
Parliament and Council reduced the average carbon dioxide emissions target for passenger vehicles to 95 grams
per kilometer beginning in 2021. 95% of each manufacturer’s new cars must comply with this new standard by
2020. Penalties apply to those manufacturers who fail to meet their targets, in amounts corresponding to thedegree of shortfall. Manufacturers failing to meet their targets incur penalties of between €5 and €95 per eachgram of carbon dioxide per kilometer shortfall for each non-compliant vehicle, and such penalties will rise to €95
from the first gram of exceedance onwards in 2019 and beyond.
In November 2017, the European Commission proposed new carbon dioxide standards for cars and lightcommercial vehicles for the period after 2020. Average emissions of the EU fleet of new cars and vans in 2025
are proposed to be 15% lower than in 2021, reduced further to 30% lower than in 2021 by 2030. In April 2019,
the EU Parliament and the European Council approved more stringent 2030 limits of a 37.5% reduction for cars
39and 31% for vans relative to 2021. Starting from 2021, the emissions targets will be tested using the WLTP
procedures.
An EU directive on motor vehicle air conditioning units required manufacturers to replace currently usedrefrigerants with refrigerants having a lower global warming impact for all newly registered vehicles starting inJanuary 2017.
Chinese Standards
Fuel consumption regulations are being implemented pursuant to the Chinese National Standards (“GB”),
and the manufacture and sale of vehicle models not meeting these regulations are prohibited. For light-duty
passenger vehicles, GB27999-2011 was issued. In these Level 3 Fuel Consumption Regulations for passenger
vehicles, the regulation framework was substantially revised, such as the introduction of new regulations
requiring automobile manufacturers to meet standards of corporate average fuel consumption across models in
addition to existing regulations requiring each model to meet consumption standards. Furthermore, in order toachieve the national target for average fuel efficiency for 2020, the following more stringent fuel consumption
regulations have been enacted and enforced. First, GB19578-2014, which has been enacted to strengthen
regulations for each model, is being applied to new models after January 2016. Second, GB27999-2014, which
has been enacted as Level 4 Fuel Consumption Regulations for passenger vehicles to strengthen corporate
average regulations, has been in effect since 2016. In addition, Level 5 Fuel Consumption Regulations forpassenger vehicles are being examined as more stringent next-generation fuel consumption regulations. For lightduty commercial vehicles, GB20997-2015 was enacted, which further applied Level 3 Fuel Consumption
Regulations to all new vehicles from January 2018 and is currently being enforced.
With respect to large commercial vehicles, pursuant to GB30510-2014, Level 2 Fuel Consumption
Regulations apply to new vehicles from July 2014 and are currently being enforced. In addition, in an effort tofurther strengthen fuel consumption regulations, GB30510-2018 was enacted, pursuant to which Level 3 Fuel
Consumption Regulations are scheduled to be applied to new vehicles from July 2019.
Vehicle Safety
Japanese Standards
In Japan, efforts have been made since 1998 to bring Japanese standards in line with the regulations of theUnited Nations Economic Commission for Europe (“UN”).
With respect to standards that were previously brought in line with the UN regulations, under the Japanesestandards regarding seat belts, the range of vehicles and seats requiring the fitting of seatbelt reminder devices
that warn the driver when seat belts are not fastened has been expanded; such requirements will become
applicable in stages, starting in September 2020. Standards for approaching vehicle audible systems apply to newmodels beginning from March 2018 and to existing models still in production beginning in October 2020. With
respect to standards that are scheduled to be newly brought in line with the UN regulations, the standards for
accident emergency call devices will apply to new vehicles fitted with the devices from January 2020 and toexisting models still in production from July 2021. Standards for ISOFIX attachment devices have been
separated from the standards for seat belt attachment, and have applied as new standards to new vehicles since
July 2018.
Furthermore, unique to Japan, guidelines for emergency driving stop systems (evacuate to road shouldertype) were established. The enhancement of visibility standards for rearward and surrounding area, as well as thestandardization of measures relating to brake override systems, the strengthening of anti-spinal injury measuresand anti-drunk driving measures are currently under consideration.
40

U.S. Standards
In December 2015, the Fixing America’s Surface Transportation (“FAST”) Act was signed into law. The
FAST Act increased the maximum civil penalty that NHTSA can collect for violations of applicable safety laws
from $35 million to $105 million. In connection with recalls of defective vehicles, the FAST Act expanded thefree remedy that manufacturers must provide car owners from applying to cars up to ten years old to applying tocars up to 15 years old.
In 2016, the NHTSA and the Insurance Institute for Highway Safety announced that they have agreed withtwenty major vehicle manufacturers to standardize equipment of automatic emergency brakes on almost all newmodels by 2022. In the same year, the NHTSA also announced a policy regarding automatic driving vehicles topromote such vehicles safely, as well as best practices to enhance cybersecurity for vehicles.
In 2017, the NHTSA proposed to establish a new safety standard to require passenger vehicles and lightduty commercial vehicles to have dedicated short-range communication units that enable Vehicle-to-Vehiclecommunication.
European Standards
Fitting of emergency call systems (“eCall”) became mandatory for new vehicles from the end of
March 2018 for light-duty passenger vehicles and light-duty commercial vehicles using the framework of“Whole Vehicle Type Approval.”
In May 2018, the European Commission made a proposal to tighten the regulations concerning safety andthe protection of vehicle occupants and vulnerable road users, which would make certain vehicle safety
equipment mandatory to a great extent, including: advanced emergency braking, emergency lane keeping
systems, driver drowsiness and attention warning, intelligent speed assistance, reversing detection systems, tirepressure monitoring systems, and data recorders in case of an accident (“event data recorders”).
In March 2019, the European Parliament, Council and Commission reached a provisional politicalagreement on the proposed regulation and will start the procedures for the adoption. If this regulation takes
effect, fitting of multiple equipment will become mandatory in stages from around 2022.
In addition, GEAR2030 (the High Level Group on the Competitiveness and Sustainable Growth of theAutomotive Industry in the European Union) was established in January 2016 as a successor body of the
CARS2020, deliberations were conducted at the European Commission and each member state, as well as among
high-level related stakeholders, for strengthening the competitiveness of the automobile value chain in Europe by
2030, and the final report was issued in October 2017. The final report discussed the importance of thesimplification of the existing and future regulatory framework and its implementation, specific measures
addressing automated and connected vehicles, the creation of a EU type-approval framework for the certificationof automated driving vehicles and the implementation of the ITS Directive and its delegated regulations by eachmember state. Detailed strategies are currently being deliberated based on the final report. As part of that, inFebruary 2019 the European Commission adopted draft guidelines concerning the exemption procedure for the
Whole Vehicle Type Approval (WVTA), as a short-term measure for promoting the use of automated driving
vehicles. As a result, it will be possible for automated driving vehicles to be approved through “approval throughthe exemption procedure” even while the adoption of the EU or UN regulations on automated driving vehicles ispending.
United Nations Regulations
While automotive parts and vehicle systems are regulated by the UN regulations, there were no regulations
with respect to Whole Vehicle Type Approval (WVTA) such as those in Europe. Japan proposed legislation
41

establishing International Whole Vehicle Type Approval (IWVTA) under the United Nations in 2016, and the
proposal was adopted as UN Regulation No. 0 (“R0”) in November 2017. IWVTA took effect in July 2018
(although the mutual recognition of IWVTA will not take place) and to be implemented with the mutual
recognition in April 2019. Although this IWVTA (applies to passenger vehicles), which was created as a firststep, is incomplete, it is significant because it creates a framework that enables the reciprocal recognition ofwhole vehicles type approval. Work is underway to formulate a complete IWVTA system for small passenger
vehicles as the second step. If a complete IWVTA is formulated, integration of global approval administrative
regulations of each country and simplification of vehicle construction regulations are expected.
The United Nations is currently discussing establishing new regulations for automated driving vehicles. As
part of this effort, the existing working party was abolished and replaced by the Working Party on Automated/
Autonomous and Connected Vehicles (GRVA) that is dedicated to examine automated driving. The European,
U.S., Chinese and Japanese etc. governments are currently coordinating to establish sub-working groups under
the GRVA (certain sub-working groups have already been established for functional safety requirements, newevaluation test method requirements, cybersecurity, software updates, data recording for automated driving
vehicles and data recording in case of an accident). For the new regulation on automated driving vehicles, thedraft regulation is aimed to be finalized in 2020 in light of the targeted timing for popularization of these vehicles
in each country, and while the deliberation framework has been established, the deliberation on technicalrequirements has also commenced. As related initiatives, new areas such as compliance with regulations on
vehicles in the use phase (including compliance with regulations outside the scope of the conditions prescribedby the type approval regulations) are also being examined.
Chinese Standards
Vehicle safety regulations in China were drafted with reference to the UN regulations and cover almost thesame matters as the UN regulations. However, recently, these regulations also include unique provisions whichtake into account the distinctive characteristics of the Chinese market environment and the progress oftechnological development in China and there are increasing number of legislations that differ from the latest UN
regulations or other international standards. As for future safety regulations, standards related to batteries,
motors, the charging of EVs and data communication are currently being planned.
Environmental Matters
Japanese Standards
Toyota’s automotive operations in Japan are subject to substantial environmental regulation under laws suchas the Air Pollution Control Act the Water Pollution Prevention Act, the Noise Regulation Act and the Vibration
Control Act. Under these laws, if a business entity establishes or alters any facility that is regulated by these laws,
the business entity is required to give prior notice to regulators, and if a business entity discharges, uses or stores
substances that are environmental burdens or causes noise or vibration from such facility, the business entity isalso required to comply with the applicable standards. Toyota is also subject to local regulations, which in somecases impose more stringent obligations than the Japanese central government requirements. Toyota has
complied with these regulations. Under the Waste Management and Public Cleansing Act, producers of industrial
waste must dispose of industrial waste in the manner prescribed in the same act. Toyota has also complied withthe same act.
The Soil Contamination Countermeasures Act of Japan requires that land owners conduct contamination
testing and submit a report at the time they cease to use hazardous substances, such as in connection with the saleof a former factory, or if there is a possibility of health hazards due to land contamination. If it is found that land
contamination exceeds a certain level, the relevant prefectural authority designates the area as considered to becontaminated, orders the land owner to submit a plan for decontamination (such plan must describe the measures
to be taken in the area, the reasons therefor, and the deadline for implementing such measures, etc.), and has the42

land owner take such measures in accordance with such plan. Toyota is suitably managing its land in accordancewith the same law. In addition, under the Act on Recycling, etc. of End-of-Life Vehicles, vehicle manufacturers
are required to take back and recycle specified materials (automotive shredder residues, air bags andfluorocarbons) of end-of-life vehicles and the provisions concerning such obligations of vehicle manufacturers
became effective in January 2005. Toyota has coordinated with relevant parties to establish a vehicle take-backand recycle system throughout Japan. As a result, in fiscal 2019, Toyota achieved a recycling/recovery rate of
97% for automobile shredder residue (the legal requirement being 70%) and 97% for air bags (the legal
requirement being 85%) and reached the targets set forth in this law.
U.S. Standards
Toyota’s assembly, manufacturing and other operations in the United States are subject to a wide range ofenvironmental regulation under the Clean Air Act, the Clean Water Act, the Resource Conservation andRecovery Act, the Pollution Prevention Act of 1990 and the Toxic Substances Control Act. Toyota is also subject
to a variety of state legislation that parallels, and in some cases imposes more stringent obligations than, federal
requirements. These federal and state regulations impose severe restrictions on air- and water-borne discharges ofpollution from Toyota facilities, the handling of hazardous materials at Toyota facilities and the disposal ofwastes from Toyota operations. Toyota is subject to many similar requirements in its operations in Europe,
Canada and other countries.
Pursuant to the Clean Air Act, the EPA has promulgated National Ambient Air Quality Standards(“NAAQS”) for six “criteria” pollutants, including for ozone and particulate matter. The Clean Air Act requiresthat the EPA review and possibly revise these NAAQS every five years. On December 14, 2012, the EPA madethe annual health-based particulate matter NAAQS more stringent. On October 1, 2015, the EPA made theannual health-based and welfare-based ozone NAAQS more stringent. The revised annual health-based
particulate matter NAAQS and the revised annual health-based and welfare-based ozone NAAQS, as well as any
future NAAQS revisions, could lead to additional pollution control requirements on the industry, including on
Toyota’s manufacturing operations.
Toyota expects growing pressure in the next several years to further reduce emissions from motor vehicles
and manufacturing facilities.
European Standards
In 2014, the EU adopted a regulation to reduce noise produced by cars, vans, buses, coaches and light andheavy trucks. Noise limit values must ultimately be lowered by four A-weighted decibels for vehicles other thantrucks, and three A-weighted decibels for trucks. Compliance must be achieved in three steps over a ten to
12 year period.
Toyota believes that its operations are materially in compliance with environmental regulatory requirements
concerning its facilities and products in each of the markets in which it operates. Toyota continuously monitorsthese requirements and takes necessary operational measures to ensure that it remains in material compliancewith all of these requirements.
Toyota believes that environmental regulatory requirements have not had a material adverse effect on its
operations. However, compliance with environmental regulations and standards has increased costs and is
expected to lead to higher costs in the future. Therefore, Toyota recognizes that effective environmental costmanagement will become increasingly important. Moreover, innovation and leadership in the area ofenvironmental protection are becoming increasingly important to remain competitive in the market. As a result,
Toyota has proceeded with the development and production of environmentally friendly technologies, such as
hybrid vehicles, FCVs and high fuel efficiency, low emission engines.
43

In addressing environmental issues, based on an assessment of the environmental impact of its products
through their entire life cycles, from production through sales, disposal and recycling, Toyota, as a manufacturer,
strives to take all possible measures from development stage and continues to work towards technologicalinnovations to make efficient use of resources and to reduce the burden on the environment.
Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934
None.
Research and Development
The overriding goals of Toyota’s technology and product development activities are to minimize thenegative aspects of cars, such as traffic accidents and impact on the environment, and maximize the positive
aspects, such as driving pleasure, comfort and convenience. By achieving these sometimes conflicting goals to ahigh degree, Toyota seeks to open the door to the automobile society of the future. To ensure efficient progress inresearch and development activities, Toyota coordinates and integrates all research and development phases,from basic research and advanced research to forward-looking technology and product development. With
respect to long-term basic research in areas such as energy, the environment, information technology,
telecommunications and materials, projects are regularly reviewed and evaluated in consultation with outside
experts to achieve research and development cost control. With respect to forward-looking, leading-edge
technology and product development, Toyota establishes cost-performance benchmarks on a project-by-projectbasis to ensure efficient development investment.
The chart below provides an overview of Toyota’s R&D at each phase.
Basic researchPhase to discover development theme
Research on basic vehicle-related technology

Forward-looking andleading-edge technology
development

Phase requiring technological breakthroughs such as components and systems
Development of leading-edge components and systems that are more advanced
than those of competitors

Product development

Phase mainly for development of new models
Development of all-new models and existing-model upgrades

Toyota is promoting research and development into the early commercialization of next generation
environmentally friendly, energy-efficient and safe-vehicle technology. Toyota is also moving forward with thedevelopment of innovative technologies such as electrification, connected vehicles and automated driving so as
to realize a mobility society of the future that enables everyone to enjoy freedom of movement beyond theconventional concept of vehicles. To this end, Toyota is focusing on the following areas:•

further improvements in hybrid technologies, including in functions and cost, and contributions to theenvironment through advancements;•

improvement in internal combustion engine fuel economy technology as well as improvement intechnology in connection with more stringent emission standards;•

development of EVs, FCVs and other alternative fuel vehicles;•development of advanced safety technology designed to promote driving and vehicle safety;•

automated driving technologies; and•connected car technologies.
44

For a detailed discussion of the company’s research and development infrastructure, see “Operating and
Financial Review and Prospects — Research and Development, Patents and Licenses.”Components and Parts, Raw Materials and Sources of Supply
Toyota purchases parts, components, raw materials, equipment and other supplies from multiple competing
suppliers located around the world. Toyota works closely with its suppliers to pursue optimal procurement.
Toyota believes that this policy encourages technological innovation, cost reduction and other measures tostrengthen its vehicle competitiveness. Toyota plans to continue purchases based on the same principle and does
not anticipate any difficulty in obtaining stable supplies in the foreseeable future. For example, in 2018, Japanwas hit by major disasters such as the Northern Osaka Earthquake (June), heavy rain in western Japan (July) andthe Hokkaido Eastern Iburi Earthquake (September), Toyota minimized the impact of those disasters throughutmost efforts with all Toyota suppliers to realize early restoration of damaged local areas and suppliers, as well
as alternative production by other suppliers.
Because Toyota had more than 50 overseas operations in 27 countries and regions as of March 31, 2019,
procurement of parts and components is being carried out not only locally in the country of the production site
but also from third countries. As a result, the distribution network has become increasingly complex. In order torealize timely and efficient distribution while minimizing costs, Toyota is promoting efforts to optimize eachstage of the supply-chain. To this end, Toyota has developed a standardized system of global distribution and is
supporting the operation of the system at each production base. The use of the global distribution system aims at
implementing parts procurement that meets changes in vehicle production in a timely manner. These varying
efforts, combined together, have led to maximized customer satisfaction, as well as to building a good working
relationship with Toyota’s suppliers.
Toyota aims to share information and collaborate among the procurement divisions in each of the regions
throughout the world in order to procure parts and materials from the most competitive suppliers among Toyota
factories located in various areas worldwide. At the same time, Toyota carries out streamlining efforts together
with suppliers in each country in order to achieve sustainable growth. Toyota has been working on cost reduction
measure, referred to as RR-CI and VA activities. Through RR-CI activities, which are conducted in conjunction
with TNGA, Toyota aims to ensure cost competitiveness through such means as thorough localization, sharing
parts and components and manufacturing reforms, together with producing products matching customers’ needs
in each region and vehicle category, and reinforcing activities from a medium- to long-term perspective as thethird phase of RR-CI. Toyota has been continuously working on VA (value analysis) activities for the various
types of vehicles already on sale in collaboration with in-house vehicle companies. In pursuit of cost reduction,
Toyota focuses on “developing a real cost-competitive structure” by working together with suppliers.
In the raw material market during 2018, the impact of OPEC’s coordinated production cut and the situationin Middle East resulted in higher prices for crude oil and naptha-related products, and the increase in actual
demands for raw materials for automobiles also pushed up the prices of precious metals (palladium andrhodium). Furthermore, market prices of aluminum were volatile due to U.S. trade policy. The direction of prices
is still unforeseeable and Toyota is continually promoting cost reduction efforts, such as reducing the amount of
raw materials it uses.
Toyota’s ability to continue to obtain supplies in an efficient manner is subject to a number of factors, someof which are not in Toyota’s control. These factors include the ability of its suppliers to provide a continued
source of supplies and the effect on Toyota of competition by other users in obtaining the supplies.
Intellectual Property
Toyota holds numerous Japanese and foreign patents, trademarks, design patents and some utility model
registrations. It also has a number of applications pending for Japanese and foreign patents. While Toyota
45considers all of its intellectual property to be important, it does not consider any specific subset of its patents,
trademarks, design patents or utility model registrations to be so important that their expiration or termination
would materially affect Toyota’s business.
Capital Expenditures and Divestitures
Set forth below is a chart of Toyota’s principal capital expenditures between April 1, 2016 and March 31,
2019, the approximate total costs of such activity, as well as the location and method of financing of suchactivity, presented on a “by subsidiary” basis and as reported in Toyota’s annual Japanese securities report filedwith the director of the Kanto Local Finance Bureau.

Description of Activity

Japan
Investment primarily in technology and products by
Toyota Motor Corporation . . . . . . . . . . . . . . . . . . . . . . .

Investment primarily in technology and products by
Toyota Motor Kyushu, Inc. . . . . . . . . . . . . . . . . . . . . . .
Investment primarily in technology and products byHino Motors, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment primarily in technology and products by
Toyota Auto Body Co., Ltd. . . . . . . . . . . . . . . . . . . . . .
Investment primarily in technology and products by
Daihatsu Motor Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . .
Investment primarily in technology and products byPrimearth EV Energy Co., Ltd. . . . . . . . . . . . . . . . . . . .
Outside of Japan
Investment primarily to promote localization by
Toyota Motor Manufacturing, Kentucky, Inc. . . . . . . . .
Investment primarily to promote localization by
Toyota Motor Manufacturing Canada Inc. . . . . . . . . . .
Investment primarily to promote localization by
Toyota Motor Manufacturing, Indiana, Inc. . . . . . . . . .
Investment primarily to promote localization by
Toyota do Brazil Ltda. . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment primarily to establish office facilities by
Toyota Motor North America, Inc. . . . . . . . . . . . . . . . .
Investment primarily to promote localization by
Toyota Motor Thailand Co., Ltd. . . . . . . . . . . . . . . . . . .
Investment primarily to promote localization by
Toyota Motor Manufacturing Mississippi, Inc. . . . . . . .
Investment primarily to promote localization by
Toyota Motor Europe NV/SA . . . . . . . . . . . . . . . . . . . .
Investment primarily in leased automobiles by
Toyota Motor Credit Corporation . . . . . . . . . . . . . . . . .

46

Primary
Method ofFinancing

Total Cost
(Yen in billions)

Location

1,042.5

Japan

Internal funds,
financingfrom issuanceof bonds, etc.

110.1

Japan

Internal funds

99.9

Japan

Internal funds

81.1

Japan

Internal funds

68.1

Japan

Internal funds

54.4

Japan

Borrowings

266.2

United States

Internal funds

147.1

CanadaInternal funds

108.3

United States

Internal funds

97.8

BrazilInternal funds

97.5

United States

Internal funds

93.4

ThailandInternal funds

70.2

United States

Internal funds

64.5

BelgiumInternal funds

6,085.0

United States

Internal funds,
financingfrom issuanceof bonds, etc.

Set forth below is information with respect to Toyota’s material plans to construct, expand or improve its
facilities between April 2019 and March 2020, presented on a “by subsidiary” basis and as reported in Toyota’s
annual Japanese securities report filed with the director of the Kanto Local Finance Bureau.

Description of Activity

Japan
Investment primarily in manufacturing facilities by
Toyota Motor Corporation . . . . . . . . . . . . . . . . . . . . . . . .
Investment primarily in manufacturing facilities byPrimearth EV Energy Co., Ltd. . . . . . . . . . . . . . . . . . . . .

Total Cost
(Yen in billions)

Location

Primary
Method ofFinancing

300.0

Japan

Internal funds

48.9

Japan

Borrowings

82.3

CanadaInternal funds

53.7

United States

Internal funds

47.7

BelgiumInternal funds

45.3

BrazilInternal funds

Outside of Japan
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing Canada Inc. . . . . . . . . . . . .
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing, Indiana, Inc. . . . . . . . . . . .
Investment primarily in manufacturing facilities by
Toyota Motor Europe NV/SA . . . . . . . . . . . . . . . . . . . . .
Investment primarily in manufacturing facilities by
Toyota do Brazil Ltda. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set forth below is additional information with respect to Toyota’s material plans to construct, expand or
improve its facilities.
In Mexico, Toyota increased production capacity at its Baja California factory from 100 thousand units to
160 thousand units in 2018 and is constructing a new plant to be opened by the end of 2019. In the U.S., Toyota
plans to construct a new joint-manufacturing plant with Mazda in 2021. Toyota also plans to start new productionlines of hybrid transaxles with annual capacity of 200,000 units in its West Virginia plant during 2020 and 2021.
In Alabama, Toyota will increase annual engine production capacity by 230,000 units by the end of 2021. In
China, Toyota launched a third plant in Guangzhou in 2018. Tianjin FAW Toyota Motor Co., Ltd. also
constructed a new production line to replace an aging existing line in June 2018. At the beginning of 2019,
Toyota launched a new plant in Malaysia dedicated to passenger vehicles with annual production capacity of
50,000 cars.
Toyota does not collect information on the amount of expenditures already paid for each plant underconstruction because Toyota believes that it is difficult and it would require unreasonable effort or expense to
identify and categorize each expenditure item with reasonable accuracy as past and future expenditures. Toyota’s
construction projects consist of numerous expenditures, each of which is continually being adjusted and incurredin variable and constantly changing amounts as part of the overall work-in-progress.
Seasonality
Toyota does not consider its seasonality material in the sense of significantly higher sales during any certain
period of the year as compared to other periods of the year.
Legal Proceedings
From time-to-time, Toyota issues vehicle recalls and takes other safety measures including safety campaigns
relating to its vehicles. Since 2009, Toyota issued safety campaigns related to the risk of floor mat entrapment ofaccelerator pedals and vehicle recalls related to slow-to-return or sticky accelerator pedals. Personal injury and47wrongful death claims involving allegations of unintended acceleration are still pending in several consolidated
proceedings in federal and state courts, as well as in individual cases in various other states. The judges in the
consolidated federal action and the consolidated California state action have approved an Intensive Settlement
Process (“ISP”) for such claims in those actions. Under the ISP, all individual claims within the consolidated
actions are stayed pending completion of a process to assess whether they can be resolved on terms acceptable tothe parties. Cases not resolved after completion of the ISP will then proceed to discovery and toward trial. Toyota
has offered the ISP process to plaintiffs in other consolidated actions and in individual cases, as well.
Toyota has been named as a defendant in 33 economic loss class action lawsuits in the United States, which,
together with similar lawsuits against Takata and other automakers, have been made part of a multi-district
litigation proceeding in the United States District Court for the Southern District of Florida, arising out ofallegations that airbag inflators manufactured by Takata are defective. Toyota has reached a settlement with theplaintiffs in the United States economic loss class actions. The court approved the settlement on October 31,
2017, and the subsequent appeals have been withdrawn, making the settlement final. The economic loss classaction lawsuits against Toyota have been dismissed. Toyota and other automakers have also been named incertain class actions filed in Mexico, Canada, Australia, Israel and Brazil, as well as some other actions by states
or territories of the United States. Those actions have not been settled and are being litigated.
Toyota self-reported a process gap in fulfilling certain emissions defect information reporting requirementsof the U.S. Environmental Protection Agency (“EPA”) and California Air Resources Board, including updates on
its repair completion rates for recalled emissions components and certain other reports concerning emissions
related defects. Toyota is involved in discussions with the EPA and the Civil Division of the Southern District of
New York (“SDNY”) on this reporting issue. These agencies have requested certain follow-up information
regarding this reporting issue, and Toyota is cooperating with the request.
Toyota also has various other pending legal actions and claims, including without limitation personal injury
and wrongful death lawsuits and claims in the United States, and is subject to government investigations fromtime-to-time.
Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a
range of reasonably possible loss, if any, for the pending legal matters because (i) many of the proceedings are inevidence gathering stages, (ii) significant factual issues need to be resolved, (iii) the legal theory or nature of theclaims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of othermatters of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Basedupon information currently available to Toyota, however, Toyota believes that its losses from these matters, ifany, beyond the amounts accrued, would not have a material adverse effect on Toyota’s financial position, resultsof operations or cash flows.

48

4.C ORGANIZATIONAL STRUCTURE
As of March 31, 2019, Toyota Motor Corporation had 288 Japanese subsidiaries and 320 overseas
subsidiaries. The following table sets forth for each of Toyota Motor Corporation’s principal subsidiaries, thecountry of incorporation and the percentage ownership interest and the voting interest held by Toyota Motor
Corporation.
Country ofIncorporation

Name of Subsidiary

Toyota Financial Services Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .
JapanHino Motors, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Toyota Motor Kyushu, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
JapanDaihatsu Motor Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Toyota Finance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Misawa Homes Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Toyota Auto Body Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Toyota Motor East Japan, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
JapanDaihatsu Motor Kyushu Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
Toyota Motor Engineering & Manufacturing North America, Inc. . . . . United States
Toyota Motor Manufacturing, Kentucky, Inc. . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor North America, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor Credit Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor Manufacturing, Indiana, Inc. . . . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor Manufacturing, Texas, Inc. . . . . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor Sales, U.S.A., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States
Toyota Motor Manufacturing de Baja California, S. de R.L. de C.V. . .
MexicoToyota Motor Manufacturing Canada Inc. . . . . . . . . . . . . . . . . . . . . . . .
CanadaToyota Credit Canada Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CanadaToyota Canada Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CanadaToyota Motor Europe NV/SA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BelgiumToyota Motor Manufacturing France S.A.S. . . . . . . . . . . . . . . . . . . . . . .
FranceToyota Kreditbank GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany
Toyota Motor Finance (Netherlands) B.V. . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Toyota Motor Manufacturing (UK) Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Toyota Financial Services (UK) PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Toyota Motor Manufacturing Turkey Inc. . . . . . . . . . . . . . . . . . . . . . . .
TurkeyOOO “TOYOTA MOTOR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RussiaToyota Motor (China) Investment Co., Ltd. . . . . . . . . . . . . . . . . . . . . . .
China
Toyota Motor Finance (China) Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . .
China
Toyota Kirloskar Motor Pvt. Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
India
P.T. Astra Daihatsu Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indonesia
P.T. Toyota Motor Manufacturing Indonesia . . . . . . . . . . . . . . . . . . . . .
Indonesia
Toyota Motor Asia Pacific Pte Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore
ThailandToyota Leasing (Thailand) Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota Motor Thailand Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ThailandToyota Daihatsu Engineering & Manufacturing Co., Ltd. . . . . . . . . . . .
ThailandToyota Motor Corporation Australia Ltd. . . . . . . . . . . . . . . . . . . . . . . . .
Australia
Toyota Finance Australia Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia
Toyota Argentina S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Argentina
Toyota do Brasil Ltda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BrazilToyota South Africa Motors (Pty) Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . South Africa

49

Percentage
Ownership
Interest

Percentage
VotingInterest

100.0050.21
100.00100.00100.0051.00
100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0051.00
100.00100.00100.00100.00100.00100.0090.00
100.00100.00100.00
89.00
61.75
95.00
100.0086.84
86.43
100.00100.00100.00100.00100.00100.00100.0050.29
100.00100.00100.0051.21
100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0051.00
100.00100.00100.00100.00100.00100.0090.00
100.00100.00100.00
89.00
61.75
95.00
100.0086.84
86.43
100.00100.00100.00100.00100.00100.004.D PROPERTY, PLANTS AND EQUIPMENT
As of March 31, 2019, Toyota and its affiliated companies produced automobiles and related components
through more than 50 overseas manufacturing organizations in 27 countries and regions besides Japan. The
facilities are located principally in Japan, the United States, Canada, the United Kingdom, France, Turkey,
Thailand, China, Taiwan, India, Indonesia, South Africa, Argentina and Brazil.
In addition to its manufacturing facilities, Toyota’s properties include sales offices and other sales facilities
in major cities, repair service facilities and research and development facilities.
The following table sets forth information, as of March 31, 2019, with respect to Toyota’s principal
facilities and organizations, all of which are owned by Toyota Motor Corporation or its subsidiaries. However,small portions, all under approximately 20%, of some facilities are on leased premises.

Facility or Subsidiary NameLand Area(thousandsquareNumber ofmeters) Employees

Location

Principal
Products orFunctionsJapan (Toyota Motor Corporation)
Tahara Plant . . . . . . . . . . . . . . . . . . . . . Tahara City, Aichi Pref.
Toyota Head Office and TechnicalCenter . . . . . . . . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.

4,029

6,608

Automobiles

3,568

23,868Higashi-Fuji Technical Center . . . . . . . Susono City, Shizuoka Pref.

2,037

2,968

Motomachi Plant . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.
Takaoka Plant . . . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.
Tsutsumi Plant . . . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.
Kamigo Plant . . . . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.
Kinu-ura Plant . . . . . . . . . . . . . . . . . . . Hekinan City, Aichi Pref.
Honsha Plant . . . . . . . . . . . . . . . . . . . . Toyota City, Aichi Pref.
Nagoya Office . . . . . . . . . . . . . . . . . . . Nagoya City, Aichi Pref.

1,593
1,312
937
868
836
551
3

7,793
4,369
5,364
3,118
3,100
2,049
2,337

Research andDevelopment
Research andDevelopment
Automobiles
Automobiles
Automobiles
Automobile parts
Automobile parts
Automobile parts
Office

6,263
7,747

12,935
11,428Automobiles
Automobiles

1,949
2,262
2,572

8,064
11,286
7,130

Automobiles
Automobiles
Automobiles

5,161
4,414
3,279

7,902
10,073
5,203

Automobiles
Automobiles
Sales facilities

4,752
724

7,615
1,812

Automobiles
OfficeJapan (Subsidiaries)
Hino Motors, Ltd. . . . . . . . . . . . . . . . . Hino City, Tokyo, etc.
Daihatsu Motor Co., Ltd. . . . . . . . . . . . Ikeda City, Osaka, etc.
Toyota Motor Kyushu, Inc. . . . . . . . . . Miyawaka City, Fukuoka Pref.,etc.
Toyota Auto Body Co., Ltd. . . . . . . . . Kariya City, Aichi Pref., etc.
Toyota Motor East Japan, Inc. . . . . . . . Kurokawa-gun, Miyagi Pref., etc.
Outside Japan (Subsidiaries)
Toyota Motor Manufacturing,
Kentucky, Inc. . . . . . . . . . . . . . . . . . Kentucky, U.S.A.
Toyota Motor Thailand Co., Ltd. . . . . Samutprakan, Thailand
Toyota Motor Sales, U.S.A., Inc. . . . . Texas, U.S.A.
Toyota Motor Manufacturing Canada,Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . Ontario, Canada
Toyota Motor North America, Inc . . . . Texas, U.S.A.

Toyota is constantly engaged in upgrading, modernizing and revamping the operations of its manufacturing
facilities based on its assessment of market needs and prospects. To respond flexibly to fluctuations in demand ineach of its production operations throughout the world, Toyota continually reviews and implements appropriate
production measures such as revising takt time and adjusting days of operation. As a result, Toyota believes it50

would require unreasonable effort to track the exact productive capacity and the extent of utilization of each of its
manufacturing facilities with a reasonable degree of accuracy.
As of March 31, 2019, property, plant and equipment having a net book value of approximately¥641.5 billion was pledged as collateral securing indebtedness incurred by Toyota Motor Corporation’s
consolidated subsidiaries. Toyota believes that there does not exist any material environmental issues that may
affect the company’s utilization of its assets.
Toyota considers all its principal manufacturing facilities and other significant properties to be in goodcondition and adequate to meet the needs of its operations.
See “— Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s materialplans to construct, expand or improve facilities.

ITEM 4A. UNRESOLVED STAFF COMMENTS
None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
5.A OPERATING RESULTS
Financial information discussed in this section is derived from Toyota’s consolidated financial statementsthat appear elsewhere in this annual report. The financial statements have been prepared in conformity withaccounting principles generally accepted in the United States of America.

Overview
The business segments of Toyota include automotive operations, financial services operations and all otheroperations. Automotive operations are Toyota’s most significant business segment, accounting for 88% of
Toyota’s total revenues before the elimination of intersegment revenues for fiscal 2019. Toyota’s primarymarkets based on vehicle unit sales for fiscal 2019 were: Japan (24.8%), North America (30.6%), Europe(11.1%) and Asia (18.7%).

Automotive Market Environment
The worldwide automotive market is highly competitive and volatile. The demand for automobiles isaffected by a number of factors including social, political and general economic conditions; introduction of newvehicles and technologies; and costs incurred by customers to purchase or operate vehicles. These factors cancause consumer demand to vary substantially in different geographic markets and for different types ofautomobiles.
During fiscal 2019, automotive markets have remained stable in developed countries, but have slowed downin China, which had been experiencing continued expansion, as well as in some resource-rich countries.
51

The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market based on
location of customers for the past three fiscal years.
Thousands of units
Year Ended March 31,
2017
2018
2019

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,274 2,255 2,226
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,837 2,806 2,745
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
925
968
994
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,588 1,543 1,684
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,347 1,392 1,327
Overseas total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,697

6,709

6,751

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,971

8,964

8,977

* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.
In each of fiscal 2018 and fiscal 2019, although Toyota’s consolidated vehicle unit sales in Japan decreased
compared to the previous fiscal year, for fiscal 2018 and fiscal 2019, the Toyota and Lexus brands’ market shareexcluding mini-vehicles in Japan was 46.9% and 45.9%, and the market share (including Daihatsu and Hinobrands) including mini-vehicles was 44.4% and 43.6%, each remaining at a high level as a result of the efforts ofdealers nationwide, consistent with the previous fiscal year. Overseas consolidated vehicle unit sales increased asa whole during fiscal 2018, due mainly to increases in Europe and Other, and vehicle unit sales increased as awhole during fiscal 2019, due mainly to increases in Asia and Europe.
Toyota’s share of total vehicle unit sales in each market is influenced by the quality, safety, reliability, price,design, performance, economy and utility of Toyota’s vehicles compared with those offered by othermanufacturers. The timely introduction of new or redesigned vehicles is also an important factor in satisfying
customer needs. Toyota’s ability to satisfy changing customer preferences can affect its revenues and earnings
significantly.
The profitability of Toyota’s automotive operations is affected by many factors. These factors include:•

vehicle unit sales volumes,•

the mix of vehicle models and options sold,•the level of parts and service sales,•

the levels of price discounts and other sales incentives and marketing costs,•

the cost of customer warranty claims and other customer satisfaction actions,•the cost of research and development and other fixed costs,•

the prices of raw materials,•

the ability to control costs,•

the efficient use of production capacity,•

the adverse effect on production due to the reliance on various suppliers for the provision of supplies,•

the adverse effect on market, sales and productions of natural calamities and interruptions of social
infrastructure, and•changes in the value of the Japanese yen and other currencies in which Toyota conducts business.
52

Changes in laws, regulations, policies and other governmental actions can also materially impact the
profitability of Toyota’s automotive operations. These laws, regulations and policies include those attributed toenvironmental matters, vehicle safety, fuel economy and emissions that can add significantly to the cost ofvehicles.
Many governments also impose local content requirements, impose tariffs and other trade barriers, and enact
price or exchange controls that can limit an automaker’s operations and can make the repatriation of profits
unpredictable. Changes in these laws, regulations, policies and other governmental actions may affect the
production, licensing, distribution or sale of Toyota’s products, cost of products or applicable tax rates. From
time-to-time when potential safety problems arise, Toyota issues vehicle recalls and takes other safety measures
including safety campaigns relating to its vehicles. Since 2009, Toyota issued safety campaigns related to the riskof floor mat entrapment of accelerator pedals and vehicle recalls related to slow-to-return or sticky accelerator
pedals. The recalls and other safety measures described above have led to a number of claims and lawsuits
against Toyota. For a more detailed description of these claims and lawsuits, see “Information on the Company— Business Overview — Legal Proceedings” and note 24 to the consolidated financial statements.
The worldwide automotive industry is in a period of global competition which may continue for theforeseeable future, and in general the competitive environment in which Toyota operates is likely to intensify.
Toyota believes it has the resources, strategies and technologies in place to compete effectively in the industry as
an independent company for the foreseeable future.
Financial Services Operations
The competition in the worldwide automobile financial services industry is intensifying. As competition
increases, margins on financing transactions may decrease and market share may also decline as customers
obtain financing for Toyota vehicles from alternative sources.
Toyota’s financial services operations mainly include loans and leasing programs for customers and dealers.
Toyota believes that its ability to provide financing to its customers is an important value added service.
Therefore, Toyota has expanded its network of finance subsidiaries in order to offer financial services in many
countries.
Toyota’s competitors for retail financing and retail leasing include commercial banks, credit unions andother finance companies. Meanwhile, commercial banks and other captive automobile finance companies also
compete against Toyota’s wholesale financing activities.
Toyota’s total finance receivables increased during fiscal 2019 mainly due to an increase in retailreceivables. Also, vehicles and equipment on operating leases, net increased during fiscal 2019 mainly due to thefavorable impact of changes in exchange rates.
For a detail of finance receivables and vehicles and equipment on operating leases, see note 6 and 9 to theconsolidated financial statements.
Toyota’s finance receivables are subject to collectability risks. These risks include consumer and dealer
insolvencies and insufficient collateral values (less costs to sell) to realize the full carrying values of thesereceivables. See discussion in “Critical Accounting Estimates — Allowance for Doubtful Accounts and Credit
Losses” and note 10 to the consolidated financial statements.
Toyota continues to originate leases to finance new Toyota vehicles. These leasing activities are subject toresidual value risk. Residual value losses could be incurred when the lessee of a vehicle does not exercise theoption to purchase the vehicle at the end of the lease term. See discussion in “Critical Accounting Estimates —Investment in Operating Leases” and note 2 to the consolidated financial statements.
53

Toyota enters into interest rate swap agreements and cross currency interest rate swap agreements to convert
its fixed-rate debt to variable-rate functional currency debt. A portion of the derivative instruments are enteredinto to hedge interest rate risk from an economic perspective and are not designated as a hedge of specific assets
or liabilities on Toyota’s consolidated balance sheet and accordingly, unrealized gains or losses related toderivatives that are not designated as a hedge are recognized currently in operations. See discussion in “Critical
Accounting Estimates — Derivatives and Other Contracts at Fair Value” and “Quantitative and Qualitative
Disclosures about Market Risk” and notes 21 and 28 to the consolidated financial statements.
The fluctuations in funding costs can affect the profitability of Toyota’s financial services operations.
Funding costs are affected by a number of factors, some of which are not in Toyota’s control. These factors
include general economic conditions, prevailing interest rates and Toyota’s financial strength. Funding costs
increased during fiscal 2018 and fiscal 2019, mainly as a result of higher interest rates.
Toyota launched its credit card business in Japan in April 2001. As of March 31, 2018, Toyota had
15.3 million cardholders, an increase of 0.4 million cardholders compared with March 31, 2017. As of March 31,
2019, Toyota had 15.8 million cardholders, an increase of 0.5 million cardholders compared with March 31,
2018. Credit card receivables as of March 31, 2018 increased by ¥23.1 billion from March 31, 2017 to¥432.7 billion, and that as of March 31, 2019 increased by ¥42.9 billion from March 31, 2018 to ¥475.6 billion.
Other Business Operations
Toyota’s other business operations consist of housing (including the manufacture and sale of prefabricatedhomes), information technology related businesses (including information technology and telecommunicationsand GAZOO) and other businesses.
Toyota does not expect its other business operations to materially contribute to Toyota’s consolidated resultsof operations.
Currency Fluctuations
Toyota is affected by fluctuations in foreign currency exchange rates. Toyota is exposed to fluctuations in
the value of the Japanese yen against the U.S. dollar and the euro as well as the Australian dollar, the Russian
ruble, the Canadian dollar, the British pound, and others. Toyota’s consolidated financial statements, which arepresented in Japanese yen, are affected by foreign currency exchange fluctuations through both translation risk
and transaction risk.
Translation risk is the risk that Toyota’s consolidated financial statements for a particular period or for aparticular date will be affected by changes in the prevailing exchange rates of the currencies in those countries inwhich Toyota does business compared with the Japanese yen. Even though the fluctuations of currency exchange
rates to the Japanese yen can be substantial, and, therefore, significantly impact comparisons with prior periods
and among the various geographic markets, the translation risk is a reporting consideration and does not reflect
Toyota’s underlying results of operations. Toyota does not hedge against translation risk.
Transaction risk is the risk that the currency structure of Toyota’s costs and liabilities will deviate from thecurrency structure of sales proceeds and assets. Transaction risk relates primarily to sales proceeds from Toyota’s
non-domestic operations from vehicles produced in Japan.
Toyota believes that the location of its production facilities in different parts of the world has significantly
reduced the level of transaction risk. As part of its globalization strategy, Toyota has continued to localize
production by constructing production facilities in the major markets in which it sells its vehicles. In calendar
2017 and 2018, Toyota produced 75.9% and 72.8%, respectively, of its non-domestic sales outside Japan. In
North America, 71.1% and 68.9% of vehicles sold in calendar 2017 and 2018, respectively, were produced54

locally. In Europe, 81.5% and 78.3% of vehicles sold in calendar 2017 and 2018, respectively, were produced
locally. Localizing production enables Toyota to locally purchase many of the supplies and resources used in the
production process, which allows for a better match of local currency revenues with local currency expenses.
Toyota also enters into foreign currency transactions and other hedging instruments to address a portion of
its transaction risk. This has reduced, but not eliminated, the effects of foreign currency exchange rate
fluctuations, which in some years can be significant. See notes 21 and 28 to the consolidated financial statements
for additional information.
Generally, a weakening of the Japanese yen against other currencies has a positive effect on Toyota’s
revenues, operating income and net income attributable to Toyota Motor Corporation. A strengthening of theJapanese yen against other currencies has the opposite effect. In fiscal 2018 and 2019, the Japanese yen was on
average weaker against the U.S. dollar in comparison to fiscal 2017 and 2018, respectively. The Japanese yen
was at the end of fiscal 2018 stronger against the U.S. dollar in comparison to the end of fiscal 2017, but was at
the end of fiscal 2019 weaker against the U.S. dollar in comparison to the end of fiscal 2018. In fiscal 2018, theJapanese yen was on average weaker against the euro in comparison to the previous fiscal year, but in fiscal
2019, was on average stronger against the euro in comparison to the previous fiscal year. The Japanese yen wasat the end of fiscal 2018 weaker against the euro in comparison to the end of fiscal 2017, but was at the end of
fiscal 2019 stronger against the euro in comparison to the end of fiscal 2018. See further discussion in“Quantitative and Qualitative Disclosures about Market Risk — Market Risk Disclosures — Foreign Currency
Exchange Rate Risk”.

Segmentation
Toyota’s most significant business segment is its automotive operations. Toyota carries out its automotive
operations as a global competitor in the worldwide automotive market. Management allocates resources to, andassesses the performance of, its automotive operations as a single business segment on a worldwide basis andassesses financial and non-financial data such as vehicle unit sales, production volume, market share information,
vehicle model plans and plant location costs to allocate resources within the automotive operations. Toyota does
not manage any subset of its automotive operations, such as domestic or overseas operations or parts, as separate
management units.

Geographic Breakdown
The following table sets forth Toyota’s net revenues in each geographic market based on the country
location of the parent company or the subsidiaries that transacted the sale with the external customer for the past
three fiscal years.

2017

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen in millions
Year ended March 31,
20188,798,903
10,033,419
2,517,601
4,279,617
1,967,653* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
55

9,273,672
10,347,266
2,940,243
4,497,374
2,320,955

2019

9,520,148
10,585,934
3,055,654
4,832,392
2,231,553

Results of Operations — Fiscal 2019 Compared with Fiscal 2018
Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination/unallocated amount . . . . . . . . . .

16,024,844 16,625,361 600,517
10,574,410 10,817,247 242,837
3,185,224
3,238,851
53,627
5,148,139
5,513,031 364,892
2,453,299
2,333,443 (119,856)(8,006,406) (8,302,252) (295,846)

3.7%
2.3
1.7
7.1
(4.9)
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,379,510 30,225,681
Operating income (loss):Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,659,918
1,691,675
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138,899
114,515
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,026
124,868
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
433,199
457,489
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112,663
91,110Intersegment elimination/unallocated amount . . . . . . . . . .
(19,843)(12,112)846,171

2.9

31,757(24,384)
49,842
24,290(21,553)7,731

1.9(17.6)
66.4
5.6(19.1)—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and equity in earnings ofaffiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net margin from income before income taxes and equity inearnings of affiliated companies . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . .
Net income attributable to Toyota Motor Corporation . . . . . . .
Net margin attributable to Toyota Motor Corporation . . . . . . .

67,683(0.0)%

2.8

2,399,862
2,467,545
8.2%
8.2%
2,620,429

2,285,465(334,964)(12.8)

8.9%
7.6%(1.3)%
470,083
360,066 (110,017)(23.4)
2,493,983
1,882,873 (611,110)(24.5)
8.5%
6.2%(2.3)%* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
Net Revenues
Toyota had net revenues for fiscal 2019 of ¥30,225.6 billion, an increase of ¥846.1 billion, or 2.9%,
compared with the prior fiscal year. The increase resulted mainly from the ¥860.0 billion impact of changes invehicle unit sales and sales mix, partially offset by the ¥510.0 billion unfavorable impact of changes in exchange
rates.

56

The table below shows Toyota’s net revenues from external customers by product category and by business.
Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parts and components for overseas production . . . . . . . . . . . . . .
Parts and components for after service . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,631,201
498,8022,044,104
1,173,122

23,066,190 434,989
625,483 126,681
2,093,437
49,333
1,249,382
76,260

1.9%
25.4
2.4
6.5

Total Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,347,229 27,034,492 687,263
1,073,047
1,070,846(2,201)

2.6(0.2)

Total sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,420,276
1,959,234

28,105,338
2,120,343

685,062
161,109

2.5
8.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,379,510

30,225,681

846,171

2.9%

Toyota’s net revenues include net revenues from sales of products, consisting of net revenues fromautomotive operations and all other operations, which increased by 2.5% during fiscal 2019 compared with theprior fiscal year to ¥28,105.3 billion, and net revenues from financial services operations which increased by
8.2% during fiscal 2019 compared with the prior fiscal year to ¥2,120.3 billion. The increase in net revenues
from sales of products is mainly due to the impact of changes in vehicle unit sales and sales mix.
The following table shows the number of financing contracts by geographic region at the end of fiscal 2019and 2018, respectively.
Number of financing contracts in thousands
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,103
5,465
1,112
1,672
846

2,249
5,404
1,220
1,803
890

146
(61)
108
131
44

6.9%
(1.1)
9.7
7.8
5.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,198

11,566368

3.3%* “Other” consists of Central and South America, Oceania and Africa.
Geographically, net revenues (before the elimination of intersegment revenues) for fiscal 2019 increased by
3.7% in Japan, 2.3% in North America, 1.7% in Europe, and 7.1% in Asia, while they decreased by 4.9% in
Other compared with the prior fiscal year. Excluding the impact of changes in exchange rates of ¥510.0 billion,
net revenues in fiscal 2019 would have increased by 3.0% in Japan, 2.5% in North America, 4.5% in Europe,
8.0% in Asia, and 12.1% in Other compared with the prior fiscal year.

57

The following is a discussion of net revenues in each geographic market (before the elimination ofintersegment revenues).
Japan
Thousands of units
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Toyota’s consolidated vehicle unit sales* . . . . . . . . . . . . . . . . . .

4,137

4,173

36

0.9%

* including number of exported vehicle unit sales
Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,893,465
131,379

16,485,093
140,268

591,628
8,889

3.7%
6.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,024,844

16,625,361

600,517

3.7%

Toyota’s domestic and exported vehicle unit sales increased by 36 thousand vehicles compared with theprior fiscal year and net revenues in Japan increased. For fiscal 2018 and 2019, exported vehicle unit sales were1,882 thousand units and 1,947 thousand units, respectively.
North America
Thousands of units
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . .

2,806

2,745

(61)

(2.2)%

Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,173,277
1,401,133

9,295,132
1,522,115

121,855
120,982

1.3%
8.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,574,410

10,817,247

242,837

2.3%

Net revenues in North America increased due primarily to the impact of changes in vehicle sales mix
despite vehicle unit sales decreasing by 61 thousand vehicles compared with the prior fiscal year.

58EuropeThousands of units
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . . . .

968

994

26

2.7%

Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,074,396
110,828

3,107,687
131,164

33,291
20,336

1.1%
18.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,185,224

3,238,851

53,627

1.7%

Despite the unfavorable impact of changes in exchange rates, net revenues in Europe increased due
primarily to the 26 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year. The
vehicle unit sales increased due mainly to strong sales of C-HR and other hybrid vehicles.
Asia
Thousands of units
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . . . .

1,543

1,684

141

9.2%

Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,996,339
151,800

5,348,385
164,646

352,046
12,846

7.0%
8.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,148,139

5,513,031

364,892

7.1%

Despite the unfavorable impact of changes in exchange rates, net revenues in Asia increased due primarily
to the 141 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year. The vehicle unit
sales increased due mainly to strong sales in Thailand and China.

59

OtherThousands of units
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . . .

1,392

1,327

(65)

(4.6)%

Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,270,150
183,149

2,148,134
185,309(122,016)
2,160(5.4)%
1.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,453,299

2,333,443(119,856)(4.9)%Net revenues in Other decreased due primarily to the 65 thousand vehicles decrease in vehicle unit sales
compared with the prior fiscal year. The decrease in vehicle unit sales was due mainly to decreased sales in the
Middle East.

Operating Costs and Expenses
Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Operating costs and expenses
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of financing operations . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,600,474 23,389,495
1,288,679
1,392,290
3,090,495
2,976,351

789,021103,611(114,144)

3.5%
8.0
(3.7)

26,979,648

778,488

2.9%

27,758,136

Yen in millions
2019 v. 2018 Change

Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of increase of cost of financing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

750,000(460,000)
118,500(80,000)
165,000
284,988

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

778,488

Operating costs and expenses increased by ¥778.4 billion, or 2.9%, to ¥27,758.1 billion during fiscal 2019
compared with the prior fiscal year. This increase resulted from the ¥750.0 billion impact of changes in vehicle
unit sales and sales mix, the ¥165.0 billion increase in expenses, the ¥118.5billion increase in cost of financing
operations (excluding the effect of changes in exchange rates), and the ¥284.9 billion increase in other, partially
offset by the ¥460.0 billion favorable impact of changes in exchange rates, and the ¥80.0 billion impact of cost
reduction efforts.
60

The increase in expenses was due mainly to the ¥45.0 billion increase in labor costs, the ¥20.0 billion
increase in depreciation expenses and the ¥190.0 billion increase in other various costs, partially offset by the¥75.0 billion decrease in product quality related expenses.
The decrease in product quality related expenses was due mainly to a decrease in provisions for recalls andother safety measures resulting from a decrease in actual payments during fiscal 2019. See note 13 to theconsolidated financial statements for further discussion.
Cost Reduction Efforts
During fiscal 2019, continued cost reduction efforts together with suppliers contributed to a reduction ofoperating costs and expenses by ¥80.0 billion. This was due to ¥25.0 billion in cost reduction efforts concerning
design related costs due mainly to ongoing value engineering activities, and ¥55.0 billion in cost reduction efforts
at plants and logistics departments.
These cost reduction efforts related to ongoing value engineering and value analysis activities, the use ofcommon parts resulting in a reduction of part types and other manufacturing initiatives designed to reduce thecosts of vehicle production. The amount of the effect of cost reduction efforts includes the impact of fluctuationin the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production
materials and parts.
Cost of Products Sold
Cost of products sold increased by ¥789.0 billion, or 3.5%, to ¥23,389.4 billion during fiscal 2019 comparedwith the prior fiscal year. The increase resulted mainly from the impact of changes in vehicle unit sales and sales
mix, as well as the increase in labor costs and depreciation expenses, partially offset by the favorable impact ofchanges in exchange rates, the impact of cost reduction efforts and the decrease in product quality related
expenses.
Cost of Financing Operations
Cost of financing operations increased by ¥103.6 billion, or 8.0%, to ¥1,392.2 billion during fiscal 2019
compared with the prior fiscal year. The increase was mainly due to the increased funding costs as a result ofhigher interest rates.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by ¥114.1 billion, or 3.7%, to ¥2,976.3 billion during
fiscal 2019 compared with the prior fiscal year. This decrease mainly reflected the favorable impact of changes inexchange rates.
Operating Income
Yen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

275,000
80,000(50,000)(165,000)(72,317)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67,68361

Toyota’s operating income increased by ¥67.6 billion, or 2.8%, to ¥2,467.5 billion during fiscal 2019
compared with the prior fiscal year. This increase was due to the ¥275.0 billion impact of marketing efforts, andthe ¥80.0 billion impact of cost reduction efforts, partially offset by the ¥165.0 billion increase in expenses, andthe ¥50.0 billion unfavorable impact of changes in exchange rates.
Marketing efforts and marketing activities include changes in vehicle unit sales and sales mix, sales
expenses and other. “Other” includes valuation gains and losses from interest rate swaps etc.
The unfavorable impact of changes in exchange rates was due mainly to the ¥95.0 billion impact of overseas
transactions such as imports and exports denominated in foreign currencies, the ¥60.0 billion translational impact
concerning provisions at the end of the fiscal year, and the ¥25.0 billion translational impact concerning
operating income of overseas subsidiaries. This was partially offset by the ¥136.2 billion impact of the change of
exchange rate used to translate foreign currency-denominated transactions as well as foreign currencydenominated monetary receivables and payables to the Telegraphic Transfer Middle Rate from fiscal 2019.
During fiscal 2019, operating income (before elimination of intersegment profits) compared with the priorfiscal year increased by ¥49.8 billion, or 66.4%, in Europe, ¥31.7 billion, or 1.9%, in Japan, and ¥24.2 billion, or
5.6%, in Asia, and decreased by ¥24.3 billion, or 17.6%, in North America, and ¥21.5 billion, or 19.1%, in Other.
The following is a description of operating income in each geographic market.

Japan
Yen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

70,00090,0005,000(120,000)(13,243)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31,757

North America
Yen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115,000
5,000(20,000)(85,000)(39,384)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(24,384)62

EuropeYen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,0005,000(15,000)
35,0004,842

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49,842Asia
Yen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80,000(20,000)(40,000)
4,290

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,290Other
Yen in millions
2019 v. 2018 Change

Changes in operating income and loss:
Effect of marketing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease in expenses and expense reduction efforts . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10,000)(20,000)
35,000(26,553)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(21,553)

Other Income and Expenses
Interest and dividend income increased by ¥45.9 billion, or 25.6%, to ¥225.4 billion during fiscal 2019
compared with the prior fiscal year.
Interest expense increased by ¥0.4 billion, or 1.8%, to ¥28.0 billion during fiscal 2019 compared with theprior fiscal year.
Foreign exchange gain, net decreased by ¥10.2 billion, or 45.3%, to ¥12.4 billion during fiscal 2019
compared with the prior fiscal year. Foreign exchange gains and losses include the differences between the valueof foreign currency denominated assets and liabilities recognized through transactions in foreign currencies
translated at prevailing exchange rates and the value at the date the transaction settled during the fiscal year,
including those settled using forward foreign currency exchange contracts, or the value translated by appropriate
year-end exchange rates. The ¥10.2 billion decrease in the foreign exchange gains, net was due mainly to the63change of exchange rate used to translate foreign currency-denominated transactions as well as foreign currencydenominated monetary receivables and payables to the Telegraphic Transfer Middle Rate from fiscal 2019. Thisdecrease was partially offset by gains recorded in fiscal 2019 resulting from the Japanese yen being weakeragainst foreign currencies at the dates of settlement of the foreign currency trade accounts receivable than at thedates of the transactions.
Toyota adopted new guidance for financial instruments from fiscal 2019. Equity securities are measured atfair value and any changes in fair value are recognized in net income. According to this adoption, a¥341.0 billion loss was recorded as unrealized gains (losses) on equity securities.
Other income (loss), net decreased by ¥96.7 billion, to ¥50.8 billion in losses during fiscal 2019 comparedwith the prior fiscal year.

Income Taxes
The provision for income taxes increased by ¥155.5 billion, or 30.8%, to ¥659.9 billion during fiscal 2019
compared with the prior fiscal year. This increase was due mainly to revaluation of deferred tax assets andliabilities resulting from the Tax Cuts and Jobs Act of 2017 of the United States. The effective tax rate for fiscal
2019 was 28.9%.

Net Income Attributable to Noncontrolling Interests and Equity in Earnings of Affiliated Companies
Net income attributable to noncontrolling interests increased by ¥10.5 billion, or 11.5%, to ¥102.7 billion
during fiscal 2019 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal
2019 in net income attributable to the shareholders of consolidated subsidiaries.
Equity in earnings of affiliated companies during fiscal 2019 decreased by ¥110.0 billion, or 23.4%, to¥360.0 billion compared with the prior fiscal year. This decrease was due mainly to the losses of unrealized gains(losses) on equity securities due to the adoption of the new guidance for financial instruments and a decreaseduring fiscal 2019 in net income attributable to the shareholders of affiliated companies accounted for by theequity method.

Net Income Attributable to Toyota Motor Corporation
Net income attributable to the shareholders of Toyota Motor Corporation decreased by ¥611.1 billion, or
24.5%, to ¥1,882.8 billion during fiscal 2019 compared with the prior fiscal year.
Net income attributable to common shareholders during fiscal 2019 is ¥1,868.0 billion, which is derived bydeducting dividends and accretion to Model AA Class Shares of ¥14.7 billion from net income attributable to
Toyota Motor Corporation.

Other Comprehensive Income and Loss
Other comprehensive income and loss decreased by ¥1,147.1 billion to losses of ¥1,352.3 billion for fiscal
2019 compared with the prior fiscal year. This decrease resulted from recognition of a cumulative-effectadjustment to retained earnings of ¥1,309.7 billion as of April 1, 2018 for unrealized gains (losses) on equity
securities due mainly to the adoption of the new guidance for financial instruments, and from pension liability
adjustment losses in fiscal 2019 of ¥51.0 billion compared with gains of ¥21.7 billion in the prior fiscal year due
mainly to changes in fair value of plan assets.
64Segment Information
The following is a discussion of the results of operations for each of Toyota’s operating segments. The
amounts presented are prior to intersegment elimination.
Yen in millions
Year ended March 31,
2019 v. 2018 Change
2018
2019
AmountPercentage

Automotive:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination/unallocated amount:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,397,940
2,011,135

27,079,077
2,038,884

681,137
27,7492.6%
1.4

2,017,008
285,546

2,153,547
322,821

136,539
37,2756.8
13.1

1,646,118
100,812

1,676,377
105,538

30,259
4,726

1.8
4.7

(681,556)
2,369(683,320)302(1,764)(2,067)——

Automotive Operations Segment
The automotive operations segment is Toyota’s largest operating segment by net revenues. Net revenues forthe automotive segment increased during fiscal 2019 by ¥681.1 billion, or 2.6%, to ¥27,079.0 billion comparedwith the prior fiscal year. The increase mainly reflects the ¥860.0 billion favorable impact of changes in vehicle
unit sales and sales mix, partially offset by the ¥480.0 billion unfavorable impact of changes in exchange rates.
Operating income from the automotive operations increased by ¥27.7 billion, or 1.4%, to ¥2,038.8 billion
during fiscal 2019 compared with the prior fiscal year. This increase in operating income was due mainly to the¥205.0 billion impact of marketing efforts, and ¥80.0 billion impact of cost reduction efforts, partially offset bythe ¥165.0 billion increase in expenses, and the ¥50.0 billion unfavorable impact of changes in exchange rates.
The impact of marketing efforts was due mainly to improvement of the vehicle sales mix in North America,
Europe and Asia. The increase in expenses was due mainly to the ¥45.0 billion increase in labor costs, the¥20.0 billion increase in depreciation expenses and the ¥190.0 billion increase in other various costs, partially
offset by the ¥75.0 billion decrease in product quality related expenses.
Financial Services Operations Segment
Net revenues for the financial services operations increased during fiscal 2019 by ¥136.5 billion, or 6.8%, to¥2,153.5 billion compared with the prior fiscal year. This increase was primarily due to the ¥58.4 billion increase
in rental income from vehicles and equipment on operating leases in sales finance subsidiaries in North America.
Operating income from financial services operations increased by ¥37.2 billion, or 13.1%, to ¥322.8 billion
during fiscal 2019 compared with the prior fiscal year. This increase was due primarily to the decrease in
expenses related to residual value losses and the increase in financing volume, in sales finance subsidiaries.
All Other Operations Segment
Net revenues for Toyota’s other operations segments increased by ¥30.2 billion, or 1.8%, to ¥1,676.3 billion
during fiscal 2019 compared with the prior fiscal year.
65

Operating income from Toyota’s other operations segments increased by ¥4.7 billion, or 4.7%, to¥105.5 billion during fiscal 2019 compared with the prior fiscal year.
Results of Operations — Fiscal 2018 Compared with Fiscal 2017
Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination/unallocated amount . . . . . . . .

14,830,868 16,024,844 1,193,976
10,239,091 10,574,410
335,319
2,681,039
3,185,224
504,185
4,819,821
5,148,139
328,318
2,161,074
2,453,299
292,225(7,134,700) (8,006,406) (871,706)

8.1%
3.3
18.8
6.8
13.5
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss):Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination/unallocated amount . . . . . . . .

27,597,193

29,379,510

1,782,317

6.5

1,202,245
311,194(12,244)435,179
58,694(696)

1,659,918
138,899
75,026433,199
112,663(19,843)457,673(172,295)
87,270(1,980)53,969(19,147)38.1(55.4)
—
(0.5)
91.9
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and equity in earnings ofaffiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net margin from income before income taxes and equity inearnings of affiliated companies . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . .
Net income attributable to Toyota Motor Corporation . . . . .
Net margin attributable to Toyota Motor Corporation . . . . . .

1,994,372
2,399,862
7.2%
8.2%

405,4901.0%

20.3

2,193,825

426,604

19.4

1.0%
108,023
662,874
1.9%

29.8
36.2

2,620,429

7.9%
8.9%
362,060
470,083
1,831,109
2,493,983
6.6%
8.5%

* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
Net Revenues
Toyota had net revenues for fiscal 2018 of ¥29,379.5 billion, an increase of ¥1,782.3 billion, or 6.5%,
compared with the prior fiscal year. The increase resulted mainly from the ¥770.0 billion favorable impact offluctuations in foreign currency translation rates and the ¥670.0 billion impact of changes in vehicle unit sales
and sales mix.

66

The table below shows Toyota’s net revenues from external customers by product category and by business.
Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parts and components for overseas production . . . . . . . . . . . .
Parts and components for after service . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,540,563
468,214
1,955,781
1,067,671

22,631,201
498,8022,044,104
1,173,122

1,090,638
30,58888,323
105,451

5.1%
6.5
4.5
9.9

Total Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,032,229
781,267

26,347,229
1,073,047

1,315,000
291,780

5.3
37.3

Total sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,813,496
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,783,697

27,420,276
1,959,234

1,606,780
175,537

6.2
9.8

29,379,510

1,782,317

6.5%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,597,193

Toyota’s net revenues include net revenues from sales of products, consisting of net revenues fromautomotive operations and all other operations, which increased by 6.2% during fiscal 2018 compared with theprior fiscal year to ¥27,420.2 billion, and net revenues from financial services operations which increased by
9.8% during fiscal 2018 compared with the prior fiscal year to ¥1,959.2 billion. The increase in net revenues
from sales of products is mainly due to the favorable impact of fluctuations in foreign currency translation rates
and the impact of changes in vehicle unit sales and sales mix.
The following table shows the number of financing contracts by geographic region at the end of fiscal 2018and 2017, respectively.
Number of financing contracts in thousands
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,977
5,394
1,019
1,575
786

2,103
5,465
1,112
1,672
846

126
71
93
97
60

6.4%
1.3
9.1
6.2
7.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,751

11,198447

4.2%* “Other” consists of Central and South America, Oceania and Africa.
Geographically, net revenues (before the elimination of intersegment revenues) for fiscal 2018 increased by
8.1% in Japan, 3.3% in North America, 18.8% in Europe, 6.8% in Asia, and 13.5% in Other compared with theprior fiscal year. Excluding the impact of changes in the Japanese yen values used for translation purposes of¥770.0 billion, net revenues in fiscal 2018 would have increased by 8.1% in Japan, 0.7% in North America, 8.0%
in Europe, 2.5% in Asia, and 10.4% in Other compared with the prior fiscal year.
The following is a discussion of net revenues in each geographic market (before the elimination ofintersegment revenues).

67

JapanThousands of units
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Toyota’s consolidated vehicle unit sales* . . . . . . . . . . . . . . . .

4,000

4,137

137

3.4%

* including number of exported vehicle unit sales
Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,705,518
125,350

15,893,465
131,379

1,187,947
6,029

8.1%
4.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,830,868

16,024,844

1,193,976

8.1%

Toyota’s domestic and exported vehicle unit sales increased by 137 thousand vehicles compared with theprior fiscal year and net revenues in Japan increased. For fiscal 2017 and 2018, exported vehicle unit sales were1,726 thousand units and 1,882 thousand units, respectively.
North America
Thousands of units
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . .

2,837

2,806

(31)

(1.1)%

Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,951,333
1,287,758

9,173,277
1,401,133

221,944
113,375

2.5%
8.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,239,091

10,574,410

335,319

3.3%

Net revenues in North America increased due primarily to the favorable impact of fluctuations in foreign
currency translation rates despite vehicle unit sales decreasing by 31 thousand vehicles compared with the priorfiscal year.

68EuropeThousands of units
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . .

925

968

43

4.7%

Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,588,968 3,074,396
92,071
110,828

485,428
18,757

18.7%
20.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,681,039 3,185,224

504,185

18.8%

Net revenues in Europe increased due primarily to the favorable impact of fluctuations in foreign currencytranslation rates and the 43 thousand vehicle increase in vehicle unit sales compared with the prior fiscal year.
The vehicle unit sales increased due mainly to strong sales of C-HR and hybrid vehicles.
Asia
Thousands of units
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . . . . . .

1,588

1,543

(45)

(2.8)%

Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,689,774 4,996,339 306,565
130,047
151,800 21,753

6.5%
16.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,819,821 5,148,139 328,318

6.8%

Net revenues in Asia increased due primarily to the favorable impact of fluctuations in foreign currencytranslation rates despite vehicle unit sales decreasing by 45 thousand compared with the prior fiscal year.

69

OtherThousands of units
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Toyota’s consolidated vehicle unit sales . . . . . . . . . . . . . . . .

1,347

1,392

45

3.3%

Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Net revenues:
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,996,087
164,987

2,270,150
183,149

274,063
18,162

13.7%
11.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,161,074

2,453,299

292,225

13.5%

Net revenues in Other increased due primarily to the 45 thousand vehicle increase in vehicle unit sales
compared with the prior fiscal year. The increase in vehicle unit sales was due mainly to strong sales of Hilux
and Etios in Central and South America.
Operating Costs and Expenses
Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Operating costs and expenses
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of financing operations . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . .

21,543,035
1,191,301
2,868,485

22,600,474
1,288,679
3,090,495

1,057,439
97,378222,010

4.9%
8.2
7.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,602,821

26,979,648

1,376,827

5.4%

Yen in millions
2018 v. 2017 Change

Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of fluctuation in foreign currency translation rates . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of increase of cost of financing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of decrease of miscellaneous costs and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

600,000
505,000
61,300(165,000)(60,000)
435,527

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,376,827

Operating costs and expenses increased by ¥1,376.8 billion, or 5.4%, to ¥26,979.6 billion during fiscal 2018
compared with the prior fiscal year. This increase resulted from the ¥600.0 billion impact of changes in vehicle
unit sales and sales mix, the ¥505.0 billion unfavorable impact of fluctuations in foreign currency translation
rates, the ¥61.3 billion increase in cost of financing operations (excluding the effect of fluctuation in foreign
currency translation rates), and the ¥435.5 billion increase in other, partially offset by the ¥165.0 billion impact
of cost reduction efforts, and the ¥60.0 billion decrease of miscellaneous costs and others.
The decrease in miscellaneous costs and others was due mainly to the ¥300.0 billion decrease in productquality related expenses, partially offset by the ¥75.0 billion increase in labor costs, the ¥50.0 billion increase in70

depreciation expenses and the ¥90.0 billion increase in other various costs. “Other” includes the impact ofconsolidation and deconsolidation of certain entities due to changes in ownership interest.
The decrease in product quality related expenses was due mainly to a decrease in provisions for recalls andother safety measures resulting from a decrease in actual payments during fiscal 2018. See note 13 to theconsolidated financial statements for further discussion.
Cost Reduction Efforts
During fiscal 2018, continued cost reduction efforts together with suppliers contributed to a reduction ofoperating costs and expenses by ¥165.0 billion. This was due to ¥120.0 billion in cost reduction efforts
concerning design related costs due mainly to ongoing value engineering activities, and ¥45.0 billion in cost
reduction efforts at plants and logistics departments.
These cost reduction efforts related to ongoing value engineering and value analysis activities, the use ofcommon parts resulting in a reduction of part types and other manufacturing initiatives designed to reduce thecosts of vehicle production. The amount of the effect of cost reduction efforts includes the impact of fluctuationin the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production
materials and parts.
Cost of Products Sold
Cost of products sold increased by ¥1,057.4 billion, or 4.9%, to ¥22,600.4 billion during fiscal 2018
compared with the prior fiscal year. The increase resulted mainly from the impact of changes in vehicle unit sales
and sales mix, as well as the unfavorable impact of fluctuations in foreign currency translation rates, the impact
of consolidation and deconsolidation of certain entities due to changes in ownership interest, and the increase indepreciation expenses and labor costs, partially offset by the decrease in product quality related expenses and theimpact of cost reduction efforts.
Cost of Financing Operations
Cost of financing operations increased by ¥97.3 billion, or 8.2%, to ¥1,288.6 billion during fiscal 2018
compared with the prior fiscal year. The increase resulted mainly from the unfavorable impact of fluctuations inforeign currency translation rates.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by ¥222.0 billion, or 7.7%, to ¥3,090.4 billion during
fiscal 2018 compared with the prior fiscal year. This increase mainly reflected the impact of changes in vehicle
unit sales and sales mix, the unfavorable impact of fluctuations in foreign currency translation rates, and theimpact of consolidation and deconsolidation of certain entities due to changes in ownership interest.
Operating Income
Yen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of decrease of miscellaneous costs and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

265,000
165,000
60,000(100,000)
15,490Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

405,49071

Toyota’s operating income increased by ¥405.4 billion, or 20.3%, to ¥2,399.8 billion during fiscal 2018
compared with the prior fiscal year. This increase was due mainly to the ¥265.0 billion favorable impact ofchanges in foreign currency exchange rates, the ¥165.0 billion impact of cost reduction efforts, and the¥60.0 billion decrease in miscellaneous costs and others, partially offset by the ¥100.0 billion impact ofmarketing activities. The decrease in miscellaneous costs and others was due to the ¥300.0 billion decrease inproduct quality related expenses, partially offset by the ¥75.0 billion increase in labor costs, the ¥50.0 billion
increase in depreciation expenses and the ¥90.0 billion increase in other various costs.
Marketing efforts and marketing activities include changes in vehicle unit sales and sales mix, sales
expenses and other. “Other” includes valuation gains and losses from interest rate swaps etc.
From fiscal 2017, the effect of changes in exchange rates includes translational impacts concerning
operating income of overseas subsidiaries and concerning provisions in foreign currencies at the end of the fiscal
year. During fiscal 2018, the positive effect of changes in exchange rates includes ¥25.0 billion in translational
impacts concerning operating income of overseas subsidiaries (North America ¥5.0 billion and Asia
¥20.0 billion) and ¥25.0 billion in translational impacts concerning provisions in foreign currencies at the end of
the fiscal year.
During fiscal 2018, operating income (before elimination of intersegment profits) compared with the priorfiscal year increased by ¥457.6 billion, or 38.1%, in Japan, ¥87.2 billion in Europe, ¥53.9 billion, or 91.9%, inOther, and decreased by ¥172.2 billion, or 55.4%, in North America, and ¥1.9 billion, or 0.5%, in Asia.
The following is a description of operating income in each geographic market.

Japan
Yen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of increase of miscellaneous costs and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

260,000
140,000(35,000)
85,000
7,673

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

457,673

North America
Yen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of decrease of miscellaneous costs and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,00030,000(245,000)
22,705

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(172,295)72

EuropeYen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of decrease of miscellaneous costs and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5,000)20,00085,000(5,000)(7,730)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

87,270Asia
Yen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(25,000)
15,00015,000(6,980)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,980)Other
Yen in millions
2018 v. 2017 Change

Changes in operating income and loss:
Effect of changes in exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of cost reduction efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of marketing efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,000(10,000)
50,000(1,031)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53,969Other Income and Expenses
Interest and dividend income increased by ¥20.5 billion, or 12.9%, to ¥179.5 billion during fiscal 2018
compared with the prior fiscal year.
Interest expense decreased by ¥1.7 billion, or 6.0%, to ¥27.5 billion during fiscal 2018 compared with theprior fiscal year.
Foreign exchange gain (loss), net decreased by ¥10.9 billion, or 32.5%, to ¥22.6 billion during fiscal 2018
compared with the prior fiscal year. Foreign exchange gains and losses include the differences between the valueof foreign currency denominated assets and liabilities recognized through transactions in foreign currencies
translated at prevailing exchange rates and the value at the date the transaction settled during the fiscal year,
including those settled using forward foreign currency exchange contracts, or the value translated by appropriate
year-end exchange rates. The ¥10.9 billion decrease in foreign exchange gain (loss), net was due mainly to thelosses recorded in fiscal 2018 resulting from the Japanese yen being stronger against foreign currencies at thedates of settlement of the foreign currency trade accounts receivable than at the dates of the transactions.
73

Other income, net increased by ¥9.7 billion, or 26.9%, to ¥45.9 billion during fiscal 2018 compared with theprior fiscal year.
Income Taxes
The provision for income taxes decreased by ¥124.4 billion, or 19.8%, to ¥504.4 billion during fiscal 2018
compared with the prior fiscal year. This decrease was due mainly to revaluation of deferred tax assets andliabilities resulting from the Tax Cuts and Jobs Act of 2017 of the United States. The effective tax rate for fiscal
2018 was 19.2%.
Net Income Attributable to Noncontrolling Interests and Equity in Earnings of Affiliated Companies
Net income attributable to noncontrolling interests decreased by ¥3.7 billion, or 3.9%, to ¥92.1 billion
during fiscal 2018 compared with the prior fiscal year. This decrease was due mainly to a decrease during fiscal
2018 in net income attributable to the shareholders of consolidated subsidiaries.
Equity in earnings of affiliated companies during fiscal 2018 increased by ¥108.0 billion, or 29.8%, to¥470.0 billion compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2018
in net income attributable to the shareholders of affiliated companies accounted for by the equity method.
Net Income Attributable to Toyota Motor Corporation
Net income attributable to the shareholders of Toyota Motor Corporation increased by ¥662.8 billion, or
36.2%, to ¥2,493.9 billion during fiscal 2018 compared with the prior fiscal year.
Net income attributable to common shareholders during fiscal 2018 is ¥2,481.6 billion, which is derived bydeducting dividends and accretion to Model AA Class Shares of ¥12.2 billion from net income attributable to
Toyota Motor Corporation.
Other Comprehensive Income and Loss
Other comprehensive income and loss decreased by ¥235.3 billion to losses of ¥205.2 billion for fiscal 2018
compared with the prior fiscal year. This decrease resulted from unfavorable foreign currency translation
adjustment losses of ¥118.9 billion in fiscal 2018 compared with losses of ¥52.4 billion in the prior fiscal year
due mainly to appreciation of the yen against the U.S. dollar, from unrealized holding losses on securities infiscal 2018 of ¥96.5 billion compared with losses of ¥8.0 billion in the prior fiscal year due mainly to changes inprices of marketable securities in stock exchange markets, and from pension liability adjustment gains in fiscal
2018 of ¥21.7 billion compared with gains of ¥92.8 billion in the prior fiscal year due mainly to changes in fairvalue of plan assets.

74

Segment Information
The following is a discussion of the results of operations for each of Toyota’s operating segments. The
amounts presented are prior to intersegment elimination.
Yen in millions
Year ended March 31,2018 v. 2017 Change
2017
2018
AmountPercentage

Automotive:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intersegment elimination/unallocated amount:
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,081,847
1,692,973

26,397,940
2,011,135

1,316,093
318,1625.2%
18.8

1,823,600
222,428

2,017,008
285,546

193,408
63,11810.6
28.4

1,321,052
81,327

1,646,118
100,812

325,066
19,48524.6
24.0(629,306)(2,356)(681,556)
2,369(52,250)
4,725

—
—

Automotive Operations Segment
The automotive operations segment is Toyota’s largest operating segment by net revenues. Net revenues forthe automotive segment increased during fiscal 2018 by ¥1,316.0 billion, or 5.2%, to ¥26,397.9 billion comparedwith the prior fiscal year. The increase mainly reflects the ¥710.0 billion favorable impact of fluctuations inforeign currency translation rates and the ¥670.0 billion favorable impact of changes in vehicle unit sales andsales mix.
Operating income from the automotive operations increased by ¥318.1 billion, or 18.8%, to ¥2,011.1 billion
during fiscal 2018 compared with the prior fiscal year. This increase in operating income was due mainly to the¥265.0 billion favorable impact of changes in foreign currency exchange rates, ¥165.0 billion impact of cost
reduction efforts, and the ¥60.0 billion decrease in miscellaneous costs and others, partially offset by the¥150.0 billion impact of marketing activities.
The decrease in miscellaneous costs and others was due mainly to the ¥300.0 billion decrease in productquality related expenses, partially offset by the ¥75.0 billion increase in labor costs, the ¥50.0 billion increase indepreciation expenses and the ¥90.0 billion increase in other various costs. The impact of marketing activities
was due primarily to the increase in sales incentives in North America.
Financial Services Operations Segment
Net revenues for the financial services operations increased during fiscal 2018 by ¥193.4 billion, or 10.6%,
to ¥2,017.0 billion compared with the prior fiscal year. This increase was primarily due to the ¥60.0 billion
favorable impact of fluctuations in foreign currency translation rates.
Operating income from financial services operations increased by ¥63.1 billion, or 28.4%, to ¥285.5 billion
during fiscal 2018 compared with the prior fiscal year. This increase was due primarily to the increase infinancing volume and the decrease in expenses related to credit losses and residual value losses, in sales financesubsidiaries.
All Other Operations Segment
Net revenues for Toyota’s other operations segments increased by ¥325.0 billion, or 24.6%, to¥1,646.1 billion during fiscal 2018 compared with the prior fiscal year.
75

Operating income from Toyota’s other operations segments increased by ¥19.4 billion, or 24.0%, to¥100.8 billion during fiscal 2018 compared with the prior fiscal year.
Related Party Transactions
Toyota does not have any significant related party transactions other than transactions with affiliatedcompanies in the ordinary course of business. See note 11 to the consolidated financial statements for further
discussion.
Recent Accounting Pronouncements in the United States
For a detail of recent accounting pronouncements to be adopted in future periods, see note 2 to theconsolidated financial statements.
Critical Accounting Estimates
The consolidated financial statements of Toyota are prepared in conformity with accounting principles
generally accepted in the United States of America. The preparation of these financial statements requires the useof estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the periods presented. Toyota
believes that of its significant accounting policies, the following may involve a higher degree of judgments,
estimates and assumptions:
Product Warranties and Recalls and Other Safety Measures
Toyota generally warrants its products against certain manufacturing and other defects. Provisions for
product warranties are provided for specific periods of time and/or usage of the product and vary depending upon
the nature of the product, the geographic location of the sale and other factors. All product warranties are
consistent with commercial practices. Toyota includes a provision for estimated product warranty costs as acomponent of cost of sales at the time the related sale is recognized. The accrued warranty costs represent
management’s best estimate at the time of sale of the total costs that Toyota will incur to repair or replace
product parts that fail while still under warranty. The amount of accrued estimated warranty costs is primarily
based on historical experience of product failures as well as current information on repair costs. The amount of
warranty costs accrued also contains an estimate of warranty claim recoveries to be received from suppliers. The
foregoing evaluations are inherently uncertain, as they require material estimates and some products’ warranties
extend for several years. Consequently, actual warranty costs may differ from the estimated amounts and could
require additional warranty provisions. If these factors require a significant increase in Toyota’s accrued
estimated warranty costs, it would negatively affect future operating results of the automotive operations.
An estimate of warranty claim accrued for each fiscal year is calculated based on the estimate of warranty
claim per unit. The estimate of warranty claim per unit is calculated by dividing the actual amounts of warranty
claim, net of claim recovery cost received from suppliers, by the number of sales units for the fiscal year.
As the historical recovery amounts received from suppliers is used as a factor in Toyota’s calculation of
estimated accrued warranty cost, the estimated accrued warranty cost may change depending on the average
recovery amounts received from suppliers in the past. However, Toyota believes that there is not a significant
uncertainty of estimated amounts based on historical experience regarding recoveries received from suppliers.
Toyota may seek recovery to suppliers over the life of the warranty, and there are no other significant special
terms and conditions including cap on amounts that can be recovered.
Toyota accrues for costs of recalls and other safety measures, as well as product warranty cost describedabove, as a component of cost of sales. Toyota generally measures such “liabilities for recalls and other safety76measures” at the time of vehicle sales comprehensively by aggregate sales of various models in a certain period
by geographical regions. However, when circumstances warrant, Toyota measures “liabilities for a particular
recall or other safety measure” using an individual model when they are probable and reasonably estimable.
While there is no difference in the calculation method among geographical regions, Toyota believes it isreasonable to calculate the liabilities by geographical regions because of factors such as varying labor costs
among geographical regions.
The portion of “liabilities for the costs of recalls and other safety measures” recorded in the balance sheet
comprehensively is calculated by deducting the “accumulated amount of repair cost paid” from the “expectedliability for the cost of recalls and other safety measures”. As such, this liability is evaluated every period basedon new data and are adjusted as appropriate. Toyota calculates these liabilities for units sold in the current period
and each of the past 10 fiscal years, and aggregates such liabilities in determining the final liability amount.
The “expected liability for the cost of recalls and other safety measures” are calculated by multiplying the“sales unit” by the “expected average repair cost per unit”. The “expected average repair cost per unit” iscalculated based on dividing the “accumulated amount of repair cost paid per unit” by the “pattern of payment
occurrences”. The “pattern of payment occurrence” represents a ratio that shows the measure of payment
occurrence over 10 years based on actual payments with regard to units sold within 10 years.
Factors that may cause a difference between the amount accrued comprehensively at the time of vehicle saleand actual payment on individual recalls and other safety measures mainly include actual cost of recalls andsafety measures during the period being significantly different from the accumulated amount of repair cost paid
per unit (generally comprised of parts and labor) and the actual pattern of payment occurrence during the period
being significantly different from the pattern of the payment occurrence in the past, which is considered as partof our estimation process for future recalls and other safety measures.
As described above, in estimating the comprehensive provision, the actual cost of individual recalls andother safety measures is included as a component of the calculation such as the accumulated amount of repair
cost paid per unit. Thus, an individual recall announcement generally does not directly impact the financial
statements when it occurs.
Allowance for Doubtful Accounts and Credit Losses
Natures of estimates and assumptions
Retail receivables and finance lease receivables consist of retail installment sales contracts secured bypassenger cars and commercial vehicles. Collectability risks include consumer and dealer insolvencies andinsufficient collateral values (less costs to sell) to realize the full carrying values of these receivables. As a matterof policy, Toyota maintains an allowance for doubtful accounts and credit losses representing management’s
estimate of the amount of asset impairment in the portfolios of finance, trade and other receivables. Toyota
determines the allowance for doubtful accounts and credit losses based on a systematic, ongoing review andevaluation performed as part of the credit-risk evaluation process, historical loss experience, the size andcomposition of the portfolios, current economic events and conditions, the estimated fair value and adequacy ofcollateral, and other pertinent factors. This evaluation is inherently judgmental and requires material estimates,
including the amounts and timing of future cash flows expected to be received, which may be susceptible tosignificant change. Although management considers the allowance for doubtful accounts and credit losses to beadequate based on information currently available, additional provisions may be necessary due to (i) changes inmanagement estimates and assumptions about asset impairments, (ii) information that indicates changes in
expected future cash flows, or (iii) changes in economic and other events and conditions. To the extent that sales
incentives remain an integral part of sales promotion with the effect of reducing new vehicle prices, resale prices
of used vehicles and, correspondingly, the collateral value of Toyota’s retail receivables and finance leasereceivables could experience further downward pressure. If these factors require a significant increase in77

Toyota’s allowance for doubtful accounts and credit losses, it could negatively affect future operating results ofthe financial services operations. The level of credit losses, which has a greater impact on Toyota’s results ofoperations, is influenced by two factors: frequency of occurrence and expected severity of loss. For evaluation
purposes, exposures to credit losses are segmented into the two primary categories of “consumer” and “dealer”.
Toyota’s “consumer” category consists of smaller balances that are homogenous retail receivables andfinance lease receivables. The “dealer” category consists of wholesale and other dealer loan receivables. The
overall allowance for credit losses is evaluated at least quarterly, considering a variety of assumptions and factors
to determine whether reserves are considered adequate to cover probable losses.
Sensitivity analysis
The level of credit losses, which could significantly impact Toyota’s results of operations, is influenced by
two factors: frequency of occurrence and expected severity of loss. The overall allowance for credit losses isevaluated at least quarterly, considering a variety of assumptions and factors to determine whether reserves are
considered adequate to cover probable losses. The following table illustrates the effect of an assumed change infrequency of occurrence or expected severity of loss mainly in the United States, assuming all other assumptions
are held consistent. The table below represents the impact on the allowance for credit losses in Toyota’s financial
services operations of the change in frequency of occurrence or expected severity of loss as any change impacts
most significantly on the financial services operations.
Yen in millions
Effect on the allowancefor credit losses
as of March 31, 201910 percent change in frequency of occurrence or expected severity of loss . . . . . . . . . . . . . .

4,551

Investment in Operating Leases
Natures of estimates and assumptions
Vehicles on operating leases, where Toyota is the lessor, are valued at cost and depreciated over theirestimated useful lives using the straight-line method to their estimated residual values. Toyota utilizes industry
published information and its own historical experience to determine estimated residual values for these vehicles.
Toyota evaluates the recoverability of the carrying values of its leased vehicles for impairment when there areindications of declines in residual values, and if impaired, Toyota recognizes an allowance for losses on its
residual values.
Throughout the life of the lease, management performs periodic evaluations of estimated end-of-term fairvalues to determine whether estimates used in the determination of the contractual residual value are still
considered reasonable. Factors affecting the estimated residual value at lease maturity include, but are not limited
to, new vehicle incentive programs, new vehicle pricing, used vehicle supply, projected vehicle return rates, andprojected loss severity. The vehicle return rate represents the number of leased vehicles actually returned atcontract maturity as a percentage of the number of lease contracts originally scheduled to mature in the same
period less lease contracts subject to early terminations. A higher rate of vehicle returns exposes Toyota to higher
potential losses incurred at lease termination. Severity of loss is the extent to which the end-of-term fair value ofa lease is less than its carrying value at lease end.
To the extent that sales incentives remain an integral part of sales promotion, resale prices of used vehicles
and, correspondingly, the fair value of Toyota’s leased vehicles could be subject to downward pressure. The
extent of the impact this will have on the end of term residual value depends on the significance of the incentive
programs and whether they are sustained over a number of periods. This in turn can impact the projection of
future used vehicle values, adversely impacting the expected residual value of the current operating lease78

portfolio and increasing the provision for residual value losses. However, various other factors impact used
vehicle values and the projection of future residual values, including the supply of and demand for used vehicles,interest rates, inflation, the actual or perceived quality, safety and reliability of vehicles, the general economic
outlook, new vehicle pricing, projected vehicle return rates and projected loss severity, which may offset thiseffect. Such factors may adversely affect the results of operations for financial services due to significant charges
reducing the estimated residual value.
Sensitivity analysis
The following table illustrates the effect of an assumed change in the vehicle return rate and end-of-term
market values mainly in the United States, which Toyota believes are the critical estimates, in determining theresidual value losses, holding all other assumptions constant. The following table represents the impact on theresidual value losses in Toyota’s financial services operations of the change in vehicle return rate andend-of-term market values for returned units as those changes have a significant impact on financial services
operations.
Yen in millions
Effect on the residual value losses
over the remaining termsof the operating leases
on and after April 1, 20191 percent increase in vehicle return rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 percent increase in end-of-term market values . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,441
13,652

Impairment of Long-Lived Assets
Toyota periodically reviews the carrying value of its long-lived assets held and used and assets to bedisposed of, including intangible assets, when events and circumstances warrant such a review. This review isperformed using estimates of future cash flows. If the carrying value of a long-lived asset is considered impaired,an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its
fair value. Management believes that the estimates of future cash flows and fair values are reasonable. However,changes in estimates of such cash flows and fair values would affect the evaluations and negatively affect future
operating results of the automotive operations.
Pension Costs and Obligations
Natures of estimates and assumptions
Pension costs and obligations are dependent on assumptions used in calculating such amounts. Theseassumptions include discount rates, benefits earned, interest costs, expected rate of return on plan assets,mortality rates and other factors. Actual results that differ from the assumptions are accumulated and amortizedover future periods and, therefore, generally affect recognized expense in future periods. While management
believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions
may affect Toyota’s pension costs and obligations.
The two most critical assumptions impacting the calculation of pension costs and obligations are thediscount rates and the expected rates of returns on plan assets. Toyota determines the discount rates mainly basedon the rates of high quality fixed income bonds or fixed income governmental bonds currently available andexpected to be available during the period to maturity of the defined benefit pension plans. Toyota determines the
expected rates of return for pension assets after considering several applicable factors including, the compositionof plan assets held, assumed risks of asset management, historical results of the returns on plan assets, Toyota’s
principal policy for plan asset management, and forecasted market conditions. A weighted-average discount rateof 0.7% domestically and 3.9% overseas and a weighted-average expected rate of return on plan assets of 2.4%
79

domestically and 5.6% overseas were used in calculating Toyota’s consolidated pension costs for fiscal 2019.
Also, a weighted-average discount rate of 0.6% domestically and 3.8% overseas were used in calculating
Toyota’s consolidated pension obligations for fiscal 2019.
Sensitivity analysis
The following table illustrates the effects of assumed changes in weighted-average discount rates and theweighted-average expected rate of return on plan assets, which Toyota believes are critical estimates indetermining pension costs and obligations, assuming all other assumptions are consistent.
Yen in millions
Domestic
Overseas
Effect on pre-tax income Effect on obligations Effect on pre-tax income Effect on obligations
for the year ended
for the year ended
for the year ended
for the year ended
March 31, 2020
March 31, 2019
March 31, 2020
March 31, 2019

Discount rates
0.5% decrease . . . . .
0.5% increase . . . . . .
Expected rate of return onplan assets
0.5% decrease . . . . .
0.5% increase . . . . . .

(12,422)
10,908181,168(158,791)(8,002)
8,002(13,627)
14,645

151,578(154,892)(4,414)
4,414

Derivatives and Other Contracts at Fair Value
Toyota uses derivatives in the normal course of business to manage its exposure to foreign currency
exchange rates and interest rates. The accounting for derivatives is complex and continues to evolve. Toyota
estimates the fair value of derivative financial instruments using industry-standard valuation models that require
observable inputs including interest rates and foreign exchange rates, and the contractual terms. In other certain
cases when market data is not available, key inputs to the fair value measurement include quotes fromcounterparties, and other market data. These estimates are based upon valuation methodologies deemed
appropriate under the circumstances. However, the use of different assumptions may have a material effect on theestimated fair value amounts.
Marketable Securities and Other Securities Investments
Toyota evaluates debt securities designated as available-for-sale to be measured at fair value. Equity
securities without readily determinable fair values are measured at cost minus impairment, if any, plus or minuschanges resulting from observable price changes in orderly transactions for the identical or a similar investmentof the same issuer.
Individual securities classified as available-for-sale are reduced to the fair value for other-than-temporary
declines in market value. In determining if a decline in value is other-than-temporary, Toyota considers thelength of time and the extent to which the fair value has been less than the carrying value, the financial conditionand prospects of the entity issuing such securities and Toyota’s ability and intent to continue its investment in theentity for a period of time sufficient to allow for any anticipated recovery in market value. Realized gains andlosses, which are determined based on the average-cost method, are reflected in the consolidated statements ofincome when realized.
Equity securities without readily determinable fair values are monitored for signs of impairment andassessed qualitatively to evaluate whether the investment is impaired. If the fair value of the investment is lessthan its carrying value, it shall be written down to its fair value.
80

These estimates are based on valuation methods that are considered appropriate in each case. The significant
assumptions involved in the estimations include observable market information as well as the financial condition
and future prospects and trends of the investee. Due to the uncertain nature of these assumptions or by using
different assumptions and estimates, the fair value may be impacted materially.
Deferred Tax Assets
The factors used to assess the likelihood of realization of the deferred tax assets are the future reversal ofexisting taxable temporary differences, the future taxable income and available tax planning strategies that are
prudent and feasible. All available evidence, both positive and negative, is considered to determine whether,based on the weight of that evidence, a valuation allowance is needed for deferred tax assets which are not morelikely-than-not to be realized.
The accounting for deferred tax assets represents Toyota’s current best estimate based on all available
evidence. Unanticipated events or changes could result in re-evaluating the realizability of deferred tax assets.
Change in Depreciation Method
Toyota uses the declining-balance method mainly for the parent company and Japanese subsidiaries, and thestraight-line method for foreign subsidiary companies, regarding the depreciation method of property, plant andequipment, but plans to change the depreciation method of the parent company and Japanese subsidiaries to thestraight-line method starting from the fiscal year ending March 31, 2020. We believe that the straight-line
method better reflects the future usage of property, plant and equipment. The impact of the change indepreciation method is recognized prospectively as a change in accounting estimate. The change in depreciation
method is expected to cause a decrease in depreciation expense by approximately ¥150.0 billion for the fiscal
year ending March 31, 2020.
Outlook
The future automotive market is expected to revert to a gradual expansion in the medium term, due in part to
the wider use of cars mainly in emerging countries, despite entering a phase of cyclical changes in the short term.
Meanwhile, the automotive industry is entering a once-in-a-century transformational period in response toenvironmental issues and other social challenges, as well as the rapid progress in technological innovation suchas electrification, automated driving, connected vehicles and car-sharing. Taking the foregoing external factors
into account, Toyota expects that net revenues for fiscal 2020 will decrease compared with fiscal 2019 due
mainly to an unfavorable impact of changes in exchange rates. Toyota expects that operating income will
increase in fiscal 2020 compared with fiscal 2019 due mainly to the effect of the change in depreciation method
and the impact of cost reduction efforts, partially offset by the unfavorable impact of changes in exchange rates.
Toyota expects that income before income taxes and equity in earnings of affiliated companies and net income
attributable to Toyota Motor Corporation will also increase in fiscal 2020 compared with fiscal 2019.
For the purposes of this outlook discussion, Toyota is assuming an average exchange rate of ¥110 to the
U.S. dollar and ¥125 to the euro. Exchange rate fluctuations can materially affect Toyota’s operating results. In
particular, a strengthening of the Japanese yen against the U.S. dollar can have a material adverse effect on
Toyota’s operating results. See “Operating and Financial Review and Prospects — Operating Results —Overview — Currency Fluctuations” for further discussion.
The foregoing statements are forward-looking statements based upon Toyota’s management’s assumptions
and beliefs regarding exchange rates, market demand for Toyota’s products, economic conditions and others. See“Cautionary Statement Concerning Forward-Looking Statements”. Toyota’s actual results of operations could
vary significantly from those described above as a result of unanticipated changes in the factors described aboveor other factors, including those described in “Risk Factors”.
815.B LIQUIDITY AND CAPITAL RESOURCES
Historically, Toyota has funded its capital expenditures and research and development activities throughcash generated by operations.
In fiscal 2020, Toyota expects to sufficiently fund its capital expenditures and research and development
activities through cash and cash equivalents on hand, and cash generated by operations. Toyota will use its funds
to efficiently invest in maintenance and replacement of conventional manufacturing facilities and theintroduction of new products, and will focus on investment in areas contributing to strengthening
competitiveness and future growth for realization of a new mobility society. See “Information on the Company— Business Overview — Capital Expenditures and Divestitures” for information regarding Toyota’s material
capital expenditures and divestitures for fiscal 2017, 2018 and 2019, and information concerning Toyota’s
principal capital expenditures and divestitures currently in progress.
Toyota funds its financing programs for customers and dealers, including loans and leasing programs, fromboth cash generated by operations and borrowings by its sales finance subsidiaries. Toyota seeks to expand its
ability to raise funds locally in markets throughout the world by expanding its network of finance subsidiaries.
Net cash provided by operating activities decreased by ¥456.5 billion to ¥3,766.5 billion for fiscal 2019,
compared with ¥4,223.1 billion for fiscal 2018.
The decrease was primarily attributable to the ¥380.0 billion decrease in accrued income tax due mainly toincrease in fixed payment amount and the ¥141.4 billion increase in notes and accounts receivable due to theimpact of the increased sales.
Net cash provided by operating activities increased by ¥654.6 billion to ¥4,223.1 billion for fiscal 2018,
compared with ¥3,568.4 billion for fiscal 2017.
The increase was primarily attributable to the ¥405.4 billion increase in operating income. Results ofoperations are recorded on an accrual basis and are therefore different from cash provided or used in operating
activities. Other than the operating income increase, net cash provided by operating activities increased primarily
due to the ¥359.7 billion increase in income taxes payable, resulting mainly from increased income before
income taxes and equity in earnings of affiliated companies.
Net cash used in investing activities decreased by ¥962.8 billion to ¥2,697.2 billion for fiscal 2019,
compared with ¥3,660.0 billion for fiscal 2018. The decrease was primarily attributable to the ¥1,212.5 billion
decrease in purchase of marketable securities and security investments, partially offset by the ¥444.4 billion
increase in investments and other assets.
Net cash used in investing activities increased by ¥690.1 billion to ¥3,660.0 billion for fiscal 2018,
compared with ¥2,969.9 billion for fiscal 2017. The increase was primarily attributable to the ¥374.2 billion
increase in investments and other assets and the ¥303.4 billion increase in finance receivables.
Net cash used in financing activities increased by ¥91.7 billion to ¥540.8 billion for fiscal 2019, comparedwith ¥449.1 billion for fiscal 2018. The increase was primarily attributable to the ¥ 183.4 billion impact of
repayments of short-term debt having exceeded borrowings of short-term debt and ¥101.8 billion increase inrepurchase and cancellation of treasury stock, partially offset by the ¥206.9 billion increase in funding by longterm debt.
Net cash used in financing activities increased by ¥73.9 billion to ¥449.1 billion for fiscal 2018, comparedwith ¥375.1 billion for fiscal 2017. The increase was primarily attributable to the ¥606.7 billion increase inpayments of long-term debt, partially offset by the ¥256.1 billion decrease in repurchase and reissuance oftreasury stock, and the ¥190.4 billion increase in financing of long-term debt.
82

Total capital expenditures for property, plant and equipment, excluding vehicles and equipment on operatingleases, were ¥1,452.7 billion during fiscal 2019, an increase of 12.5% from the ¥1,291.1 billion in total capital
expenditures during the prior fiscal year. This increase was due primarily to an increase in investments for modelchanges in Europe.
Total capital expenditures for vehicles and equipment on operating leases were ¥2,286.1 billion during fiscal
2019, remaining largely unchanged from the ¥2,307.5 billion in total capital expenditures during the prior fiscal
year. Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on
operating leases, to be approximately ¥1,450.0 billion during fiscal 2020.
Cash and cash equivalents and restricted cash and cash equivalents were ¥3,706.5 billion as of March 31,
2019. Most of Toyota’s cash and cash equivalents and restricted cash and cash equivalents are held in Japanese
yen or in U.S. dollars. In addition, time deposits were ¥1,126.3 billion and marketable securities were¥1,127.1 billion as of March 31, 2019.
Liquid assets, which Toyota defines as cash and cash equivalents, time deposits, marketable debt securities
and its investment in monetary trust funds, decreased during fiscal 2019 by ¥438.3 billion, or 4.1%, to¥10,365.0 billion.
Trade accounts and notes receivable, less allowance for doubtful accounts increased during fiscal 2019 by¥153.1 billion, or 6.9%, to ¥2,372.7 billion. This increase was due mainly to increased revenue from sales.
Inventories increased during fiscal 2019 by ¥116.6 billion, or 4.6%, to ¥2,656.3 billion. This increase wasdue mainly to the increase in vehicle inventories at foreign subsidiaries.
Total finance receivables, net increased during fiscal 2019 by ¥1,098.9 billion, or 6.9%, to ¥16,928.8 billion.
This increase was due mainly to the increase in the lending balance in the financial services operations. As of
March 31, 2019, finance receivables were geographically distributed as follows: in North America 55.2%, in
Asia 13.0%, in Europe 12.3%, in Japan 8.2% and in Other 11.3%.
Marketable securities and other securities investments, including those included in current assets, decreased
during fiscal 2019 by ¥1,160.5 billion, or 11.9%. This decrease was due mainly to redemption of marketablesecurities and other securities investments and decrease in fair value of such securities.
Property, plant and equipment increased during fiscal 2019 by ¥417.8 billion, or 4.1%, primarily reflecting
the increase in the capital expenditures.
Accounts and notes payable increased during fiscal 2019 by ¥59.3 billion, or 2.3%. This increase was due
mainly to the impact of fluctuation in the price of materials and parts.
Accrued expenses increased during fiscal 2019 by ¥118.1 billion, or 3.8%. This increase was due mainly to
an increase in accrued expenses resulting from quality related expenses.
Income taxes payable decreased during fiscal 2019 by ¥141.3 billion, or 30.6%. This decrease was due
mainly to the increase in the fixed payment amount.
Toyota’s total borrowings increased during fiscal 2019 by ¥802.6 billion, or 4.1%. Toyota’s short-termborrowings consist of loans with a weighted-average interest rate of 2.11% and commercial paper with aweighted-average interest rate of 2.28%. Short-term borrowings increased during fiscal 2019 by ¥190.0 billion,
or 3.7%, to ¥5,344.9 billion. Toyota’s long-term debt consists of unsecured and secured loans, medium-term
notes, unsecured and secured notes etc. with weighted-average interest rates ranging from 1.84% to 7.78%, andmaturity dates ranging from 2019 to 2048. The current portion of long-term debt increased during fiscal 2019 by83¥67.9 billion, or 1.6%, to ¥4,254.2 billion and the non-current portion increased by ¥544.5 billion, or 5.4%, to¥10,550.9 billion. The increase in total borrowings resulted mainly from the increasing demand for financing
associated with the increase in the lending balance. As of March 31, 2019, approximately 48% of long-term debt
was denominated in U.S. dollars, 11% in Euros, 11% in Japanese yen, 9% in Australian dollars, 5% in Canadiandollars, and 16% in other currencies. Toyota hedges interest rate risk exposure of fixed-rate borrowings byentering into interest rate swaps. There are no material seasonal variations in Toyota’s borrowings requirements.
As of March 31, 2019, Toyota’s total interest bearing debt was 104.1% of Toyota Motor Corporation
shareholders’ equity, compared with 103.3% as of March 31, 2018.
The following table provides information for credit rating of Toyota’s short-term borrowing and long-term
debt from rating agencies, Standard & Poor’s Ratings Group (S&P), Moody’s Investors Services (Moody’s), andRating and Investment Information, Inc. (R&I), as of May 31, 2019. A credit rating is not a recommendation tobuy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating
should be evaluated separately of any other rating.
Short-term borrowing . . . . .
Long-term debt . . . . . . . . . .

S&P

Moody’s

R&I

A-1+
AA-

P-1
Aa3

—
AA+

Toyota’s unfunded pension liabilities of Japanese plans increased during fiscal 2019 by ¥93.1 billion, or
22.9%, to ¥499.5 billion. The liabilities of foreign plans increased during fiscal 2019 by ¥21.6 billion, or 7.7%, to¥304.1 billion. The unfunded amounts will be funded through future cash contributions by Toyota or in somecases will be settled on the retirement date of each covered employee. The increase in unfunded pension
liabilities of the Japanese plans reflects mainly a decrease in plan assets that resulted from a decrease in stock
prices. See note 20 to the consolidated financial statements for further discussion.
Toyota’s treasury policy is to maintain controls on all exposures, to adhere to stringent counterparty credit
standards, and to actively monitor marketplace exposures. Toyota remains centralized, and is pursuing global
efficiency of its financial services operations through Toyota Financial Services Corporation.
The key element of Toyota’s financial strategy is maintaining a strong financial position that will allow
Toyota to fund its research and development initiatives, capital expenditures and financial services operations
efficiently even if earnings are subject to short-term fluctuations. Toyota believes that it maintains sufficientliquidity for its present requirements and that by maintaining its high credit ratings, it will continue to be able toaccess funds from external sources in large amounts and at relatively low costs. Toyota’s ability to maintain its
high credit ratings is subject to a number of factors, some of which are not within Toyota’s control. These factors
include general economic conditions in Japan and the other major markets in which Toyota does business, aswell as Toyota’s successful implementation of its business strategy.
5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
Toyota’s research and development is dedicated to capturing the increasingly diverse and sophisticatedmarket through the development of attractive, affordable, high-quality products for customers worldwide. The
intellectual property that R&D generates is a vital management resource that Toyota utilizes and protects tomaximize its corporate value. For a more detailed discussion of the company’s research and development
objectives and policies, see “Information on the Company — Business Overview — Research andDevelopment.”
Toyota’s research and development expenditures were approximately ¥1,048.8 billion in fiscal 2019,¥1,064.2 billion in fiscal 2018 and ¥1,037.5 billion in fiscal 2017.
Toyota operates a global research and development organization with the primary goal of building
automobiles that meet the needs of customers in every region of the world. In Japan, research and development
84

operations are led by Toyota and Toyota Central Research & Development Laboratories, Inc., which works
closely with Daihatsu Motor Co., Ltd., Hino Motors, Ltd., Toyota Auto Body Co., Ltd., Toyota Motor East
Japan, Inc., and many other Toyota group companies. Overseas, Toyota has a worldwide network of technicalcenters as well as design and motorsports research and development centers.
Toyota established Toyota Research Institute, Inc. (“TRI”) in January 2016 to accelerate research anddevelopment of artificial intelligence technology, which has significant potential to support future industrial
technologies. In July 2017, Toyota Research Institute, Inc. invested $100 million to launch a venture capital funddesigned to provide financing to startup companies, and is making investments in newly established promising
startup companies in the four areas of artificial intelligence, robotics, autonomous mobility, and data and cloudtechnology.
In Japan, Toyota established a new company, Toyota Research Institute-Advanced Development(“TRI-AD”), in March 2018 to further accelerate its efforts in advanced development for automated driving
technology. Its key objectives include creating a smooth software pipeline from research to commercialization,leveraging data-handling capabilities, strengthening collaboration in development within the Toyota group,
including TRI, to accelerate development, and recruiting and employing top-level engineers globally, while
cultivating and coordinating strong talent within the Toyota group.
Toyota also established a technical development center in Otemachi, Tokyo, Japan in October 2018 as a site
for development of key IT technologies that will support automated driving in collaboration with TRI-AD, as
well as promotion of collaboration with venture companies and creation of new value by utilizing big data.

85

The following table provides information on Toyota’s principal research and development facilities.
Facility

Principal Activity

Japan
Toyota Technical Center . . . . . . . . . . . . . . . .

Product planning, style, design, prototype production andvehicle evaluation

Higashi-Fuji Technical Center . . . . . . . . . . .

Advanced development

Tokyo Design Research & Laboratory . . . . .

Advanced styling designs

Toyota Research Institute-Advanced
Development (TRI-AD) . . . . . . . . . . . . . .

Development of artificial intelligence technology with afocus on automated driving technology

Otemachi Office . . . . . . . . . . . . . . . . . . . . . .

Development of key IT technologies, creation of new values
by utilizing big data and collaboration with venturecompanies

Shibetsu Proving Ground . . . . . . . . . . . . . . .

Evaluation

Toyota Central R&D Labs., Inc. . . . . . . . . . .

Basic research

United States
Toyota Motor Engineering andManufacturing North America, Inc. . . . . .
Calty Design Research, Inc. . . . . . . . . . . . . .
Toyota Research Institute of North America(TRI-NA) . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota Research Institute, Inc. . . . . . . . . . . .

Product planning, design and evaluation of vehicles
manufactured in North America
DesignAdvanced research relating to “energy and environment,”“safety” and “mobility infrastructure”
Research and development of artificial intelligence
technology

EuropeToyota Motor Europe NV/SA . . . . . . . . . . . .

Planning and evaluation of vehicles manufactured in Europe

Toyota Europe Design Development
S.A.R.L. . . . . . . . . . . . . . . . . . . . . . . . . . .

DesignToyota Motorsport GmbH . . . . . . . . . . . . . .

Development of motor sports vehicles

Asia PacificToyota Daihatsu Engineering andManufacturing Co., Ltd. . . . . . . . . . . . . . .

Planning and evaluation of vehicles manufactured inAustralian and Asia.

China
Toyota Motor Engineering andManufacturing (China) Co., Ltd. . . . . . . .
FAW Toyota Research & Development Co.,Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GAC Toyota Motor Co., Ltd. R&D
Center . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Environmental technology design and evaluation in China
Design, evaluation and certification of vehicles
manufactured in China
Design, evaluation and certification of vehicles
manufactured in China
86

Toyota reorganized its subsidiary and vehicle development partner Toyota Technical Development
Corporation, integrating its vehicle development functions into Toyota in January 2016.
Toyota carefully analyzes patents and the need for patents in each area of research to formulate more
effective research and development strategies. Toyota identifies research and development projects in which it
should build a strong global patent portfolio.
In addition, Toyota wishes to contribute to sustainable mobility by promoting the spread of technologies
with environmental and safety benefits. This is why Toyota takes an open stance to patent licensing and grants
licenses when appropriate terms are met. In April 2019, from the perspective of contributing to the widespreaduse of electrified vehicles, taking its existing basic policy on intellectual property a step further, Toyota decided
to grant royalty-free licenses through the end of 2030 on approximately 23,740 domestic and foreign patents it
independently holds for vehicle electrification-related technologies that it has developed in its hybrid vehicle
development.
For a further discussion of Toyota’s intellectual property, see “Information on the Company — Business
Overview — Intellectual Property.”
5.D TREND INFORMATION
For a discussion of the trends that affect Toyota’s business and operating results, see “— Operating Results”
and “— Liquidity and Capital Resources.”
5.E OFF-BALANCE SHEET ARRANGEMENTS
Toyota uses its securitization program as part of its funding through special purpose entities for its financial
services operations. Toyota is considered as the primary beneficiary of these special purpose entities andtherefore consolidates them. Toyota has not entered into any off-balance sheet securitization transactions during
fiscal 2019.
Lending Commitments
Credit Facilities with Credit Card Holders
Toyota’s financial services operations issue credit cards to customers. As customary for credit cardbusinesses, Toyota maintains credit facilities with holders of credit cards issued by Toyota. These facilities areused upon each holder’s requests up to the limits established on an individual holder’s basis. Although loans
made to customers through these facilities are not secured, for the purposes of minimizing credit risks and of
appropriately establishing credit limits for each individual credit card holder, Toyota employs its own risk
management policy which includes an analysis of information provided by financial institutions in alliance with
Toyota. Toyota periodically reviews and revises, as appropriate, these credit limits. Outstanding credit facilities
with credit card holders were ¥201.2 billion as of March 31, 2019.
Credit Facilities with Dealers
Toyota’s financial services operations maintain credit facilities with dealers. These credit facilities may be
used for business acquisitions, facilities refurbishment, real estate purchases, and working capital requirements.
These loans are typically collateralized with liens on real estate, vehicle inventory, and/or other dealership assets,
as appropriate. Toyota obtains a personal guarantee from the dealer or corporate guarantee from the dealershipwhen deemed prudent. Although the loans are typically collateralized or guaranteed, the value of the underlying
collateral or guarantees may not be sufficient to cover Toyota’s exposure under such agreements. Toyota
87evaluates the credit facilities according to the risks assumed in entering into the credit facility. Toyota’s financial
services operations also provide financing to various multi-franchise dealer organizations, referred to as dealer
groups, often as part of a lending consortium, for wholesale inventory financing, business acquisitions, facilities
refurbishment, real estate purchases, and working capital requirements. Toyota’s outstanding credit facilities withdealers totaled ¥2,891.5 billion as of March 31, 2019.
Guarantees
Toyota enters into certain guarantee contracts with its dealers to guarantee customers’ payments of theirinstallment payables that arise from installment contracts between customers and Toyota dealers, as and whenrequested by Toyota dealers. Guarantee periods are set to match the maturity of installment payments, and as ofMarch 31, 2019, ranged from one month to 35 years. However, they are generally shorter than the useful lives of
products sold. Toyota is required to execute its guarantee primarily when customers are unable to make required
payments.
The maximum potential amount of future payments as of March 31, 2019 is ¥3,078.9 billion. Liabilities forthese guarantees of ¥8.9 billion have been provided as of March 31, 2019. Under these guarantee contracts,
Toyota is entitled to recover any amounts paid by it from the customers whose obligations it guaranteed.
5.F TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONSContractual Obligations and Commitments
For information regarding debt obligations, capital lease obligations, operating lease obligations and otherobligations, including amounts maturing in each of the next five years, see notes 12, 23 and 24 to theconsolidated financial statements. In addition, as part of Toyota’s normal business practices, Toyota enters into
long-term arrangements with suppliers for purchases of certain raw materials, components and services. Thesearrangements may contain fixed/minimum quantity purchase requirements. Toyota enters into such arrangements
to facilitate an adequate supply of these materials and services.
The following tables summarize Toyota’s contractual obligations and commercial commitments as ofMarch 31, 2019.
Yen in millions
Payments Due by PeriodLess than
1 to
3 to
1 year
3 years
5 years

5 years
and after

1,468,430
3,876,544
14,786,184

1,468,430
3,876,544
4,248,513——
6,085,275——
3,341,418——
1,110,9781,232,980
19,021

362,996
5,747

478,261
5,083

196,112
3,147

195,611
5,044

92,187

16,07825,25818,25332,598363,319

156,606

102,81268,85535,046

21,838,665

10,134,914

6,696,689

3,627,785

1,379,277

Total

Contractual Obligations:Short-term borrowings (note 12)
Loans . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . .
Long-term debt* (note 12) . . . . . . . . . . . . .
Estimated amount of interest expense on
long-term debt . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations (note 23) . . . . . . .
Non-cancelable operating lease obligations(note 23) . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments for the purchase of property,
plant, other assets and services(note 24) . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

* “Long-term debt” represents future principal payments.
88

Toyota is unable to make reasonable estimates of the period of cash settlement with respect to liabilities
recognized for uncertain tax benefits, and accordingly such liabilities are excluded from the table above. Seenote 15 to the consolidated financial statements for further discussion.
Toyota expects to contribute ¥40,124 million domestically and ¥14,330 million overseas to its pension plansin fiscal 2020.

Total
Amounts
Committed

Yen in millions
Amount of Commitment Expiration Per PeriodLess than
1 to
3 to
5 years
1 year
3 years
5 years
and after

Commercial Commitments (note 24):
Maximum potential exposure to guarantees
given in the ordinary course ofbusiness . . . . . . . . . . . . . . . . . . . . . . . . . .

3,078,955

789,443

1,266,435

783,713239,364

Total Commercial Commitments . . . .

3,078,955

789,443

1,266,435

783,713239,364

5.G SAFE HARBOR
All information that is not historical in nature disclosed under “— Off-Balance Sheet Arrangements” and“— Tabular Disclosure of Contractual Obligations” is deemed to be a forward-looking statement. See“Cautionary Statement Concerning Forward-Looking Statements” for additional information.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A DIRECTORS AND SENIOR MANAGEMENTIn March 2011, Toyota announced its “Toyota Global Vision.” With respect to its framework for executing
its operations, Toyota, with the aim of realizing the Toyota Global Vision, has been continuing its efforts to
respond swiftly to the external environment, which is changing faster than ever. Following the introduction of“region-based operations”, the “business unit system” and the “in-house company system” in 2011, 2013 and2016, respectively, for the purpose of further accelerating decision-making and operational execution, Toyota
further clarified that members of the board of directors are responsible for decision-making and management
oversight and that operating officers are responsible for operational execution. Furthermore, in 2018, Toyotachanged the commencement of operating officers’ terms of office from April to January, reduced corporate
strategy functions and restructured the Japan Sales Business Group based on regions rather than sales channels inan effort to enable decision-making closer to customers and the field, in order to further accelerate execution in
full coordination with each site. In 2019, in order to further advance Toyota’s “acceleration of management” andthe development of a diverse and talented workforce, the executive structure was changed to be composed onlyof senior managing officers and people of higher rank, and a new classification called “senior professional/senior
management” (kanbushoku) grouped and replaced the following titles or ranks: managing officers, executive
general managers, (sub-executive managerial level) senior grade 1 and senior grade 2 managers, and grandmasters. From the perspective of appointing the right people to the right positions, senior professionals/senior
management were positioned in a wide range of posts, from those of chief officer, deputy chief officer, field
general manager, and plant general manager to group manager, regardless of age or length of employment, todeal with management issues as they arise and to strengthen their development as part of a diverse and talented
workforce through on-site learning and problem-solving (genchi genbutsu). Executives themselves go to where
the action is taking place and, together with senior professionals/senior management and other members of theworkplace, give form in the real world to their visions for a future society of mobility.
Toyota believes it is fundamental for it to be led by members of the board of directors and senior
management who deeply understand, and can effectively implement, Toyota’s focus — the “making ever-bettercars” spirit and the genchi genbutsu principle of placing emphasis on on-site operations with a go-and-see
89attitude for continued improvement and problem solving —, and contribute to decision-making towards
sustainable growth for the future. Toyota maintains its board of directors and senior management at an adequate
size, and ensures they are overall balanced and diverse, including from the perspective of gender and nationality.
Three outside members of the board of directors have been appointed in order to further reflect the opinions of
those from outside the company in management’s decision-making process. Toyota has six audit & supervisoryboard members, three of whom are outside audit & supervisory board members. In order to be prepared in theevent Toyota lacks the number of audit & supervisory board members required by law, one substitute audit &supervisory board member has been appointed pursuant to Article 329, Paragraph 3 of the Companies Act.
Set forth below are brief summaries of Toyota’s members of the board of directors and audit & supervisoryboard members.
Name(Date of birth)

PositionTakeshi Uchiyamada Chairman of the Board(August 17, 1946)
of Directors

Brief career summary and important concurrent duties

1969 Joined Toyota Motor Corporation(“TMC”)
1998 Member of the Board of Directors of
TMC
2001 Managing Director of TMC
2003 Senior Managing Director of TMC
2005 Executive Vice President of TMC
2012 Vice Chairman of TMC
2013 Chairman of TMC (to present)

Number andkind of shares

77,039common shares(important concurrent duties)
Audit & Supervisory Board Member of Tokai
Rika Co., Ltd.
Audit & Supervisory Board Member of Toyoda
Gosei Co., Ltd.
Director of JTEKT Corporation
Shigeru Hayakawa
Vice Chairman of the(September 15, 1953)
Board of Directors

1977 Joined Toyota Motor Sales Co., Ltd.
2007 Managing Officer of TMC
2007 Toyota Motor North America, Inc.
President
2009 Retired from Toyota Motor North
America, Inc. President
2012 Senior Managing Officer of TMC
2015 Member of the Board of Directors andSenior Managing Officer of TMC
2017 Vice Chairman of TMC (to present)

35,056
common shares(important concurrent duties)
Representative Director of Institute forInternational Economic Studies
Akio Toyoda(May 3, 1956)

President,
Member of the Boardof Directors

1984 Joined TMC
2000 Member of the Board of Directors of
TMC
2002 Managing Director of TMC
2003 Senior Managing Director of TMC
2005 Executive Vice President of TMC
2009 President of TMC (to present)(important concurrent duties)
90

4,752,895
common shares

Name(Date of birth)

Position

Brief career summary and important concurrent duties

Number andkind of shares

Chairman and CEO of Toyota Motor North
America, Inc.
Chairman of TOWA REAL ESTATE Co., Ltd.
Chairman of the Japan Automobile
Manufacturers Association, Inc.
Koji Kobayashi(October 23, 1948)

Executive Vice
President,
Member of the Boardof Directors

22,7921972 Joined TMC
common shares
2004 Executive Director of DENSOCORPORATION (“DENSO”)
2007 Senior Executive Director, Member of theBoard of Directors of DENSO
2010 Executive Vice President of DENSO
2015 Vice Chairman of DENSO
2016 Advisor of TMC
2017 Senior Advisor of TMC
2018 Operating Officer (Executive Vice
President) of TMC (to present)2018 Member of the Board of Directors of
DENSO
2018 Retired as Member of the Board of
Directors of DENSO
2018 Member of the Board of Directors of
TMC (to present)(important concurrent duties)
Chairman and Executive Director of TOYOTA
Mobility Tokyo Inc.

Didier Leroy
Executive Vice
(December 26, 1957)
President,
Member of the Boardof Directors

1982 Joined Renault S.A.
1998 Retired from Renault S.A.
1998 Joined Toyota Motor Manufacturing
France S.A.S.
1998 Toyota Motor Manufacturing France
S.A.S. Vice President
2005 Toyota Motor Manufacturing France
S.A.S. President
2007 Managing Officer of TMC
2007 Toyota Motor Europe NV/SA Executive
Vice President
2009 Toyota Motor Manufacturing France
S.A.S. Chairman
2010 Toyota Motor Europe NV/SA President
2010 Retired from Toyota Motor
Manufacturing France S.A.S. Chairman
2011 Toyota Motor Europe NV/SA President
and CEO
2012 Senior Managing Officer of TMC
2015 Toyota Motor Europe NV/SA Chairman(to present)2015 Executive Vice President, Member of theBoard of Directors of TMC
91

50,000common shares

Name(Date of birth)

Position

Brief career summary and important concurrent duties

Number andkind of shares2017 Member of the Board of Directors of
TMC (to present)(important concurrent duties)
Chairman of Toyota Motor Europe NV/SA
Vice Chairman of Toyota Motor North
America, Inc.
Director of Toyota Tsusho Corporation
Shigeki Terashi(February 16, 1955)

Executive Vice
President, Memberof the Board of
Directors

1980 Joined TMC
2008 Managing Officer of TMC
2008 Executive Vice President of Toyota
Motor Engineering & Manufacturing North
America, Inc.
2011 President and COO of Toyota Motor
Engineering & Manufacturing North
America, Inc.
2012 President and CEO of Toyota Motor
Engineering & Manufacturing North
America, Inc.
2012 President and COO of Toyota Motor
North America, Inc.
2013 Retired from Toyota Motor
Engineering & Manufacturing North
America, Inc. President and CEO
2013 Retired from Toyota Motor North
America, Inc. President and COO
2013 Senior Managing Officer of TMC
2013 Member of the Board of Directors andSenior Managing Officer of TMC
2015 Executive Vice President, Member of theBoard of Directors of TMC
2017 Member of the Board of Directors of
TMC (to present)

49,172
common shares(important concurrent duties)
Director of Hino Motors, Ltd.
President, Representative Director of EV C.A.
Spirit Corporation
Ikuro Sugawara(March 6, 1957)

Outside Member of the 1981 Joined Ministry of International Trade
Board of Directors
and Industry
2010 Director-General of the Industrial Scienceand Technology Policy and Environment
Bureau, Ministry of Economy, Trade andIndustry
2012 Director-General of the Manufacturing
Industries Bureau, Ministry of Economy,
Trade and Industry
2013 Director-General of the Economic andIndustrial Policy Bureau, Ministry of
Economy, Trade and Industry
92

—

Name
(Date of birth)

Position

Brief career summary and important concurrent duties

Number andkind of shares2015 Vice-Minister of Ministry of Economy,
Trade and Industry
2017 Retired from the Ministry of Economy,
Trade and Industry
2017 Special Advisor to the Cabinet2018 Retired from Special Advisor to the
Cabinet2018 Outside Member of the Board of
Directors of TMC (to present)
Sir Philip Craven(July 4, 1950)

Outside Member of the 1998 President of the International Wheelchair
Board of Directors
Basketball Federation
2001 President of the International Paralympic
Committee
2002 Retired as President of the International
Wheelchair Basketball Federation2017 Retired as President of the International
Paralympic Committee
2018 Outside Member of the Board of
Directors of TMC (to present)—

Teiko Kudo
(May 22, 1964)

Outside Member of the 1987 Joined the Sumitomo Bank, Limited
Board of Directors
2014 Executive Officer of Sumitomo Mitsui
Banking Corporation2017 Managing Executive Officer of
Sumitomo Mitsui Banking Corporation (topresent)
2018 Outside Member of the Board of
Directors of TMC (to present)493
common shares(important concurrent duties)
Managing Executive Officer of Sumitomo
Mitsui Banking Corporation
Haruhiko Kato
(July 21, 1952)

Full-time Audit &Supervisory Board
Member1975 Joined Ministry of Finance2007 Director-General of the Tax Bureau,
Ministry of Finance2009 Commissioner of National Tax Agency
2010 Retired from Commissioner of National
Tax Agency
2011 Senior Managing Director of Japan
Securities Depository Center, Inc.
2011 President of Japan Securities Depository
Center, Inc.
2013 Member of the Board of Directors of
TMC (to present)2015 President and CEO of Japan Securities
Depository Center, Inc.
2018 Retired as Member of the Board of
Directors of TMC
2019 Director of Japan Securities Depository
Center, Inc.
93

—

Name
(Date of birth)

Position

Brief career summary and important concurrent duties

Number andkind of shares2019 Audit & Supervisory Board Member of
TMC (to present)
2019 Retired as Director of Japan Securities
Depository Center, Inc.
(important concurrent duties)
Outside Director of Canon Inc.
Masahide Yasuda(April 1, 1949)

Full-time Audit &Supervisory Board
Member1972 Joined TMC
2000 General Manager of Overseas Parts
Division of TMC
2007 President of Toyota Motor Corporation
Australia Ltd.
2014 Chairman of Toyota Motor Corporation
Australia Ltd.
2017 Retired as Chairman of Toyota Motor
Corporation Australia Ltd.
2018 Audit & Supervisory Board Member of
TMC (to present)

9,793
common shares

Katsuyuki Ogura(January 25, 1963)

Full-time Audit &Supervisory Board
Member1985 Joined TMC
2015 General Manager of AffiliatedCompanies Finance Dept. of TMC
2018 General Manager of Audit & Supervisory
Board Office of TMC
2019 Audit & Supervisory Board Member of
TMC (to present)

4,405
common shares

Yoko Wake
Outside Audit &(November 18, 1947)
Supervisory Board
Member1970 Joined the Fuji Bank, Limited
1973 Retired from the same1977 Assistant Lecturer of Faculty of Business
and Commerce of Keio University
1982 Associate Professor of the same
1993 Professor of the same2011 Outside Audit & Supervisory Board
Member of TMC (to present)2013 Professor Emeritus of Keio University (topresent)—(important concurrent duties)
Professor Emeritus of Keio University
Hiroshi Ozu(July 21, 1949)

Outside Audit &Supervisory Board
Member2012 Prosecutor-General
2014 Retired from Prosecutor-General
2014 Registered as Attorney2015 Outside Audit & Supervisory Board
Member of TMC (to present)(important concurrent duties)
Attorney
Outside Corporate Auditor of Mitsui & Co.,Ltd.
Audit & Supervisory Board Member (External)of Shiseido Company, Limited
94

89
common shares

Name(Date of birth)

Nobuyuki Hirano(October 23, 1951)

Number andkind of shares

Position

Brief career summary and important concurrent duties

Outside Audit &Supervisory Board
Member1974 Joined Mitsubishi Bank
493
2001 Executive Officer of The Bank of Tokyo- common shares
Mitsubishi, Ltd.
2005 Director of Mitsubishi UFJ Financial
Group, Inc.
2006 Managing Director of The Bank ofTokyo-Mitsubishi UFJ, Ltd.
2008 Senior Managing Director of The Bank ofTokyo-Mitsubishi UFJ, Ltd.
2009 Deputy President of The Bank of TokyoMitsubishi UFJ, Ltd.
2009 Managing Officer of Mitsubishi UFJ
Financial Group, Inc.
2010 Deputy President of Mitsubishi UFJ
Financial Group, Inc.
2012 President of The Bank of TokyoMitsubishi UFJ, Ltd.
2012 Director of Mitsubishi UFJ Financial
Group, Inc.
2013 President & CEO of Mitsubishi UFJ
Financial Group, Inc.
2015 Director, President & Group CEO of
Mitsubishi UFJ Financial Group, Inc.
2016 Chairman of the Board of Directors ofBank of Tokyo-Mitsubishi UFJ, Ltd.
2018 Company name changed from The Bankof Tokyo-Mitsubishi UFJ, Ltd. to MUFG
Bank, Ltd.
2018 Outside Audit & Supervisory Board
Member of TMC (to present)
2019 Director, Chairman of Mitsubishi UFJ
Financial Group, Inc. (to present)
2019 Member of the Board of Directors of
MUFG Bank, Ltd. (to present)(important concurrent duties)
Director, Chairman of Mitsubishi UFJ
Financial Group, Inc.
Directors of MUFG Bank, Ltd.
Director of Morgan Stanley

1.

Mr. Akio Toyoda, who is President and Member of the Board of Directors, concurrently serves as
Operating Officer (President).

2.

Mr. Koji Kobayashi, Mr. Didier Leroy and Mr. Shigeki Terashi, who are Members of the Board of
Directors, concurrently serve as Operating Officers (Executive Vice Presidents).

None of the persons listed above was selected as member of board of directors, audit & supervisory board
member or member of senior management pursuant to an arrangement or understanding with Toyota’s major
shareholders, customers, suppliers or others.
95Set forth below is a brief summary of Toyota’s substitute audit & supervisory board member.
Name(Date of birth)

Ryuji Sakai(August 7, 1957)

Position

Brief career summary and important concurrent duties

Substitute Audit &Supervisory Board
Member1985 Registered as attorney and joined
Nagashima & Ohno
1990 Wilson Sonsini Goodrich & Rosati
1995 Partner of Nagashima & Ohno
2000 Partner of Nagashima Ohno &Tsunematsu (to present)

Number andkind of shares—(important concurrent duties)
Attorney
Outside Audit & Supervisory Board Member of
Kobayashi Pharmaceutical Co., Ltd.
Outside Audit & Supervisory Board Member ofTokyo Electron Limited
6.B COMPENSATION
Decision Making Policy and Process
Toyota’s director compensation system is designed based on the following ideas.
•

It should be a system that encourages members of the board of directors to work to improve themedium- to long-term corporate value of Toyota•

It should be a system that can maintain compensation levels that will allow Toyota to secure and retain
talented personnel•

It should be a system that motivates members of the board of directors to promote management from thesame viewpoint as our shareholders with a stronger sense of responsibility as corporate managers

Remuneration for members of the board of directors is effectively linked to corporate performance whilereflecting individual job responsibilities and performance. Remuneration standards in each member’s homecountry are also taken into account when determining remuneration amounts and methods. Remuneration foroutside members of the board of directors and audit & supervisory board members consists only of fixed
payments. As a result, this remuneration is not readily impacted by business performance, helping to ensure
independence from management.
Based on the resolution of the 115th Ordinary General Shareholders’ Meeting held on June 13, 2019
concerning remuneration for the members of the board of directors of Toyota, the maximum cash compensation
was set at 3.0 billion yen per year (of which, the maximum amount payable to outside members of the board of
directors is 0.3 billion yen per year), and the maximum share compensation was set at 4.0 billion yen per year.
The number of members of the board of directors as of the conclusion of the 115th Ordinary General
Shareholders’ Meeting was nine (including three outside members of the board of directors).
The amount of remuneration for audit & supervisory board members of Toyota was set at 30 million yen orless per month at the 104th Ordinary General Shareholders’ Meeting held on June 24, 2008. The number ofaudit & supervisory board members as of the conclusion of the 104th Ordinary General Shareholders’ Meeting
was seven.
The amounts of remuneration for the Company’s members of the board of directors and the remuneration
system are decided by the board of directors and the “Executive Compensation Meeting,” a majority of themembers of which are outside members of the board of directors.
96

The board of directors resolves the total amount of remuneration for a given fiscal year and delegates thedetermination of the amount of remuneration for each member of the board of directors to the Executive
Compensation Meeting.
The Executive Compensation Meeting reviews the remuneration system for members of board of directors
and senior management and determines the amount of remuneration for each member of the board of directors,
taking into account factors such as corporate performance as well as individual job responsibilities andperformance.
Remuneration for audit & supervisory board members is determined by the audit & supervisory board
within the scope determined by resolution of the shareholders’ meeting.
Executive Compensation Meetings were held as follows to discuss changes to the method of calculating
remuneration for directors of Toyota and to determine the amount of remuneration for fiscal 2019.
March to May 2018 (multiple times)•

Deliberation of fixed remuneration for directors from July 2018

March to May 2019 (multiple times)•

Deliberation of maximum compensation in conjunction with the introduction of the restricted sharecompensation plan, changes to the method of calculating remuneration for directors, evaluation ofbenchmarks and actual results of fiscal 2019 and individual performance evaluation

The changes to the method of calculating remuneration for directors described above were determined withthe unanimous consent of the Executive Compensation Meeting after a series of revisions being made to theinitially proposed changes based on the opinions of the outside members of the board of directors.
The board of directors resolved the total amount of remuneration for a given fiscal year and delegated thedetermination of the amount of remuneration for each member of the board of directors to the Executive
Compensation Meeting.
Moreover, the appropriateness of remuneration for [members of the board of directors and audit &supervisory board members of Toyota is assessed by referring to the benchmarking result of remuneration formembers of board of directors and audit & supervisory board members by an external compensation consultant.
Method of Determining Performance-based Remuneration
Directors with Japanese citizenship (excluding outside members of the board of directors)
Toyota sets the total amount of remuneration (“Annual Total Remuneration”) received by each member ofthe board of directors in a year based on consolidated operating income, the volatility of the share price of Toyota
and individual performance evaluation. The balance after deducting fixed remuneration from Annual Total
Remuneration constitutes performance-based remuneration.
< Concept of Each Item>
Consolidated operating
incomeIndicator for evaluating Toyota’s efforts based on businessperformance

Volatility of the share
price

Corporate value indicator for shareholders and investors to evaluate
Toyota’s efforts

Individual performance
evaluation

Qualitative evaluation of performance of each member of the boardof directors
97

< Method and Reference Value for Evaluating Indicators and Evaluation Result for Fiscal 2019 >Evaluation
Evaluation Method
Reference Value
Result for
Fiscal 2019
Evaluate the degree of attainment ofconsolidated operating income in fiscal
Consolidated
2019, using required income (set in¥1 trillion
operating income2011) for Toyota’s sustainable growth
as reference value
170%
Comparatively evaluate the volatility of
Toyota’s share price up to the end ofCompany’s share
Volatility of the
fiscal 2019, using the share price of
price: ¥6,825
Company’s share
Toyota and the Nikkei stock average at
price
the end of fiscal 2018 as reference
Nikei average: ¥21,454
values< Method of Setting Annual Total Remuneration >Annual Total Remuneration is set using a theoretical formula that takes into account the benchmarking
results of remuneration for members of the board of directors. Annual Total Remuneration is set for eachmember of the board of directors based on consolidated operating income and the volatility of the share price ofToyota, and then adjusted based on individual performance evaluation. Individual performance evaluation is set
within the range of 10% above or below Annual Total Remuneration for each position.
Directors with foreign citizenship (excluding outside members of the board of directors)
Fixed remuneration and performance-based remuneration are set based on the remuneration levels andstructures that allow Toyota to secure and retain talented personnel. Fixed remuneration is set, taking into
account each member’s job responsibilities and the remuneration standards of such member’s home country.
Performance-based remuneration is set based on consolidated operating income, the volatility of the share priceof Toyota and individual performance, taking into account each member’s job responsibilities and the
remuneration standards of such member’s home country. The concept of each item is the same as that for
directors with Japanese citizenship (excluding outside members of the board of directors).
Compensation
The aggregate amount of remuneration, including bonuses, accrued for all members of the board of directors
and audit & supervisory board members as a group by Toyota for services in all capacities was ¥2,272 million
during fiscal 2019.
Toyota Motor Corporation and its subsidiaries have not set aside or accrued any amounts to provide
pension, retirement or similar benefits to members of the board of directors and audit & supervisory board
members of Toyota Motor Corporation.
Toyota’s Annual Securities Report filed with the Kanto Local Bureau of Finance on June 21, 2019,contained the following information concerning compensation in fiscal 2019 on a consolidated basis for membersof the board of directors and audit & supervisory board members whose total compensation exceeded¥100 million during such period:- Takeshi Uchiyamada, Member of the Board of Directors: ¥189 million (¥99 million in base compensationand ¥82 million in bonus)
98

- Shigeru Hayakawa, Member of the Board of Directors: ¥116 million (¥61 million in base compensationand ¥47 million in bonus)- Akio Toyoda, Member of the Board of Directors: ¥386 million (¥99 million in base compensation and¥280 million in bonus)- Didier Leroy, Member of the Board of Directors: ¥1,042 million (¥249 million in base compensation and¥777 million in bonus)- Shigeki Terashi, Member of the Board of Directors: ¥131 million (¥70 million in base compensation and¥54 million in bonus)
The amounts above were recorded as expenses in fiscal 2019.
6.C BOARD PRACTICES
Toyota’s articles of incorporation provide for a board of directors of not more than 20 members and for not
more than seven audit & supervisory board members. Shareholders elect the members of the board of directors
and audit & supervisory board members at the general shareholders’ meeting. The normal term of office of amember of the board of directors is one year and that of an audit & supervisory board member is four years.
Members of the board of directors and audit & supervisory board members may serve any number of consecutive
terms.
The board of directors may appoint one Chairman of the Board of Directors and one President, as well as
one or more Vice Chairmen of the Board and Executive Vice Presidents. The board of directors elects, pursuant
to its resolutions, one or more Representative Directors. Each Representative Director represents Toyota
generally in the conduct of its affairs. The board of directors has the ultimate responsibility for the administrationof Toyota’s affairs. None of Toyota’s members of the board of directors is party to a service contract with Toyota
or any of its subsidiaries that provides for benefits upon termination of employment.
Under the Companies Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of
directors, exempt members of the board of directors (including former members of the board of directors) fromtheir liabilities to Toyota arising in connection with their failure to execute their duties within the limits
stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with eachmember of the board of directors (excluding executive members of the board of directors, among others) which
limits the maximum amount of their liabilities owed to Toyota arising in connection with their failure to execute
their duties to an amount equal to the minimum liability limit amount prescribed in the laws and regulations.
Under the Companies Act, Toyota must have at least three audit & supervisory board members. At least halfof the audit & supervisory board members are required to be an “outside” audit & supervisory board member,which is any person who satisfies all of the following requirements:(a) the person has never been a member of the board of directors, accounting counselor (in the case that an
accounting counselor is a legal entity, an employee of such entity who is in charge of its affairs), executive
officer, manager or employee of Toyota or its subsidiaries during the ten year period before becoming an outside
audit & supervisory board member;(b) if the person was an audit & supervisory board member of Toyota or any of its subsidiaries at any time
during the ten year period before becoming an outside audit & supervisory board member, such person has notbeen a member of the board of directors, accounting counselor (in the case that an accounting counselor is a legal
entity, an employee of such entity who is in charge of its affairs), executive officer, manager or employee ofToyota or any of its subsidiaries during the ten year period before becoming an audit & supervisory board
member of Toyota or any of its subsidiaries; and99

(c) the person is not a spouse or relative within the second degree of kinship of any member of the board of
directors or manager or other key employee of Toyota.
The audit & supervisory board members may not at the same time be a member of the board of directors,
accounting counselor (in case that an accounting counselor is a judicial person, a member of such judicial person
who is in charge of its affairs), executive officers, general managers or employees of Toyota or any of its
subsidiaries. Together, these audit & supervisory board members form the audit & supervisory board. The
audit & supervisory board members have the duty to examine the financial statements and business reports which
are submitted by the board of directors to the general shareholders’ meeting. The audit & supervisory board
members also monitor the administration of Toyota’s affairs by the members of the board of directors. Audit &supervisory board members are not required to be, and Toyota’s audit & supervisory board members are not,certified public accountants. They are required to participate in meetings of the board of directors but are notentitled to vote.
Under the Companies Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of
directors, exempt audit & supervisory board members (including former audit & supervisory board members)from their liabilities to Toyota arising in connection with their failure to execute their duties within the limits
stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with each
audit & supervisory board member which limits the maximum amount of their liabilities owed to Toyota arisingin connection with their failure to execute their duties to an amount equal to the minimum liability limit amountprescribed in the laws and regulations.
Toyota does not have a remuneration committee. However, members of Toyota’s Executive Compensation
Meeting discuss remuneration for members of the board of directors.
The Executive Compensation Meeting reviews the remuneration system for members of the board of
directors and senior management and determines the amount of remuneration for each member of the board of
directors, taking into account factors such as corporate performance as well as individual job responsibilities andperformance. The members of the meeting are Takeshi Uchiyamada, the Chairman of the Board of Directors, andKoji Kobayashi, Ikuro Sugawara, Sir Philip Craven and Teiko Kudo, each, a Member of the Board of Directors.
6.D EMPLOYEESThe total number of Toyota employees, on a consolidated basis, was 370,870 as March 31, 2019, 369,124 asof March 31, 2018 and 364,445 as of March 31, 2017. The following tables set forth a breakdown of persons
employed by business segment and by geographic location as of March 31, 2019.
Segment

Automotive . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . .
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Employees

Location

320,563 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,796 North America . . . . . . . . . . . . . . . . . . . . . .
34,378 Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,133 Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . .
370,870 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Employees

213,862
49,63821,16864,293
21,909370,870* “Other” consists of Central and South America,
Oceania, Africa and the Middle East.
Most regular employees of Toyota Motor Corporation and its consolidated subsidiaries in Japan, other thanmanagement, are required to become members of the labor unions that compose the Federation of All Toyota
Workers’ Unions. Approximately 87% of Toyota Motor Corporation’s regular employees in Japan are membersof this union.
100

In Japan, basic wages and other working conditions are negotiated annually. In addition, in accordance withJapanese national custom, each employee is also paid a semi-annual bonus. Bonuses are negotiated at the time ofwage negotiations and are based on Toyota’s financial results, prospects and other factors. The average wage
increase for all union members, excluding bonuses, in Japan was approximately 3.01% in fiscal 2019.
In general, Toyota considers its labor relations with all of its workers to be good. However, Toyota iscurrently a party to, and otherwise from time to time experiences, labor disputes in some of the countries inwhich it operates. Toyota does not expect any disputes to which it is currently a party to materially affectToyota’s consolidated financial position.
Toyota’s average number of temporary employees on a consolidated basis was 87,129 during fiscal 2019.
6.E SHARE OWNERSHIP
For information on the number of shares of Toyota’s common stock held by each member of the board of
directors and audit & supervisory board member as of June 2019, see “—Directors and Senior Management.”
None of Toyota’s shares of common stock entitles the holder to any preferential voting rights. As of
March 31, 2019, Toyota does not have any stock option plan for which stock options or stock acquisition rights
are exercisable or will become exercisable in the future.
Toyota’s board of directors plans to resolve the share compensation within the maximum sharecompensation amount of 4.0 billion yen per year established at the 115th Ordinary General Shareholders’Meeting held on June 13, 2019. The overview of the share compensation is as follows.
Eligible persons

Members of the board of directors of Toyota (excluding outside membersof the board of directors)

Total amount of the sharecompensation

Maximum of 4.0 billion yen per year

Amount of the sharecompensation payable to eachmember of the board of directors

Set each year considering factors such as corporate results, duties, andperformance

Type of shares to be allotted andmethod of allotment

Issue or disposal of common shares (with transfer restrictions under anallotment agreement)

Total number of shares to be
allotted

Maximum of 800,000 shares per year in total to eligible members of theboard of directors

Amount to be paid

Determined by the board of directors of Toyota based on the closing priceof Toyota’s common shares on the Tokyo Stock Exchange on the business
day prior to each resolution of the board of directors, within a range that is
not particularly advantageous to eligible members of the board of directors

Transfer restriction period

A period of between three and fifty years, as predetermined by the board of
directors of Toyota

Conditions for removal oftransfer restrictions

Restrictions will be removed upon the expiration of the transfer restriction
period.
However, restrictions will also be removed in the case of expiration of theterm of office, death, or other legitimate reasons.

Gratis acquisition by Toyota

Toyota will be able to acquire all allotted shares without consideration in
the case of violations of laws and regulations or other reasons specified by
the board of directors of Toyota during the transfer restriction period.
101

Toyota also has an employee stock ownership association in Japan for employees and full time and part timecompany advisors. Members of the employee stock ownership association set aside certain amounts from theirmonthly salary and bonuses to purchase Toyota’s common stock through the employee stock ownershipassociation. As of March 31, 2019, the employee stock ownership association held 14,734,167 shares of Toyota’scommon stock.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A MAJOR SHAREHOLDERS
As of March 31, 2019, 3,262,997,492 shares of Toyota’s common stock (out of which 430,558,325 shareswere treasury stock and 2,832,439,167 shares were outstanding) and 47,100,000 First Series Model AA
Class Shares of Toyota were issued. Information concerning beneficial ownership of Toyota’s common stock inthe table below was prepared from information known to Toyota or that could be ascertained from public filings,
including filings made by Toyota’s shareholders regarding their ownership of Toyota’s common stock under the
Financial Instruments and Exchange Law of Japan.
Under the Financial Instruments and Exchange Law, any person who becomes, beneficially and solely or
jointly, a holder, including, but not limited to, a deemed holder who manages shares for another holder pursuant
to a discretionary investment agreement, of more than 5% of the total issued shares of a company listed on a
Japanese stock exchange (including ADSs representing such shares) must file a report concerning theshareholding with the director of the relevant local finance bureau. A similar report must be filed, with certain
exceptions, if the percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued
shares of a company increases or decreases by 1% or more, or if any change to a material matter set forth in any
previously filed reports occurs.
Based on information known to Toyota or can be ascertained from public filings, the following table sets
forth the beneficial ownership of holders of 5% or more of Toyota’s common stock as of the most recent
practicable date. Toyota is not aware of any holder of First Series Model AA Class Shares who beneficially owns
5% or more of Toyota’ outstanding First Series Model AA Class Shares.

Name of Beneficial Owner

Toyota Industries Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares ofCommon Stock(in thousands)

Percentage of
Outstanding
Voting Shares ofCommon Stock

238,466

8.42

According to The Bank of New York Mellon, depositary for Toyota’s ADSs (the “Depositary”), as ofMarch 31, 2019, 45,459,183 shares of Toyota’s common stock were held in the form of ADRs and there were1,833 ADR holders of record and 148,282 beneficial owners in the United States. According to Toyota’s registerof shareholders, as of March 31, 2019, there were 623,599 holders of common stock and First Series Model AA
Class Shares of record worldwide. As of March 31, 2019, there were 486 record holders of Toyota’s common
stock with addresses in the United States, whose shareholdings represented approximately 8.6% of the issued
common stock on that date. Because some of these shares were held by brokers or other nominees, the number ofrecord holders with addresses in the United States might not fully show the number of beneficial owners in the
United States.
None of Toyota’s shares of common stock entitles the holder to any preferential voting rights.
To the extent known to Toyota, Toyota is not owned or controlled, directly or indirectly, by anothercorporation, any foreign government or any natural or legal person.
Toyota knows of no arrangements the operation of which may at a later time result in a change of control.
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7.B RELATED PARTY TRANSACTIONSBusiness Relationships
Toyota purchases materials, supplies and services, among others, from numerous suppliers throughout theworld in the ordinary course of business, including Toyota’s affiliated companies accounted for by the equity
method and those firms with which certain members of Toyota’s board of directors are affiliated. Toyota
purchased materials, supplies and services, among others, from these affiliated entities in the amount of¥6,431.4 billion in fiscal 2019. Toyota also sells its products and services, among others, to Toyota’s affiliatedcompanies accounted for by the equity method and firms with which certain members of Toyota’s board of
directors are affiliated. Toyota sold products and services, among others, to these affiliated entities in the amountof ¥2,159.5 billion in fiscal 2019. See note 11 of Toyota’s consolidated financial statements for additional
information regarding Toyota’s investments in and transactions with affiliated companies.
Loans
Toyota regularly has trade accounts and other receivables by, and accounts payable to, Toyota’s affiliatedcompanies accounted for by the equity method and firms with which certain members of Toyota’s board of
directors are affiliated. Toyota had outstanding trade accounts and other receivables by these affiliated entities in
the amount of ¥362.8 billion as of March 31, 2019. Toyota had outstanding trade accounts and other payables tothese affiliated entities in the amount of ¥8,457 billion as of March 31, 2019.
Toyota, from time to time, provides short- to medium-term loans to its affiliated companies, as well as loans
under a loan program established by certain subsidiaries to assist their executives and members of the board of
directors with the purchase of homes. As of March 31, 2019, there is no outstanding loans extended to its
affiliated companies accounted for by the equity method. As of March 31, 2019, an aggregate amount of¥37.4 billion in loans was outstanding to those of its affiliated companies not accounted for by the equity method,which are 20% to 50% owned by Toyota.
7.C INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8. FINANCIAL INFORMATION
8.A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
1-3. Consolidated Financial Statements. Toyota’s audited consolidated financial statements are included under“Item 18 — Financial Statements.” Except for Toyota’s consolidated financial statements included under
Item 18, no other information in this annual report has been audited by Toyota’s auditors.
4.

Not applicable.

5.

Not applicable.

6.

Export Sales. See “Operating and Financial Review and Prospects — Operating Results — Overview —Geographic Breakdown.”

7.

Legal and Arbitration Proceedings. See “Information on the Company — Business Overview — Legal
Proceedings.”

8.

Dividend Policy. See “Key Information — Selected Financial Data — Dividend Information.”

8.B SIGNIFICANT CHANGES
Except as disclosed in this annual report, there have been no significant changes since the date of Toyota’s
latest annual financial statements.
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ITEM 9. THE OFFER AND LISTING
9.A LISTING DETAILS
Shares of Toyota common stock are traded on the Tokyo Stock Exchange and the Nagoya Stock Exchange
under the ticker symbol “7203” in Japan, and on the London Stock Exchange under the ticker symbol “TYT.”
Toyota’s American Depositary Shares, or ADSs, each representing two shares of Toyota common stock, arelisted on the New York Stock Exchange, or NYSE, under the ticker symbol “TM.” Toyota’s Model AA
Class Shares are not listed on any securities exchange.
9.B PLAN OF DISTRIBUTION
Not applicable.
9.C MARKETSThe primary trading market for Toyota’s common stock is the Tokyo Stock Exchange. The common stock isalso listed on the Nagoya Stock Exchange and on the London Stock Exchange.
Since September 29, 1999, American Depositary Shares, each equal to two shares of Toyota’s common
stock and evidenced by American Depositary Receipts, have been traded and listed on the New York Stock
Exchange through a sponsored ADR facility operated by The Bank of New York Mellon, as Depositary. Prior tothat time, Toyota’s ADSs were listed on the Nasdaq SmallCap Market through five unsponsored ADR facilities.
9.D SELLING SHAREHOLDERS
Not applicable.
9.E DILUTION
Not applicable.
9.F EXPENSES OF THE ISSUE
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A SHARE CAPITAL
Not applicable.
10.B MEMORANDUM AND ARTICLES OF ASSOCIATION
Except as otherwise stated, set forth below is information relating to Toyota’s common stock and Model AA
Class Shares, including brief summaries of the relevant provisions of Toyota’s articles of incorporation and sharehandling regulations, as currently in effect, and of the Companies Act, Act Concerning Book-Entry Transfer ofCorporate Bonds, Shares and Other Securities (the “Book-Entry Transfer Act”) and related legislation.
GeneralToyota’s authorized number of shares as of March 31, 2019 was 10,000,000,000 common shares, of which
3,262,997,492 shares were issued. The articles of incorporation was amended at the 111th Ordinary General104

Shareholders’ Meeting held in June 2015 and Toyota’s authorized number of shares was changed to
10,000,000,000 shares, with the total number of authorized shares per class, of 10,000,000,000 for commonshares, 50,000,000 for First Series Model AA Class Shares, 50,000,000 for Second Series Model AA
Class Shares, 50,000,000 for Third Series Model AA Class Shares, 50,000,000 for Fourth Series Model AA
Class Shares and 50,000,000 for Fifth Series Model AA Class Shares, and the total number of shares authorized
to be issued with respect to First Series Model AA Class Shares through the Fifth Series Model AA Class Shares
not to exceed 150,000,000 shares. As of June 21, 2019, there were 47,100,000 shares of First Series Model AA
Class Shares issued and outstanding. Neither the common shares nor the First Series Model AA Class Shares
have any par value.
Toyota does not issue share certificates for its shares. In accordance with the Companies Act, the BookEntry Transfer Act and Toyota’s articles of incorporation, Toyota’s common shares are recorded or registered on(i) Toyota’s register of shareholders and (ii) transfer account books of the Japan Securities Depository Center,
Inc. (“JASDEC”) which is a book-entry transfer institution and securities firms, banks or other accountmanagement institutions. The transfer of common shares will generally become effective once the transfer isrecorded in the transferee’s account. There are no restrictions imposed by Toyota’s articles of incorporation or
share handling regulations on the transfer of common shares. In order to assert shareholders’ rights against
Toyota, a shareholder must generally have his or her name and address recorded or registered on Toyota’s
register of shareholders. A holder of common shares can assert minority shareholders’ rights (shareholders’rights for which Toyota has not set a record date) against Toyota if JASDEC provides an individual shareholder
notice to Toyota upon the shareholder’s request. The shareholder of deposited shares underlying the ADSs is the
Depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert shareholders’ rights.
A holder of common shares must have a transfer account to transfer shares. Holders of common shares who
do not have a transfer account with JASDEC must have an account with an account management institution that
directly or indirectly has a transfer account with JASDEC. Once Toyota decides on the record date for its
shareholders’ meeting or makes a request to JASDEC based on justifiable grounds, JASDEC will promptly
provide to Toyota names, addresses and other information with respect to the holders of Toyota’s common shares
who are recorded on the transfer account books of JASDEC or account management institutions. Upon receivingsuch information, Toyota will record or register such information received from JASDEC on its register ofshareholders. Accordingly, holders of common shares recorded or registered on Toyota’s register of shareholders
will be treated as holders of common shares of Toyota and may exercise rights, such as voting rights, and will
receive dividends (if any) and notices to holders of common shares directly from Toyota. Holders of commonshares wishing to assert minority shareholders’ rights against Toyota must request an individual shareholder
notice to JASDEC or the account management institution at which the shareholder has opened a transfer account.
In response to such request, JASDEC will provide the individual shareholders notice to Toyota. A holder ofcommon shares may assert his or her minority shareholders’ rights against Toyota for a period of four weeks
after the date the individual shareholder notice is provided to Toyota. The shares held by a person who is deemedto hold additional shares according to the transfer account books are aggregated for these purposes.
Model AA Class Shares, once issued, will be recorded or registered on Toyota’s register of shareholders.
The transfer of Model AA Class Shares, once issued, will be effective upon an agreement between the transferor
and the transferee, but entry or record of a change of holder in the register of shareholders will require an
approval from the board of directors.
Corporate Purpose
Article 2 of Toyota’s articles of incorporation states that its purpose is to engage in the following
businesses:•

the manufacture, sale, leasing and repair of:•

motor vehicles, industrial vehicles, ships, aircraft, other transportation machinery and apparatus,
spacecraft and space machinery and apparatus, and parts thereof;105

•

industrial machinery and apparatus, other general machinery and apparatus, and parts thereof;•electrical machinery and apparatus, and parts thereof; and•measuring machinery and apparatus, medical machinery and apparatus, and parts thereof.

•

the manufacture and sale of ceramics and products of synthetic resins, and materials thereof;•

the manufacture, sale and repair of construction materials and equipment, furnishings and fixtures forresidential buildings;•

the planning, designing, supervision, execution and undertaking of construction works, civil engineering
works, land development, urban development and regional development;•

the sale, purchase, leasing, brokerage and management of real estate;•

the service of information processing, information communications and information supply and thedevelopment, sale and leasing of software;•

the design and development of product sales systems that utilize networks such as the Internet, sale,leasing and maintenance of computers included within such systems, and sale of products by utilizing
such systems;•

the inland transportation, marine transportation, air transportation, stevedoring, warehousing andtourism businesses;•

the printing, publishing, advertising and publicity, general leasing, security and workers dispatch
businesses;•

the credit card operations, purchase and sale of securities, investment consulting, investment trust
operation, and other financial services;•

the operation and management of such facilities as parking lots, showrooms, educational facilities,
medical care facilities, sports facilities, marinas, airfields, food and drink stands and restaurants, lodging
facilities, retail stores and others;•

the non-life insurance agency business and the life insurance agency business;•the production and processing by using biotechnology of agricultural products including trees, and thesale of such products;•

the sale of goods related to each of the preceding items and mineral oil;•the conducting of engineering, consulting, invention and research relating to each of the preceding items
and the utilization of such invention and research; and•any businesses incidental to or related to any of the preceding items.

Dividends
Dividends — General
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend.
Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to a
resolution of its board of directors. Toyota’s board of directors resolves to pay year-end dividends to holders ofcommon shares and registered pledgees of common shares of record as of March 31, the record date, in eachyear. In addition, the articles of incorporation provide that in the event that Toyota pays a year-end dividend toholders of common shares, it will pay AA Dividends in cash from surplus to any holders of Model AA
Class Shares or registered pledgees of Model AA Class Shares entered or recorded in the final register ofshareholders as of the record date for the year-end dividend, in preference to holders of common shares orregistered pledgees of common shares. The amount of annual AA Dividends per Model AA Class Share is106calculated by multiplying the amount per Model AA Class Share paid to Toyota as consideration by a rate
determined by the board of directors prior to the issuance of such Model AA Class Share, which rate is not toexceed 5%.
In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash
distributions from its distributable surplus to holders of common shares and pledgees of common shares of record
as of September 30, the record date, in each year by a resolution of its board of directors. The articles ofincorporation provide that in the event that Toyota pays such interim dividends, Toyota will pay AA Interim
Dividends in cash as interim dividend to any holders of Model AA Class Shares or registered pledgees of ModelAA Class Shares entered or recorded in the final register of shareholders as of the record date for the interim
dividend, in preference to holders of common shares or registered pledgees of common shares. If AA Interim
Dividends are paid during the fiscal year in which the record date for the year-end dividend falls, the amount of
AA Interim Dividends is deducted from AA Dividends to be paid per the above paragraph.
If the amount of the dividends from surplus paid in cash to holders of Model AA Class Shares or registeredpledgees of Model AA Class Shares is less than the prescribed amount of AA Dividends in any fiscal year, theamount of the shortfall will be carried forward to and accumulate in the following fiscal year and thereafter.
Dividends from surplus will be paid in cash to holders of Model AA Class Shares or registered pledgees ofModel AA Class Shares in preference to the payment of interim and year-end dividends until such payment
reaches the amount of the accumulated unpaid dividends.
In addition, under the Companies Act, dividends may be paid to holders of common shares and pledgees ofrecord of common shares as of any record date, other than those specified above, as set forth by Toyota’s articles
of incorporation or as determined by its board of directors from time to time. Under the Companies Act,
dividends may be distributed in cash or (except in the case of interim dividends mentioned in the second
preceding paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.
Dividends — Distributable amountUnder the Companies Act, Toyota is permitted to make distributions of surplus to the extent that theaggregate book value of the assets to be distributed to shareholders does not exceed the distributable amountprovided for by the Companies Act and the ordinance of the Ministry of Justice as at the effective date of such
distribution of surplus.
The amount of surplus at any given time shall be the amount of Toyota’s assets and the book value ofToyota’s treasury stock after subtracting and adding the amounts of items provided for by the Companies Act andthe ordinance of the Ministry of Justice, and the amount of surplus distributable for dividends is calculated byadding to and subtracting from this amount the amounts of items provided for by the Companies Act and theordinance of the Ministry of Justice.
Dividends — Prescription
Under its articles of incorporation, Toyota is not obligated to pay any dividends in cash which are left
unclaimed for a period of three years after the date on which they first became payable.
Capital Accounts
The amount of the cash or assets paid or contributed by subscribers for new shares (with certain exceptions)is required to be accounted for as stated capital, although Toyota may account for an amount not exceeding
one-half of such cash or assets as additional paid-in capital.
Under the Companies Act, Toyota may reduce its additional paid-in capital and legal reserve without
limitation on the amount to be reduced, generally, by a resolution of a general shareholders’ meeting and if so107

decided by the same resolution, may account for the whole or any part of the amount of the reduction of
additional paid-in capital as stated capital. The whole or any part of surplus which may be distributed as
dividends may also be transferred to stated capital by a resolution of a general shareholders’ meeting.
Stock Splits
Toyota may at any time split the outstanding shares into a greater number of shares by a resolution of theboard of directors. Toyota must give public notice of the stock split, specifying a record date for the stock split,
not less than two weeks prior to the record date. Toyota shall conduct any stock split simultaneously and in thesame proportion with respect to the common shares and the Model AA Class Shares.
Consolidation of Shares
Toyota may at any time consolidate shares in issue into a smaller number of shares by a special shareholders
resolution (as defined in “Voting Rights”). When a consolidation of shares is to be made, Toyota must give
public notice of certain matters two weeks prior to the effective date of the consolidation. Toyota must disclose
the reason for the consolidation of shares at a general shareholders’ meeting. Toyota shall conduct any
consolidation of shares simultaneously and in the same proportion with respect to the common shares and theModel AA Class Shares.
Japanese Unit Share System
General. Consistent with the requirements of the Companies Act, Toyota’s articles of incorporation providethat 100 common shares or Model AA Class Shares each constitute one “unit.” Although the number of sharesconstituting a unit is included in the articles of incorporation, any amendment to the articles of incorporation
reducing (but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit ofshares may be made by a resolution of the board of directors rather than by a special shareholders resolution,
which is otherwise required for amending the articles of incorporation.
Voting Rights under the Unit Share System. Under the unit share system, shareholders have one voting
right for each unit of shares that they hold. Any number of common shares or Model AA Class Shares less than afull unit will carry no voting rights.
Purchase by Toyota of Shares Constituting Less Than a Unit. A holder of shares constituting less than afull unit may require Toyota to purchase those shares at their market value in the case of common shares and atfair price in the case of Model AA Class Shares in accordance with the provisions of Toyota’s share handlingregulations and the Companies Act.
Surrender of American Depositary Receipts. ADR holders will only be permitted to surrender ADRs andwithdraw underlying common shares constituting an integral number of a whole unit. If a holder surrenders an
ADR including ADRs representing common shares that do not constitute an integral number of whole units, theDepositary will deliver to that holder only those common shares which constitute a whole unit. The Depositary
will then issue to the holder a new ADR representing the remaining shares. Holders of an ADR that represents
less than a whole unit of underlying shares will be unable to withdraw the underlying shares. As a result, those
holders will be unable to require Toyota to purchase their common shares to the extent those common sharesconstitute less than one whole unit.
Voting Rights
Toyota holds its ordinary general shareholders’ meeting each year. In addition, Toyota may hold anextraordinary general shareholders’ meeting whenever necessary by giving at least two weeks’ advance notice.
Under the Companies Act, notice of any shareholders’ meeting must be given to each shareholder having voting
rights or, in the case of a non-resident shareholder, to his or her resident proxy or mailing address in Japan inaccordance with Toyota’s share handling regulations, at least two weeks prior to the date of the meeting.
108Holders of common shares and holders of Model AA Class Shares shall have voting rights exercisable at a
general shareholders’ meeting. A holder of shares constituting one or more whole units is entitled to one vote perunit of shares subject to the limitations on voting rights set forth in this paragraph. In general, under theCompanies Act, a resolution can be adopted at a general shareholders’ meeting by a majority of the shares having
voting rights represented at the meeting. The Companies Act and Toyota’s articles of incorporation require aquorum for the election of members of the board of directors and audit & supervisory board members of not lessthan one-third of the total number of outstanding shares having voting rights. Toyota’s shareholders are notentitled to cumulative voting in the election of members of the board of directors. A corporate shareholder, themanagement of which is substantially under Toyota’s control as provided by an ordinance of the Ministry ofJustice, either through the holding of voting rights or for any other reason, does not have voting rights.
Shareholders may exercise their voting rights by attending the general shareholders’ meeting or in writingby mail. Shareholders who choose to exercise their voting rights by mail must fill out and return to Toyota thevoting right exercise form enclosed with the convocation notice of the general shareholders’ meeting by the datespecified in such convocation notice. In addition, from the general shareholders’ meeting for fiscal 2009,
shareholders may exercise their voting rights through the internet. Shareholders electing to exercise their voting
rights through the internet must log on to the “Website to Exercise Voting Rights” using the login ID andtemporary password provided in the voting right exercise form enclosed with the convocation notice and submit
their votes by a date specified in the convocation notice, following instructions appearing on the website.
Institutional investors may also use the Electronic Proxy Voting Platform operated by Investor Communications
Japan (“ICJ”) to exercise their voting rights through the use of the Internet, if such institutional investor applies
to use the platform in advance. Shareholders may also exercise their voting rights through proxies, provided thatthose proxies are also shareholders who have voting rights. Toyota may refuse a shareholder having two or more
proxies attend a general shareholders’ meeting.
The Companies Act provides that a quorum of at least one-third of outstanding shares with voting rights
must be present at a shareholders’ meeting to approve any material corporate actions such as:(1) any amendment of the articles of incorporation with certain exceptions in which a shareholders’
resolution is not required;(2) acquisition of its own shares from a specific party;(3) consolidation of shares;(4) any issue or transfer of its shares at a “specially favorable” price (or any issue of stock acquisitionrights or bonds with stock acquisition rights at “specially favorable” conditions by Toyota) to any
persons other than shareholders;(5) the removal of an audit & supervisory board member;(6) the exemption of liability of a director or audit & supervisory board member with certain
exceptions;(7) a reduction of stated capital which meets certain requirements with certain exceptions;(8) a distribution of in-kind dividends which meets certain requirements;(9) dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is
not required;(10) the transfer of the whole or a material part of the business;(11) the transfer in entirety or in part of shares or equity interest of a subsidiary under certain
conditions;(12) the taking over of the entire business of any other corporation with certain exceptions in which ashareholders’ resolution is not required;109

(13) share exchange or share transfer for the purpose of establishing 100% parent-subsidiary
relationships with certain exceptions in which a shareholders’ resolution is not required; or(14) company split with certain exceptions in which a shareholders’ resolution is not required.
At least two-thirds of the shares having voting rights represented at the meeting must approve these actions.
The voting rights of holders of ADSs are exercised by the Depositary based on instructions from those
holders.
Rights to be Allotted Shares
Holders of common shares and Model AA Class Shares have no preemptive rights under Toyota’s articles
of incorporation. Under the Companies Act, the board of directors may, however, determine that shareholders
shall be given rights to be allotted shares or stock acquisition rights on request in connection with a particularissue or transfer of shares, or issue of stock acquisition rights, respectively. In this case, such rights must be given
on uniform terms to all shareholders as of a specified record date by at least two weeks’ prior public notice toshareholders of the record date.
Rights to be allotted shares are nontransferable. However, a shareholder may be allotted stock acquisitionrights without consideration thereto, and may transfer such rights.
Liquidation Rights
In the event of a liquidation of Toyota, the assets remaining after payment of all debts, liquidation expenses
and taxes will be distributed as follows. First, an amount per First Series Model AA Class Share through Fifth
Series Model AA Class Share, determined by resolution of the board of directors or calculated using a formuladetermined by a resolution of the board of directors prior to the issuance of such Model AA Class Shares basedon the amount per Model AA Class Shares paid to Toyota as consideration (the “Base Amount”), shall be paid in
cash to holders of Model AA Class Shares or registered pledgees of Model AA Class Shares. No other
distribution of residual assets shall be made to holders of Model AA Class Shares or registered pledgees ofModel AA Class Shares. The remaining residual assets shall be distributed among the holders of common sharesor registered pledgees of common shares in proportion to the respective number of shares they own.
Liability to Further Calls or Assessments
All of Toyota’s currently outstanding shares, including shares represented by the ADSs, are fully paid andnonassessable.
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for all shares. Mitsubishi UFJ Trust andBanking Corporation’s office is located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8212 Japan.
Mitsubishi UFJ Trust and Banking Corporation maintains Toyota’s register of shareholders and records transfersof record ownership (in the case of common shares, upon receiving notification from JASDEC).
Record Date
The close of business on March 31 is the record date for Toyota’s year-end dividends, if paid. A holder ofcommon shares or Model AA Class Shares constituting one or more whole units who is recorded or registered asa holder on Toyota’s register at the close of business as of March 31 is also entitled to exercise shareholders’voting rights at the ordinary general shareholders’ meeting with respect to the business year ending on March 31.
110

The close of business on September 30 of each year is the record date for interim dividends, if paid. In addition,
Toyota may set a record date for determining the shareholders entitled to other rights and for other purposes bygiving at least two weeks’ prior public notice.
The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges two business days prior
to a record date (or if the record date is not a business day, three business days prior thereto), for the purpose ofdividends or rights offerings. However, in connection with the scheduled shortening of the settlement period ofshares listed on any Japanese stock exchange, the ex-dividend date and ex-rights date is expected to become thepreceding business day before the record date (or if the record date is not a business day, two business days prior
thereto) if the record date is on or after July 18, 2019 (provided, however, such transition date is subject tochange).
Acquisition by Toyota of Shares
Toyota may acquire its own common shares (i) through a stock exchange on which such shares are listed orby way of tender offer (pursuant to an ordinary resolution of a general shareholders’ meeting or a resolution of
the board of directors), (ii) by purchase from a specific party (pursuant to a special resolution of a generalshareholders’ meeting) or (iii) from a subsidiary of Toyota (pursuant to a resolution of the board of directors). In
addition, Toyota may acquire its own Model AA Class Shares (i) by purchase from all holders of the relevant
series of Model AA Class Shares who make an offer to transfer the shares to Toyota upon notice from Toyota toacquire the shares (pursuant to an ordinary resolution of a general shareholders’ meeting), (ii) by purchase from a
specific party (pursuant to a special resolution of a general shareholders’ meeting) or (iii) from a subsidiary of
Toyota (pursuant to a resolution of the board of directors). When such acquisition of common shares is made by
Toyota from a specific party other than a subsidiary of Toyota, any other holder of common shares may make ademand to a representative director, more than five calendar days prior to the relevant shareholders’ meeting, that
Toyota also purchase the common shares held by such holder. However, the acquisition of its own commonshares at a price not exceeding the market price to be provided under an ordinance of the Ministry of Justice will
not trigger the right of any shareholder to include him/her as the seller of his/her shares in such proposed
purchase.
Any acquisition of shares must satisfy certain requirements that the total amount of the acquisition price
may not exceed the amount of the distributable dividends. See “— Dividends.”
Shares acquired by Toyota may be held by it for any period or may be cancelled by resolution of the boardof directors. Toyota may also transfer to any person the shares held by it, subject to a resolution of the board of
directors, and subject also to other requirements applicable to the issuance of new shares. Toyota may also utilize
its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the
purpose of acquiring another company by way of merger, share exchange or corporate split through exchange oftreasury stock for shares or assets of the acquired company.
The Companies Act generally prohibits any subsidiary of Toyota from acquiring shares of Toyota.
Model AA Class Shareholder’s Conversion Right into Common Shares
Holders of Model AA Class Shares may, at certain times specified in resolution of the board of directors as
the conversion period at the time of the issuance of First Series Model AA Class Shares to Fifth Series ModelAA Class Shares, demand that Toyota acquire some or all of such Model AA Class Shares held by such holder ofModel AA Class shares in exchange for common shares in a number determined by a formula specified in suchboard resolution. Any fractions of less than one common share to be delivered in exchange for such Model AA
Class Shares shall be disregarded, in which case payment of money as provided in the Companies Act shall not
be made.
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Model AA Class Shareholder’s Cash Put Option
Holders of Model AA Class Shares may, at certain times specified in resolution of the board of directors as
the cash put option period at the time of the issuance of First Series Model AA Class Shares to Fifth Series
Model AA Class Shares, demand that Toyota acquire some or all of such Model AA Class Shares in exchange
for cash in an amount equivalent to the Base Amount. If demand for acquisition exceeds the amount available
under the Companies Act for distribution as of the date of demand for such acquisition, Model AA Class Shares
to be acquired by Toyota shall be determined by a resolution of the board of directors, and the cash put option in
respect of Model AA Class Shares not so acquired shall be deemed not to have been exercised.
Toyota’s Cash Call Option
After the lapse of period specified in resolution of its board of directors at the time of the issuance of First Series
Model AA Class Shares to Fifth Series Model AA Class Shares, on an acquisition date separately determined bya resolution of the board of directors, Toyota may acquire all of such Model AA Class Shares in exchange forcash in an amount equivalent to the Base Amount.
Acquisition or Disposition of Shares or ADS
Under the Foreign Exchange and Foreign Trade Law and the cabinet orders and ministerial ordinances
thereunder (collectively, the “Foreign Exchange Regulations”), all aspects of regulations on foreign exchange
and foreign trade transactions are, with minor exceptions (which are not generally applicable to the purchase andsale of Toyota’s shares), only subject to post transaction reporting requirements. Acquisitions and dispositions ofshares of common stock or ADS by non-residents of Japan (including foreign corporations not resident in Japan)
are generally not subject to this reporting requirement. However, the Minister of Finance has the power toimpose a licensing requirement for transactions in limited circumstances.
Report of Substantial Shareholdings
The Financial Instruments and Exchange Law of Japan and regulations under the Law require any person
who has become a holder (together with its related persons) of more than 5% of the total issued shares of acompany listed on any Japanese stock exchange (including ADSs representing such shares) to file with the
Director of a competent Local Finance Bureau, within five business days, a report concerning thoseshareholdings. A similar report must also be filed to reflect any change of 1% or more in any shareholding or any
change in material matters set out in reports previously filed. Any such report shall be filed with the Director of acompetent Local Finance Bureau through the Electronic Disclosure for Investor’s Network (“EDINET”) system.
For this purpose, shares issuable to a shareholder upon exercise of stock acquisition rights are taken into accountin determining both the number of shares held by that stock acquisition rights holder and the company’s total
issued shares.
10.C MATERIAL CONTRACTS
All contracts concluded by Toyota during the two years preceding this filing were entered into in theordinary course of business.
10.D EXCHANGE CONTROLSThe Foreign Exchange Regulations govern the acquisition and holding of shares of capital stock of Toyota
by “exchange non-residents” and by “foreign investors.” The Foreign Exchange Regulations currently in effectdo not, however, affect transactions between exchange non-residents to purchase or sell shares outside Japan
using currencies other than Japanese yen.
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Exchange non-residents are:•individuals who do not reside in Japan; and•corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded
as residents of Japan. Conversely, branches and other offices of Japanese corporations located outside Japan are
regarded as exchange non-residents.
Foreign investors are:•individuals who are exchange non-residents;•

corporations or other organizations that are organized under the laws of foreign countries or whose
principal offices are located outside of Japan; and•corporations (1) of which 50% or more of their voting rights are held directly or indirectly by
individuals who are exchange non-residents and/or corporations or other organizations (a) that areorganized under the laws of foreign countries or (b) whose principal offices are located outside of Japanor (2) a majority of whose officers, or officers having the power of representation, are individuals whoare exchange non-residents.

In general, the acquisition of shares of a Japanese company (such as the shares of capital stock of Toyota)
by an exchange non-resident from a resident of Japan is not subject to any prior filing requirements. In certain
limited circumstances, however, the Minister of Finance may require prior approval of an acquisition of this type.
While prior approval, as described above, is not required, in the case where a resident of Japan transfers shares ofa Japanese company (such as the shares of capital stock of Toyota) for consideration exceeding ¥100 million toan exchange non-resident, the resident of Japan who transfers the shares is required to report the transfer to the
Minister of Finance within 20 days from the date of the transfer or the date of receipt of payment, whichevercomes later, unless the transfer was made through a bank or financial instruments business operator licensed orregistered under Japanese law.
If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock exchange (suchas the shares of capital stock of Toyota) and, as a result of the acquisition, the foreign investor, in combination
with any existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant company,
the foreign investor, in general, must file a report of the acquisition with the Minister of Finance and any othercompetent Ministers having jurisdiction over that Japanese company by the 15th day of the month following themonth in which the date of the acquisition falls. In limited circumstances, such as where the foreign investor is ina country that is not listed on an exemption schedule in the Foreign Exchange Regulations, or where thatJapanese company is engaged in certain businesses designated by the Foreign Exchange Regulations, a priornotification of the acquisition must be filed with the Minister of Finance and any other competent Ministers, who
may then modify or prohibit the proposed acquisition.
Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares
held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad.
Under the terms of the deposit agreement pursuant to which Toyota’s ADSs are issued, the Depositary is
required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the
resulting dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares
into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holders
of ADSs.
10.E TAXATION
The following discussion is a general summary of the principal U.S. federal income and Japanese national
tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs. This113

summary does not purport to address all material tax consequences that may be relevant to holders of shares ofcommon stock or ADSs, and does not take into account the specific circumstances of any particular investors,some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers, traders in securities thatelect to use a mark-to-market method of accounting for their securities holdings, regulated investmentcompanies, real estate investment trusts, partnerships and other pass-through entities, investors liable for the U.S.
alternative minimum tax, investors that own or are treated as owning 10% or more of Toyota’s stock (by vote orvalue), investors that hold shares of common stock or ADSs as part of a straddle, hedge, conversion transaction
or other integrated transaction, U.S. Holders (as defined below) subject to special tax accounting rules as a resultof any item of gross income with respect to shares of common stock or ADSs being taken into account in an“applicable financial statement” (as defined in section 451 of the Internal Revenue Code of 1986, as amended)
and U.S. Holders (as defined below) whose functional currency is not the U.S. dollar) may be subject to special
tax rules. This summary is based on the tax laws and regulations of the United States and Japan, judicial
decisions, published rulings and administrative pronouncements all as in effect on the date hereof, as well as on
the current income tax convention between the United States and Japan (the “Treaty”), as described below, all ofwhich are subject to change (possibly with retroactive effect), and to differing interpretations.
For purposes of this discussion, a “U.S. Holder” is any beneficial owner of shares of common stock or
ADSs that, for U.S. federal income tax purposes, is:1.

an individual who is a citizen or resident of the United States;2.

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes)
organized in or under the laws of the United States, any state thereof, or the District of Columbia;

3.

an estate the income of which is subject to U.S. federal income tax without regard to its source; or

4.

a trust that is subject to the primary supervision of a U.S. court and the control of one or more
U.S. persons, or that has a valid election in effect under applicable Treasury regulations to betreated as a U.S. person.

An “Eligible U.S. Holder” is a U.S. Holder that:1.

is a resident of the United States for purposes of the Treaty;2.

does not maintain a permanent establishment in Japan (a) with which the shares of common stockor ADSs are effectively connected and through which the U.S. Holder carries on or has carried on
business, or (b) of which the shares of common stock or ADSs form part of the business property;
and3.

is eligible for benefits under the Treaty with respect to income and gain derived in connection
with the shares of common stock or ADSs.

This summary does not address any aspects of U.S. federal tax law other than income taxation and does notdiscuss any aspects of Japanese taxation other than income taxation, as limited to national taxes, inheritance andgift taxation. This summary also does not cover any state or local, or non-U.S., non-Japanese tax considerations.
Investors are urged to consult their tax advisors regarding the U.S. federal, state and local and Japanese and othertax consequences of acquiring, owning and disposing of shares of common stock or ADSs. In particular, where
relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discusswith their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders. In addition,
this summary is based in part upon the representations of the Depositary and the assumption that each obligationin the deposit agreement, and in any related agreement, will be performed in accordance with its terms.
In general, for purposes of the Treaty and for U.S. federal income and Japanese income tax purposes,
owners of ADRs evidencing ADSs will be treated as the owners of the shares of common stock represented bythose ADSs, and exchanges of shares of common stock for ADSs, and exchanges of ADSs for shares of common
stock, will not be subject to U.S. federal income or Japanese income tax.
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The discussion below is intended for general information only and does not constitute a complete analysisof all tax consequences relating to ownership of shares of common stock or ADSs. Prospective purchasers ofshares of common stock or ADSs should consult their own tax advisors concerning the tax consequences of
their particular situations.
Japanese Taxation
The following is a summary of the principal Japanese tax consequences (limited to national taxes) to
non-residents of Japan or non-Japanese corporations without permanent establishments in Japan (“non-resident
Holders”) who are holders of shares of common stock or of ADSs of Toyota. The following information
regarding taxation in Japan is based on the tax treaties and tax laws in force and their interpretation by Japan’s
tax authorities as of the date of this annual report. Tax laws and treaties and their interpretations may change(including with retroactive effect). Toyota will not revise this summary on the basis of any such change occurring
after the date of this annual report.
Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese
corporations. Stock splits are, in general, not taxable events.
In the absence of an applicable income tax treaty, convention or agreement reducing the maximum rate ofJapanese withholding tax or allowing an exemption from Japanese withholding tax, the rate of Japanese
withholding tax applicable to dividends paid by Japanese corporations to non-resident Holders is generally
20.42 percent, provided that, with respect to dividends paid on listed shares issued by a Japanese corporation(such as the shares of common stock or ADSs of Toyota) to non-resident Holders, other than any individual
shareholder who holds three percent or more of the total issued shares of the relevant Japanese corporation, theaforementioned 20.42 percent withholding tax rate is reduced to 15.315 percent for dividends due and payable onor before December 31, 2037. These rates include a special additional withholding tax (2.1 percent of the original
withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake.
At the date of this annual report, Japan has income tax treaties, conventions or agreements whereby theabove-mentioned withholding tax rate is reduced, in most cases to 15 percent or ten percent for portfolio
investors (15 percent under the income tax treaties in force with, among other countries, Belgium (until 2019),
Canada, Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore,and Spain, and ten percent under the income tax treaties with, among other countries, Australia, Austria, Belgium(from 2020), France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the U.K. and the UnitedStates).
Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paidby a Japanese corporation to an Eligible U.S. Holder that is a portfolio investor is generally reduced to ten
percent of the gross amount actually distributed, and dividends paid by a Japanese corporation to an Eligible U.S.
Holder that is a pension fund (as defined in the Treaty) are exempt from Japanese income tax by way of
withholding or otherwise, provided that such dividends are not derived from the carrying on of a business,directly or indirectly, by such pension fund.
If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Toyota to any
particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law
or if any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under
the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who is entitledto a reduced rate of or exemption from Japanese withholding tax on the payment of dividends on shares ofcommon stock by Toyota is required to submit an Application Form for Income Tax Convention Regarding
Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends (together with anyother required forms and documents) in advance through the withholding agent to the relevant tax authority
before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may
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provide this application service. In addition, a simplified special filing procedure is available for non-resident
Holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax by submitting aSpecial Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special
Income Tax for Reconstruction on Dividends of Listed Stock (together with any other required forms anddocuments). With respect to ADSs, this reduced rate or exemption is applicable if the Depositary or its agent
submits, together with other documents, two Special Application Forms (one before payment of dividends, theother within eight months after the recording date concerning such payment of dividends) to the Japanese tax
authority. To claim this reduced rate or exemption, any relevant non-resident Holder of ADSs will be required tofile proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other informationor documents as may be required by the Depositary. A non-resident Holder who is entitled, under an applicable
income tax treaty, to a reduced treaty rate lower than the withholding tax rate otherwise applicable underJapanese tax law or an exemption from the withholding tax, but fails to submit the required application inadvance, will be entitled to claim the refund of Japanese taxes withheld in excess of the rate under an applicabletax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty)or the entire amount of Japanese tax withheld (if such non-resident Holder is entitled to an exemption under theapplicable income tax treaty) by complying with a certain subsequent filing procedure. Toyota does not assume
any responsibility to ensure withholding at the reduced rate, or exemption therefrom, for non-resident Holders
who would be so eligible under an applicable tax treaty, but where the required procedures as stated above are
not followed.
Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident Holder
holding such shares of common stock or ADSs as portfolio investors are, in general, not subject to Japaneseincome tax or corporation tax under Japanese law. In addition, Eligible U.S. Holders are exempt from Japaneseincome or corporation tax with respect to such gains under the Treaty so long as filings required under Japanese
law are made.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired
from another individual shares of common stock or ADSs as a legatee, heir or donee even though neither theindividual, nor the deceased, nor donor is a Japanese resident.
Holders of shares of common stock or ADSs should consult their tax advisors regarding the effect of thesetaxes and, in the case of U.S. Holders, the possible application of the Estate and Gift Tax Treaty between the
United States and Japan.
U.S. Federal Income Taxation
U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to U.S.
Holders that hold shares of common stock or ADSs as capital assets (generally, for investment purposes).
Taxation of Dividends
Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any
distribution made by Toyota in respect of shares of common stock or ADSs (without reduction for Japanese
withholding taxes) will constitute a taxable dividend to the extent paid out of current or accumulated earnings
and profits, as determined under U.S. federal income tax principles. The U.S. dollar amount of such a dividend
generally will be included in the gross income of a U.S. Holder, as ordinary income, when actually or
constructively received by the U.S. Holder, in the case of shares of common stock, or by the Depositary, in thecase of ADSs. Dividends paid by Toyota will not be eligible for the dividends-received deduction generally
allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
Dividends received on shares and ADSs of certain foreign corporations by non-corporate U.S. investors may
be subject to U.S. federal income tax at lower rates than other types of ordinary income if certain conditions are116

met. Dividends received by non-corporate U.S. Holders with respect to shares of common stock or ADSs ofToyota are expected to be eligible for these reduced rates of tax. U.S. Holders should consult their own tax
advisors regarding the eligibility of such dividends for a reduced rate of tax.
The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese yen/
U.S. dollar exchange rate in effect on the date that the dividend is included in the gross income of the U.S.
Holder, regardless of whether the payment is converted into U.S. dollars on that date. Generally, any gain or loss
resulting from currency exchange fluctuations during the period from the date the dividend payment is includedin the gross income of a U.S. Holder through the date that payment is converted into U.S. dollars (or otherwise
disposed of) will be treated as U.S.-source ordinary income or loss. U.S. Holders should consult their own tax
advisors regarding the calculation and U.S. federal income tax treatment of foreign currency gain or loss.
To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of shares ofcommon stock or ADSs exceeds Toyota’s current and accumulated earnings and profits, as determined under
U.S. federal income tax principles, the distribution first will be treated as a tax-free return of capital to the extent
of the U.S. Holder’s adjusted tax basis in those shares or ADSs, and thereafter will be treated as U.S.-source
capital gain.
Distributions of additional shares of common stock that are made to U.S. Holders with respect to theirshares of common stock or ADSs, and that are part of a pro rata distribution to all of Toyota’s shareholders,
generally will not be subject to U.S. federal income tax.
For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect ofshares of common stock or ADSs will constitute income from sources outside the United States, and will
generally be “passive category income” or, in the case of certain U.S. Holders, “general category income.”
Subject to generally applicable limitations under U.S. federal income tax law and the Treaty, any Japanese
withholding tax imposed in respect of a Toyota dividend may be claimed as a credit against the U.S. federal
income tax liability of a U.S. Holder, or alternatively as a deduction in the computation of such U.S. Holder’staxable income if the U.S. Holder does not elect to claim a credit for any foreign taxes paid or accrued for the
taxable year. Special rules generally will apply to the calculation of foreign tax credits in respect of dividend
income that qualifies for preferential U.S. federal income tax rates. Additionally, special rules apply toindividuals whose foreign source income during the taxable year consists entirely of “qualified passive income”
and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the caseof a joint return). Further, under some circumstances, a U.S. Holder that:(i) has held shares of common stock or ADSs for less than a specified minimum period; or(ii) is obligated to make payments related to Toyota dividends,
will not be allowed a foreign tax credit for Japanese taxes imposed on Toyota dividends.
U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under
their particular circumstances.
Taxation of Capital Gains and Losses
In general, upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S. Holder willrecognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between theamount realized on the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in those sharesof common stock or ADSs. A U.S. Holder generally will have an adjusted tax basis in a share of common stockor an ADS equal to its U.S. dollar cost. Subject to the PFIC rules discussed below, gain or loss recognized on thesale or other taxable disposition of shares of common stock or ADSs generally will be capital gain or loss and, if
the U.S. Holder’s holding period for those shares or ADSs exceeds one year, will be long-term capital gain or117

loss. Non-corporate U.S. Holders, including individuals, currently are eligible for preferential rates of U.S.
federal income tax in respect of long-term capital gains. Under U.S. federal income tax law, the deduction ofcapital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder in respect of the sale or otherdisposition of shares of common stock or ADSs generally will be treated as U.S.-source income or loss for U.S.
foreign tax credit purposes.
Deposits and withdrawals of common stock in exchange for ADSs will not result in the realization of gainor loss for U.S. federal income tax purposes.

Passive Foreign Investment Companies
A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any
taxable year in which, after applying look-through rules, either (1) at least 75% of its gross income is passive
income or (2) on average at least 50% of the gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents and gains from commodities and securities transactions. The PFIC
determination is made annually and generally is based on the value of a non-U.S. corporation’s assets (including
goodwill) and composition of its income.
Toyota does not believe that it was a PFIC for U.S. federal income tax purposes for its taxable year ended
March 31, 2018, and currently intends to continue its operations in such a manner that it will not become a PFICin the future. Because the PFIC determination is made annually and the application of the PFIC rules to a
corporation such as Toyota (which among other things is engaged in leasing and financing through several
subsidiaries) is not entirely clear, no assurances can be made regarding determination of its PFIC status in thecurrent or any future taxable year. If Toyota is determined to be a PFIC, U.S. Holders could be subject toadditional U.S. federal income taxes on gain recognized with respect to the shares of common stock or ADSs andon certain distributions. In addition, an interest charge may apply to the portion of the U.S. federal income tax
liability on such gains or distributions treated under the PFIC rules as having been deferred by the U.S. Holder.
Moreover, dividends that a non-corporate U.S. Holder receives from Toyota will not be eligible for the reduced
U.S. federal income tax rates on dividends described above if Toyota is a PFIC either in the taxable year of thedividend or the preceding taxable year. If a U.S. Holder owns shares of common stock or ADSs in any taxable
year in which Toyota is a PFIC, such U.S. Holder generally would be required to file Internal Revenue Service(“IRS”) Form 8621 (or other form specified by the U.S. Department of the Treasury) on an annual basis, subject
to certain exceptions based on the value of PFIC stock held. Toyota will inform U.S. Holders if it believes that it
will be classified as a PFIC in any taxable year.
Prospective investors should consult their own tax advisors regarding the potential application of the PFIC
rules to shares of common stock or ADSs.

Non-U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to beneficial
owners of shares of common stock or ADSs that are neither U.S. Holders, nor partnerships, nor entities taxable aspartnerships for U.S. federal income tax purposes (“Non-U.S. Holders”).
A Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax on
distributions received in respect of shares of common stock or ADSs unless the distributions are effectively
connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (and, if anapplicable tax treaty requires, are attributable to a U.S. permanent establishment or fixed base of such Non-U.S.
Holder).
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A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized ona sale or other disposition of shares of common stock or ADSs, unless:(i)the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the
United States (and, if an applicable tax treaty requires, is attributable to a U.S. permanent establishment
or fixed base of such Non-U.S. Holder); or(ii) the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in the
taxable year of the disposition and other conditions are met.
Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an income
tax treaty applies and so requires, is attributable to a U.S. permanent establishment or fixed base of the Non-U.S.
Holder, generally will be taxed in the same manner as the income of a U.S. Holder. In addition, under certain
circumstances, any effectively connected earnings and profits realized by a corporate Non-U.S. Holder may besubject to an additional “branch profits tax” at the rate of 30% or at a lower rate that may be prescribed by anapplicable income tax treaty.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to dividends paid to a U.S. Holder in respect ofshares of common stock or ADSs, and to the proceeds received upon the sale, exchange or redemption of theshares of common stock or ADSs within the United States by U.S. Holders. Furthermore, backup withholding
may apply to those amounts (currently at a 24% rate) if a U.S. Holder fails to provide an accurate taxpayer
identification number to certify that such U.S. Holder is not subject to backup withholding or to otherwise
comply with the applicable requirements of the backup withholding requirements.
Dividends paid to a Non-U.S. Holder in respect of shares of common stock or ADSs, and proceeds received
upon the sale, exchange or redemption of shares of common stock or ADSs by a Non-U.S. Holder, generally are
exempt from information reporting and backup withholding under current U.S. federal income tax law. However,a Non-U.S. Holder may be required to provide certification of non-U.S. status in order to obtain that exemption.
Persons required to establish their exempt status generally must provide such certification under penalty of
perjury on IRS Form W-9, entitled Request for Taxpayer Identification Number and Certification, in the case of
U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign Status of Beneficial Owner for UnitedStates Tax Withholding and Reporting (Individuals), or IRS Form W-8BEN-E, entitled Certificate of Status ofBeneficial Owner for United States Tax Withholding and Reporting (Entities) (or other appropriate IRS Form
W-8), in the case of non-U.S. persons. Backup withholding is not an additional tax. The amount of backup
withholding imposed on a payment generally may be claimed as a credit against the holder’s U.S. federal income
tax liability, provided that the required information is properly furnished to the IRS in a timely manner.
In addition, certain U.S. Holders who are individuals that hold certain foreign financial assets (which may
include shares of common stock or ADSs) are required to report information relating to such assets, subject tocertain exceptions. U.S. Holders should consult their tax advisors regarding the effect, if any, of this legislationon their ownership and disposition of shares of common stock or ADSs.
THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE NATIONAL TAX CONSEQUENCESSET OUT ABOVE IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. PROSPECTIVE
PURCHASERS OF COMMON STOCK OR ADSs ARE URGED TO CONSULT WITH THEIR OWN TAXADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING ORDISPOSING OF COMMON STOCK OR ADSs, BASED ON THEIR PARTICULAR CIRCUMSTANCES.
10.F DIVIDENDS AND PAYING AGENTS
Not applicable.
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10.G STATEMENT BY EXPERTS
Not applicable.
10.H DOCUMENTS ON DISPLAY
Toyota files annual reports on Form 20-F and reports on Form 6-K with the SEC. You may access thisinformation through the SEC’s website (http://www.sec.gov). In addition, Toyota’s reports, proxy statements andother information may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York,New York 10005. Copies of the documents referred to herein may also be inspected at Toyota’s offices bycontacting Toyota at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan, attention: Financial
Reporting Department, Accounting Division, telephone number: +81-565-28-2121.
10.I SUBSIDIARY INFORMATION
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures about Market Risk
Toyota is exposed to market risk from changes in foreign currency exchange rates, interest rates, certain
commodity and equity security prices. In order to manage the risk arising from changes in foreign currency
exchange rates and interest rates, Toyota enters into a variety of derivative financial instruments.
A description of Toyota’s accounting policies for derivative instruments is included in note 2 to theconsolidated financial statements and further disclosure is provided in notes 21 and 28 to the consolidated
financial statements.
Toyota monitors and manages these financial exposures as an integral part of its overall risk management
program, which recognizes the unpredictability of financial markets, and seeks to reduce the potentially adverse
effects on Toyota’s operating results.
The financial instruments included in the market risk analysis consist of all of Toyota’s cash and cash
equivalents, equity securities with readily determinable fair values, debt securities designated asavailable-for-sale, finance receivables, securities investments, long-term and short-term debt and all derivative
financial instruments. Toyota’s portfolio of derivative financial instruments consists of forward foreign currency
exchange contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements andinterest rate options. Anticipated transactions denominated in foreign currencies that are covered by Toyota’s
derivative hedging are not included in the market risk analysis. Although operating leases are not required to be
included, Toyota has included these instruments in determining interest rate risk.
Foreign Currency Exchange Rate Risk
Toyota has foreign currency exposures related to buying, selling and financing in currencies other than thelocal currencies in which it operates. Toyota is exposed to foreign currency risk related to future earnings orassets and liabilities that are exposed due to operating cash flows and various financial instruments that are
denominated in foreign currencies. Toyota’s most significant foreign currency exposures relate to the U.S. dollar
and the euro.
Toyota uses a value-at-risk analysis (“VAR”) to evaluate its exposure to changes in foreign currency
exchange rates. The VAR of the combined foreign exchange position represents a potential loss in pre-tax
earnings that was estimated to be ¥206.9 billion and ¥224.0 billion as of March 31, 2018 and 2019, respectively.
120

Based on Toyota’s overall currency exposure (including derivative positions), the risk during fiscal 2019 to
pre-tax cash flow from currency movements was on average ¥219.3 billion, with a high of ¥225.3 billion and a
low of ¥211.2 billion.
The VAR was estimated by using a Monte Carlo Simulation Method and assumed 95% confidence level on
the realization date and a 10-day holding period.
Interest Rate Risk
Toyota is subject to market risk from exposures to changes in interest rates based on its financing, investing
and cash management activities. Toyota enters into various financial instrument transactions to maintain thedesired level of exposure to the risk of interest rate fluctuations and to minimize interest expense. The potential
decrease in fair value resulting from a hypothetical 100 basis point upward shift in interest rates would beapproximately ¥251.2 billion as of March 31, 2018 and ¥249.1 billion as of March 31, 2019.
There are certain shortcomings inherent to the sensitivity analyses presented. The model assumes thatinterest rate changes are instantaneous parallel shifts in the yield curve. However, in reality, changes are rarely
instantaneous. Although certain assets and liabilities may have similar maturities or periods to repricing, they
may not react correspondingly to changes in market interest rates. Also, the interest rates on certain types ofassets and liabilities may fluctuate with changes in market interest rates, while interest rates on other types ofassets may lag behind changes in market rates. Finance receivables are less susceptible to prepayments wheninterest rates change and, as a result, Toyota’s model does not address prepayment risk for automotive related
finance receivables. However, in the event of a change in interest rates, actual loan prepayments may deviatesignificantly from the assumptions used in the model.
Commodity Price Risk
Commodity price risk is the possibility of higher or lower costs due to changes in the prices of commodities,
such as non-ferrous alloys (e.g., aluminum), precious metals (e.g., palladium, platinum and rhodium) and ferrous
alloys, which Toyota uses in the production of motor vehicles. Toyota does not use derivative instruments tohedge the price risk associated with the purchase of those commodities and controls its commodity price risk byholding minimum stock levels.
Equity Price Risk
Toyota holds investments in various equity securities with readily determinable fair values that are subject
to price risk. The fair value of equity securities with readily determinable fair values was ¥2,582.1 billion as ofMarch 31, 2018 and ¥2,154.9 billion as of March 31, 2019. The potential change in the fair value of theseinvestments, assuming a 10% change in prices, would be approximately ¥258.2 billion as of March 31, 2018 and¥215.4 billion as of March 31, 2019.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A DEBT SECURITIES
Not applicable.
12.B WARRANTS AND RIGHTS
Not applicable.
12.C OTHER SECURITIES
Not applicable.
121

12.D AMERICAN DEPOSITARY SHARESFees and Charges for Holders of American Depositary Receipts
The Bank of New York Mellon, as Depositary for the ADSs, collects its fees for delivery and surrender of
ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or fromintermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting
those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The
Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
Persons depositing or withdrawing shares must pay:For:

$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)•

Issuance of ADSs, including issuances resulting
from a distribution, sale or exercise of shares orrights or other property•

Cancellation of ADSs for the purpose ofwithdrawal including if the deposit agreement
terminates$0.02 (or less) per ADS•

Any cash distribution to ADS registered holders

A fee equivalent to the fee that would be payable if
securities distributed to the ADR holder had been sharesand the shares had been deposited for issuance of ADSs•

Distribution of securities distributed to holders
of deposited securities which are distributed by
the Depositary to ADS registered holders

Registration fees•

Registration of transfer of shares on Toyota’sshare register to the name of the Depositary or its
nominee or the custodian or its nominee whenshares are deposited or withdrawn

Expenses of the Depositary•

Cable, telex and facsimile transmissions (whenexpressly provided in the deposit agreement)•

Converting foreign currency to U.S. dollars•

As necessary

Taxes and other governmental charges the Depositaryor the custodian have to pay on any ADS or share
underlying an ADS
Fees Incurred in Fiscal 2018

For fiscal 2019, Toyota received $751,594.86 from the Depositary for standard out-of-pocket maintenancecosts for the ADRs (consisting of the expenses of postage and envelopes for mailing annual reports, printing anddistributing dividend checks, stationery, postage, facsimile, and telephone calls), expenses relating to Toyota’s
annual general shareholders’ meeting that are incurred with respect to Toyota’s ADR holders and 50% of the net
dividend fees collected by the Depositary. The Depositary also paid Toyota’s continuing annual stock exchange
listing fees.
Fees to be Paid in the FutureWith regards to the ADS program, the Depositary has agreed to pay the standard out-of-pocket maintenancecosts for the ADRs, which includes the expenses of postage and envelopes for mailing annual reports, printing
and distributing dividend checks, stationery, postage, facsimile and telephone calls. It has also agreed to pay forinvestor relations expenses and any other program related expenses. The limit on the amount of expenses forwhich the Depositary will pay is the sum of $300,000 annually. In addition, the Depositary has agreed to pay
Toyota 50% of the net dividend fees collected by the Depositary during each annual period towards theaforementioned expenses.
122

PART IIITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDSNone.
ITEM 15. CONTROLS AND PROCEDURES(a) DISCLOSURE CONTROLS AND PROCEDURES
Toyota performed an evaluation of the effectiveness of the design and operation of its disclosure controls
and procedures as of the end of fiscal 2019. Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the Form 20-F that Toyota files under the Exchange Act is accumulated
and communicated to its management, including the chief executive officer and the principal accounting andfinancial officer, to allow timely decisions regarding required disclosure. The disclosure controls and procedures
also ensure that the Form 20-F that it files under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the Commission’s rules and forms. The evaluation was performed
under the supervision of Toyota’s President and the Executive Vice President, both Representative Directors.
Toyota’s disclosure controls and procedures are designed to provide reasonable assurance of achieving its
objectives. Managerial judgment was necessary to evaluate the cost-benefit relationship of possible controls andprocedures. The President and the Executive Vice President, both Representative Directors, have concluded that
Toyota’s disclosure controls and procedures are effective at the reasonable assurance level.
(b) MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING
Toyota’s management is responsible for establishing and maintaining effective internal control overfinancial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with U.S. GAAP. Toyota’s internal control over financial reporting includes those policies andprocedures that:(i)pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect thetransactions and dispositions of Toyota’s assets;(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with U.S. GAAP, and that Toyota’s receipts and expenditures arebeing made only in accordance with authorizations of Toyota’s management and members of the boardof directors; and(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of Toyota’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
Toyota’s management conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by theCommittee of Sponsoring Organizations of the Treadway Commission.
123Based on this evaluation, management concluded that Toyota’s internal control over financial reporting was
effective as of March 31, 2019.
PricewaterhouseCoopers Aarata LLC, an independent registered public accounting firm that audited theconsolidated financial statements included in this report, has also audited the effectiveness of Toyota’s internal
control over financial reporting as of March 31, 2019, as stated in its report included herein.
(c) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
Toyota’s independent registered public accounting firm, PricewaterhouseCoopers Aarata LLC, has issued an
audit report on the effectiveness of Toyota’s internal control over financial reporting. This report appears in
Item 18.
(d) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in Toyota’s internal control over financial reporting during fiscal 2019 thathave materially affected, or are reasonably likely to materially affect, Toyota’s internal control over financial
reporting.
ITEM 16. [RESERVED]ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Toyota maintains an audit & supervisory board system, in accordance with the Companies Act. Toyota’s
audit & supervisory board is comprised of six audit & supervisory board members, three of whom are outside
audit & supervisory board members. Each audit & supervisory board member has been appointed at Toyota’s
meetings of shareholders and has certain statutory powers independently, including auditing the business affairs
and accounts of Toyota.
Toyota’s audit & supervisory board has determined that it does not have an “audit committee financial
expert” serving on the audit & supervisory board. The qualifications for, and powers of, the audit & supervisoryboard member delineated in the Companies Act are different from those anticipated for any audit committee
financial expert. Audit & supervisory board members have the authority to be given reports from a certified
public accountant or an accounting firm concerning audits, including technical accounting matters. At the sametime, each audit & supervisory board member has the authority to consult internal and external experts on
accounting matters. Each audit & supervisory board member must fulfill the requirements under Japanese laws
and regulations and otherwise follow Japanese corporate governance practices and, accordingly, Toyota’s
audit & supervisory board has confirmed that it is not necessarily in Toyota’s best interest to nominate as audit &supervisory board member a person who meets the definition of audit committee financial expert. Although
Toyota does not have an audit committee financial expert on its audit & supervisory board, Toyota believes that
Toyota’s current corporate governance system, taken as a whole, including the audit & supervisory board
members’ ability to consult internal and external experts, is fully equivalent to a system having an audit
committee financial expert on its audit & supervisory board.
ITEM 16B. CODE OF ETHICS
Toyota has adopted a code of ethics that applies to its members of the board of directors and operating
officers, including its principal executive officer, principal financial officer, principal accounting officer orcontroller, or persons performing similar functions. A copy of Toyota’s code of ethics is included as an exhibit tothis annual report on Form 20-F.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers Aarata LLC has audited the financial statements of Toyota included in this annual
report on Form 20-F.
124

The following table presents the aggregate fees for professional services and other services rendered byPricewaterhouseCoopers Aarata LLC and the various network and member firms of PricewaterhouseCoopers to
Toyota in fiscal 2018 and fiscal 2019.
Yen in millions
2018
2019

Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,645
85
449
316

4,517
84
462
233

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,495

5,296

(1) Audit Fees consist of fees billed for the annual audit services engagement and other audit services, which
are those services that only the external auditor reasonably can provide, and include the services of annual
audit, quarterly reviews and assessment and reviews of the effectiveness of internal controls over financial
reporting of Toyota and its subsidiaries and affiliated companies; the services associated with SEC
registration statements or other documents issued in connection with securities offerings such as comfort
letters and consents; and consultations as to the accounting or disclosure treatment of transactions or events.
(2) Audit-related Fees consist of fees billed for assurance and related services that are reasonably related to theperformance of the audit or review of its financial statements or that are traditionally performed by theexternal auditor, and mainly include services such as due diligence; agreed-upon or expanded audit
procedures; internal control reviews and assistance; review of the information system; and financial
statement audits of employee benefit plans.
(3) Tax Fees include fees billed for tax compliance services, including services such as tax planning, advice andcompliance of federal, state, local and international tax; the review of tax returns; assistance with tax audits
and appeals; tax-only valuation services including transfer pricing and cost segregation studies; expatriate
tax assistance and compliance.
(4) All Other Fees primarily include fees billed for risk management advisory services of assessment andtesting of security infrastructure controls; services providing information related to automotive market
conditions; IT advisory services; and other advisory services.
Policies and Procedures of the Audit & Supervisory Board
Below is a summary of the current policies and procedures of the audit & supervisory board for the
pre-approval of audit and permissible non-audit services performed by Toyota’s independent public accountants.
Under the policy, specified operating officers or managers submit a request for general pre-approval of audit
and permissible non-audit services for the following fiscal year, which shall include details of the specificservices and estimated fees for the services, to the audit & supervisory board, which reviews and determines
whether or not to grant the request by the end of March of the fiscal year. Upon the general pre-approval of theaudit & supervisory board, the specified operating officers or managers are not required to obtain any specificpre-approval for audit and permissible non-audit services so long as those services fall within the scope of thegeneral pre-approval provided.
The audit & supervisory board makes a further determination of whether or not to grant a request to revise
the general pre-approval for the applicable fiscal year if such request is submitted by specified operating officers
or managers. Such request may include (i) adding any audit or permissible non-audit services other than the ones
listed in the general pre-approval and (ii) obtaining services that are listed in the general pre-approval but of
which the total fee amount exceeds the amount affirmed by the general pre-approval. The determination ofwhether or not to grant a request to revise the general pre-approval noted in the foregoing may alternatively be125made by an audit & supervisory board member (full time), who is designated in advance by a resolution of theaudit & supervisory board, in which case such audit & supervisory board member (full time) shall report suchdecision at the next meeting of the audit & supervisory board. The performance of audit and permissible
non-audit services and the payment of fees are subject to review by the audit & supervisory board at least once
every fiscal half year.
None of the audit related fees, tax fees or all other fees described in the table above were approved by theaudit & supervisory board pursuant to the de minimis exception provided by paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Toyota does not have an audit committee. Toyota is relying on the general exemption contained inRule 10A-3(c)(3) under the Exchange Act, which provides an exemption from the NYSE’s listing standards
relating to audit committees for foreign companies like Toyota that have an audit & supervisory board. Toyota’s
reliance on Rule 10A-3(c)(3) does not, in its opinion, materially adversely affect the ability of its audit &supervisory board to act independently and to satisfy the other requirements of Rule 10A-3.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
The following table sets forth purchases of Toyota’s common stock by Toyota and its affiliated purchasers
during fiscal 2019:

Period(a)
Total
Number of
SharesPurchased(1)(b)
Average
Price Paid per
Share (Yen)(1)

(c)
Total
Number of
SharesPurchased as
Part of
Publicly
Announced
Plans or
Programs(2)(d)
Maximum
Number of
Sharesthat May
Yet BePurchased
Under thePlans or
Programs(2)April 1, 2018 – April 30, 2018 . . . . . . . . . . . . . . . . . . . . . .
May 1, 2018 – May 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .
June 1, 2018 – June 30, 2018 . . . . . . . . . . . . . . . . . . . . . . .
July 1, 2018 – July 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . .
August 1, 2018 – August 31, 2018 . . . . . . . . . . . . . . . . . . .
September 1, 2018 – September 30, 2018 . . . . . . . . . . . . . .
October 1, 2018 – October 31, 2018 . . . . . . . . . . . . . . . . . .
November 1, 2018 – November 30, 2018 . . . . . . . . . . . . . .
December 1, 2018 – December 31, 2018 . . . . . . . . . . . . . .
January 1, 2019 – January 31, 2019 . . . . . . . . . . . . . . . . . .
February 1, 2019 – February 28, 2019 . . . . . . . . . . . . . . . .
March 1, 2019 – March 31, 2019 . . . . . . . . . . . . . . . . . . . .

1,072
1,999
17,439,198
15,434,017
5,015,842
965
1,360
5,964,002
16,234,509
14,618,806
1,272
1,183

6,824.38
7,372.49
7,408.48
7,309.27
7,416.63
6,887.22
6,781.67
6,741.02
6,875.01
6,716.59
6,684.28
6,673.93——
17,437,400
15,432,200
5,013,500——
5,963,200
16,232,600
14,618,100
—
—

—
—
—
—
—
—
—
—
—
—
—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,714,225—

74,697,000—(1) A portion of the above purchases were made as a result of holders of shares constituting less than one unit,
which is 100 shares of common stock, requesting Toyota to purchase shares that are a fraction of a unit, in
accordance with Toyota’s share handling regulations. Toyota is required to comply with such requests
pursuant to the Companies Act. See “Additional Information — Memorandum and Articles of
Association — Japanese Unit Share System.” The number of shares purchased not pursuant to publicly
announced plans or programs conducted in fiscal 2019 is 17,225.
126

(2) Toyota announced on May 9, 2018, that it would repurchase up to 55 million common shares between
May 16, 2018 and September 28, 2018 at a total price up to ¥300 billion, in order to return to shareholders
the profits derived in the fiscal year ended March 31, 2018. Toyota also announced on November 6, 2018that it would repurchase up to 42 million common shares between November 13, 2018 and March 29, 2019at a total price up to ¥250 billion in order to return to shareholders the profits derived in the interim period
ended September 30, 2018.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Significant Differences in Corporate Governance Practices between Toyota and U.S. Companies Listed on
the NYSE
Pursuant to home country practices exemptions granted by the NYSE, Toyota is permitted to follow certain
corporate governance practices complying with Japanese laws, regulations and stock exchange rules in lieu of the
NYSE’s listing standards. The SEC approved changes to the NYSE’s listing standards related to corporate
governance practices of listed companies (the “NYSE Corporate Governance Rules”) in November 2003, as
further amended in November 2004. Toyota is exempt from the approved changes, except for requirements that(a) Toyota’s audit & supervisory board satisfies the requirements of Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), (b) Toyota must disclose significant differences in its corporate
governance practices as compared to those followed by domestic companies under the NYSE listing standards,(c) Toyota’s principal executive officer must notify the NYSE in writing after any executive officer of Toyota
becomes aware of any non-compliance with (a) and (b), and (d) Toyota must submit annual and interim written
affirmations to the NYSE. Toyota’s corporate governance practices and those followed by domestic companies
under the NYSE Corporate Governance Rules have the following significant differences:
1. Members of the Board of Directors. Toyota currently does not have any members of the board of
directors who will be deemed an “independent director” as required under the NYSE Corporate Governance
Rules for U.S. listed companies. Unlike the NYSE Corporate Governance Rules, the Companies Act does not
require Japanese companies with an audit & supervisory board such as Toyota to have any independent directors
on its board of directors. While the NYSE Corporate Governance Rules require that the non-management
directors of each listed company meet at regularly scheduled executive sessions without management, Toyota
currently has no non-management member on its board of directors. Unlike the NYSE Corporate Governance
Rules, the Companies Act does not require, and accordingly Toyota does not have, an internal corporate organ orcommittee comprised solely of independent directors.
Toyota currently has three outside members of the board of directors under the Companies Act. An“outside” member of the board of directors refers to:(a) a person who is not, and has never been during the ten year period before becoming an outside memberof the board of directors, an executive director (a member of the board of directors who engages in the executionof business), executive officer, manager or employee (collectively, “Executive Director, etc.”) of Toyota or its
subsidiaries;(b) if a person was a member of the board of directors, accounting counselor (in the case that an accounting
counselor is a legal entity, an employee of such entity who is in charge of its affairs) or audit & supervisoryboard member (excluding those who have ever been Executive Directors, etc.) of Toyota or any of its
subsidiaries at any time during the ten year period before becoming an outside member of the board of directors,
such person who has not been an Executive Director, etc. of Toyota or any of its subsidiaries during the ten year
period before becoming a member of the board of directors, accounting counselor or audit & supervisory board
member; and127

(c) a person who is not a spouse or relative within the second degree of kinship of any member of the boardof directors or manager or other key employee of Toyota.
Such qualifications for an “outside” member of the board of directors are different from the director
independence requirements under the NYSE Corporate Governance Rules.
In addition, pursuant to the regulations of the Japanese stock exchanges, Toyota is required to have one ormore “independent director(s)/audit & supervisory board member(s),” defined under the relevant regulations of
the Japanese stock exchanges as “outside directors” or “outside audit & supervisory board members” (as defined
under the Companies Act), who are unlikely to have any conflicts of interests with Toyota’s generalshareholders, and is also required to make efforts to have at least one “independent director(s)/audit &supervisory board member(s)” who is also a director. Each of the outside members of the board of directors of
Toyota satisfies the “independent director/audit & supervisory board member” requirements under the
regulations of the Japanese stock exchanges. Japan’s Corporate Governance Code provides that companies
should appoint at least two “independent outside directors” as defined based on the criteria for assessing director
independence established by Toyota in line with the independence standards of the Japanese stock exchanges.
The content of the criteria for assessing director independence established by Toyota is the same as that of the
independence standards of the Japanese stock exchanges, and each of the outside members of the board of
directors of Toyota satisfies the “independent outside director” requirements under such independence standards.
The definition of “independent director/audit & supervisory board member” and “independent outside director”
is different from that of the definition of independent director under the NYSE Corporate Governance Rules.
2. Committees. Under the Companies Act, Toyota has elected to structure its corporate governance system
as a company with audit & supervisory board members who are under a statutory duty to monitor, review andreport on the management of the affairs of Toyota. Toyota, as with other Japanese companies with an audit &supervisory board, does not have certain committees that are required of U.S. listed companies subject to the
NYSE Corporate Governance Rules, including those that are responsible for director nomination, corporate
governance and executive compensation. However, members of Toyota’s Executive Appointment Meeting, amajority of whom are outside directors, discuss recommendations to the board of directors concerning theappointment and dismissal of members of the board of directors and audit & supervisory board members, andmembers of the Executive Compensation Meeting, a majority of whom are outside directors, review the
remuneration system for members of board of directors and senior management as well as determine the amountof remuneration for each member of the board of directors.
Pursuant to the Companies Act, Toyota’s board of directors nominates and submits a proposal for theappointment of members of the board of directors for shareholder approval. The shareholders vote on suchnomination at the general shareholders’ meeting. The Companies Act requires that the limits or calculation
formula and kind (in case that the remuneration, bonus and any other benefits in compensation for the executionof duties (“remuneration, etc.”) are to be paid in other than cash) of remuneration, etc. to be paid to directors aswell as limits of remuneration, etc. to be paid to audit & supervisory board members must be determined by aresolution of the general shareholders’ meeting, unless their remuneration, etc. is provided for in the articles ofincorporation. The distribution of remuneration, etc. among each member of the board of directors is broadly
delegated to the board of directors and the distribution of remuneration among each audit & supervisory board
member is determined by consultation among the audit & supervisory board members.
3. Audit Committee. Toyota avails itself of paragraph (c)(3) of Rule 10A-3 of the Exchange Act, which
provides a general exemption from the audit committee requirements to a foreign private issuer with an audit &supervisory board, subject to certain requirements which continue to be applicable under Rule 10A-3.
Pursuant to the requirements of the Companies Act, Toyota elects its audit & supervisory board members
through a resolution adopted at a general shareholders’ meeting. Toyota currently has six audit & supervisoryboard members, which exceeds the minimum number of audit & supervisory board members required pursuant to
the Companies Act.
128

Unlike the NYSE Corporate Governance Rules, the Companies Act, among others, does not require audit &supervisory board members to establish an expertise in accounting or financial management nor are they required
to present other special knowledge and experience. Therefore, none of Toyota’s audit & supervisory board
members has “an expertise in accounting or financial management” as set forth in the NYSE Corporate
Governance Rules. The Japanese Corporate Governance Code indicates that persons with appropriate experienceand skills as well as necessary knowledge of finance, accounting, and laws should be appointed as audit &supervisory board members, and in particular, one or more audit & supervisory board members who havesufficient knowledge of finance and accounting matters should be appointed. Toyota has appointed persons who
are able to provide opinions and advice regarding management based on their broader experience and discretion
beyond finance and accounting. Under the Companies Act, the audit & supervisory board may determine theauditing policies and methods of investigating the conditions of Toyota’s business and assets, and may resolve
other matters concerning the execution of the audit & supervisory board member’s duties. The audit &supervisory board also prepares auditors’ reports and gives consent to proposals of the nomination of audit &supervisory board members. Further, the audit & supervisory board makes decisions concerning proposals
relating to the appointment and dismissal of accounting auditors; it also has the authority to dismiss theaccounting auditor when certain matters specified under the Companies Act occur.
Toyota currently has three outside audit & supervisory board members under the Companies Act. Under theCompanies Act, at least half of the audit & supervisory board members must be an “outside” audit & supervisoryboard member, which is any person who satisfies all of the following requirements:(a) the person has never been a member of the board of directors, accounting counselor (in the case that an
accounting counselor is a legal entity, an employee of such entity who is in charge of its affairs),
executive officer, manager or employee of Toyota or its subsidiaries during the ten year period before
becoming an outside audit & supervisory board member;(b) if the person was an audit & supervisory board member of Toyota or any of its subsidiaries at any time
during the ten year period before becoming an outside audit & supervisory board member, such person
has not been a member of the board of directors, accounting counselor (in the case that an accounting
counselor is a legal entity, an employee of such entity who is in charge of its affairs), executive officer,
manager or employee of Toyota or any of its subsidiaries during the ten year period before becoming
an audit & supervisory board member of Toyota or any of its subsidiaries; and(c) the person is not a spouse or relative within the second degree of kinship of any member of the boardof directors or manager or other key employee of Toyota.
Such qualifications for an “outside” audit & supervisory board member are different from the audit
committee independence requirement under the NYSE Corporate Governance Rules.
Each of the outside audit & supervisory board members of Toyota satisfies the “independent director/
audit & supervisory board member” requirements under the regulations of the Japanese stock exchanges, as
described above in “1. Members of the Board of Directors.”
4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is not
required to adopt Japan’s Corporate Governance Code under Japanese laws and regulations, including theCompanies Act, the Financial Instruments and Exchange Law of Japan and stock exchange rules. However, if
Toyota does not comply with Japan’s Corporate Governance Code, it is required to explain the reasons why itdoes not do so in accordance with the regulations of the Japanese stock exchanges. In addition, Toyota isrequired to resolve at the board of directors matters relating to a system, which is required under the ordinance ofthe Ministry of Justice (“internal control system” or “naibu-tosei“), to ensure the execution of duties of themembers of the board of directors to comply with laws, regulations and articles of incorporation, and any othersystems to ensure the adequacy of the business, and to disclose such matters resolved, policies and the present
status of its corporate governance in its business reports, annual securities report and certain other disclosure
129documents in accordance with the regulations under the Financial Instruments and Exchange Law and stock
exchange rules in respect of timely disclosure.
5. Code of Business Conduct and Ethics. Similar to the NYSE Corporate Governance Rules, under Japan’s
Corporate Governance Code, Toyota is encouraged to adopt a code of conduct regarding ethical businessactivities for members of the board of directors, officers and employees. Toyota has resolved matters relating tomaintenance of an “internal control system,” or “naibu-tosei,“ in order to ensure its employees comply withlaws, regulations and the articles of incorporation, etc. pursuant to the Companies Act, and Toyota maintains
guidelines and internal regulations such as “Guiding Principles at Toyota,” “Toyota Code of Conduct” and a codeof ethics pursuant to Section 406 of the Sarbanes-Oxley Act. Please see “Code of Ethics” for additional
information.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.

130PART IIIITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
The following financial statements are filed as part of this annual report on Form 20-F.

131

TOYOTA MOTOR CORPORATIONINDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2

Consolidated balance sheets at March 31, 2018 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-3

Consolidated statements of income for the years ended
March 31, 2017, 2018 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-5

Consolidated statements of comprehensive income for the years ended
March 31, 2017, 2018 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6

Consolidated statements of shareholders’ equity for the years ended
March 31, 2017, 2018 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-7

Consolidated statements of cash flows for the years ended
March 31, 2017, 2018 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-10

All financial statements schedules are omitted because they are not applicable or the required information isshown in the financial statements or the notes thereto.
Financial statements of 50% or less owned persons accounted for by the equity method have been omitted
because the registrant’s proportionate share of the income from continuing operations before income taxes is lessthan 20% of consolidated income from continuing operations before income taxes and the investment in andadvances to each company is less than 20% of consolidated total assets.

F-1

Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Toyota Jidosha Kabushiki Kaisha(“Toyota Motor Corporation”)
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Toyota Motor Corporation and its subsidiaries (collectively referred to as
the “Company”) as of March 31, 2018 and 2019, and the related consolidated statements of income, comprehensive income, shareholders’equity and cash flows for each of the three years in the period ended March 31, 2019, including the related notes (collectively referred to as
the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31, 2019,
based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of March 31, 2018 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended
March 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, theCompany maintained, in all material respects, effective internal control over financial reporting as of March 31, 2019, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for investments in equity securities asof April 1, 2018 due to the adoption of ASU 2016-01 “Financial Instruments—Recognition and Measurement of Financial Assets andFinancial Liabilities.”
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual
Report on Internal Control Over Financial Reporting appearing under Item 15(b). Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits toobtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of theconsolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers Aarata LLC
Nagoya, Japan
June 21, 2019
We have served as the Company’s auditor since 2006.

F-2

TOYOTA MOTOR CORPORATIONCONSOLIDATED BALANCE SHEETSYen in millions
March 31,
2018
2019

AssetsCurrent assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts and notes receivable, less allowance for doubtful accountsof ¥25,925 million in 2018 and ¥16,370 million in 2019 . . . . . . . . . . . .
Finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . .

3,052,269
901,244
1,768,360

3,574,704
1,126,352
1,127,160

2,219,562
6,348,306
489,3382,539,789
833,7882,372,734
6,647,771
568,156
2,656,396
805,964

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,152,656

18,879,237

Noncurrent finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,481,618

10,281,118

Investments and other assets
Marketable securities and other securities investments . . . . . . . . . . . . . . . .
Affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employees receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,999,323
3,162,917
22,562
1,221,500

7,479,926
3,313,723
21,683
1,275,768

Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,406,302

12,091,100

Property, plant and equipment
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles and equipment on operating leases . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,404,611
4,659,753
11,535,381
5,934,393
509,851

1,386,308
4,802,175
11,857,425
6,139,163
651,713

Total property, plant and equipment, at cost . . . . . . . . . . . . . . . . . . . .
Less - Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,043,989 24,836,784(13,776,316) (14,151,290)

Total property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . .

10,267,673

10,685,494

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,308,249

51,936,949

The accompanying notes are an integral part of these consolidated financial statements.
F-3

TOYOTA MOTOR CORPORATIONCONSOLIDATED BALANCE SHEETS (CONTINUED)
Yen in millions
March 31,
2018
2019

Liabilities
Current liabilities
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,154,913
4,186,277
2,586,657
1,048,216
3,104,260
462,327
1,254,241

5,344,973
4,254,260
2,645,984
1,102,802
3,222,446
320,998
1,335,475

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,796,891

18,226,938

Long-term liabilities
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,006,374
931,182
1,118,165
533,561

10,550,945
963,406
1,014,851
615,599

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,589,282

13,144,801

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,386,173

31,371,739

491,974

498,073

397,050
487,502
19,473,464
435,699

397,050
487,162
21,987,515(916,650)(2,057,733)(2,606,925)

Total Toyota Motor Corporation shareholders’ equity . . . . . . . . . . . .

18,735,982

19,348,152

Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

694,120

718,985

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,430,102

20,067,137

Commitments and contingencies
Total liabilities, mezzanine equity and shareholders’ equity . . . . . . . .

50,308,249

51,936,949

Mezzanine equity
Model AA Class Shares, no par value, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
authorized: 150,000,000 shares in 2018 and 2019;
issued: 47,100,000 shares in 2018 and 2019
Shareholders’ equity
Toyota Motor Corporation shareholders’ equity
Common stock, no par value,authorized: 10,000,000,000 shares in 2018 and 2019;
issued: 3,262,997,492 shares in 2018 and 2019 . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 353,073,500 shares in 2018 and 430,558,325
shares in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Note: The total number of authorized shares for common stock and Model AA Class Shares is 10,000,000,000
shares.
The accompanying notes are an integral part of these consolidated financial statements.
F-4

TOYOTA MOTOR CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
Yen in millions
For the years ended March 31,
2017
2018
2019

Net revenues
Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,813,496
1,783,697

27,420,276
1,959,234

28,105,338
2,120,343

Total net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,597,193

29,379,510

30,225,681

Costs and expenses
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of financing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . .

21,543,035
1,191,301
2,868,485

22,600,474
1,288,679
3,090,495

23,389,495
1,392,290
2,976,351

Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,602,821

26,979,648

27,758,136

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,994,372

2,399,862

2,467,545

Other income (expense)
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on equity securities . . . . . . . . . . . . . . . .
Other income (loss), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

158,983(29,353)
33,601—
36,222

179,541(27,586)
22,664—45,948225,495(28,078)
12,400(341,054)(50,843)

Total other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . .

199,453

220,567(182,080)

Income before income taxes and equity in earnings of affiliatedcompanies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,193,825

2,620,429

2,285,465

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . . . .

628,900
362,060

504,406
470,083

659,944
360,066

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,926,985

2,586,106

1,985,587

Less - Net income attributable to noncontrolling interests . . . . . . . . . .

(95,876)(92,123)(102,714)

Net income attributable to Toyota Motor Corporation . . . . .

1,831,109

2,493,983

1,882,873

Note: Net income attributable to common shareholders for the fiscal year ended March 31, 2017, 2018 and 2019is ¥1,821,314 million, ¥2,481,692 million and ¥1,868,085 million, respectively, which is derived by deducting
dividend and accretion to Model AA Class Shares of ¥9,795 million, ¥12,291 million and ¥14,788 million,
respectively, from Net income attributable to Toyota Motor Corporation.
Yen

Net income attributable to Toyota Motor Corporation percommon share- Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

605.47842.00650.55- Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

599.22

832.78645.11

The accompanying notes are an integral part of these consolidated financial statements.
F-5

TOYOTA MOTOR CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Yen in millions
For the years ended March 31,
2017
2018
2019

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on securities . . . . . . . . . . . . . . . . . . . . . . . .
Pension liability adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,926,985

2,586,106

1,985,587(57,926)
4,279
93,312(120,606)(94,559)
22,31527,016(21,165)(54,836)

Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . .

39,665(192,850)(48,985)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,966,650

2,393,256

1,936,602

Less - Comprehensive income attributable to noncontrolling interests . . .

(103,161)(93,096)(96,458)

Comprehensive income attributable to Toyota Motor Corporation . .

1,863,489

2,300,160

1,840,144

The accompanying notes are an integral part of these consolidated financial statements.
F-6

TOYOTA MOTOR CORPORATIONCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Yen in millions

Commonstock

Additional
paid-in
capitalRetainedearnings

Balances at March 31, 2016 . . . . . . . . . . . . . . . . 397,050 548,161 16,794,240
Equity transaction with noncontrolling interestsand other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss)
Foreign currency translation
adjustments . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on
securities . . . . . . . . . . . . . . . . . . . . . .
Pension liability adjustments . . . . . . . .

(35,555)

Total
Accumulated
Toyota Motor
other
Treasury Corporation
Total
comprehensive
stock,
shareholders’ Noncontrolling shareholders’income (loss)
at costequityinterests
equity610,768

861,472

17,608,407

245,780(232,433)

13,347

1,831,109

95,876

1,926,985(52,427)(52,427)(5,499)(57,926)(8,002)92,809(8,002)92,80912,281
503

4,279
93,312

1,863,489

103,161

1,966,650(2,226)(1,603,284) 16,746,935
283,561

1,831,109

Total comprehensive income . . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation classshareholders . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporationcommon shareholders . . . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . .
Repurchase of treasury stock . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . . .
Retirement of treasury stock . . . . . . . . . . . . . . . . .

(4,849)(4,849)(4,849)(4,946)(4,946)(4,946)(634,475)(634,475)(63,936)(1,219)(27,374)(380,009)

Balances at March 31, 2017 . . . . . . . . . . . . . . . . 397,050 484,013 17,601,070
Equity transaction with noncontrolling interestsand other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss)
Foreign currency translation
adjustments . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on
securities . . . . . . . . . . . . . . . . . . . . . .
Pension liability adjustments . . . . . . . .

1,817(700,228)
4,325
407,383

11,400640,922(1,608,243) 17,514,812

668,264

18,183,076(11,400)

1,817(3,476)(1,659)2,493,983

92,123

2,586,106(118,977)(118,977)(1,629)(120,606)(96,581)
21,735(96,581)
21,735

2,022
580(94,559)
22,3152,300,160

93,0962,393,256

2,493,983

Total comprehensive income . . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation classshareholders . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporationcommon shareholders . . . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . .
Repurchase of treasury stock . . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . . . .

(700,228)
3,106—(634,475)(63,936)(700,228)
3,106—(4,849)(4,849)(4,849)(7,442)(7,442)(7,442)(620,698)(620,698)(63,764)(500,177)
50,687

1,672

Balances at March 31, 2018 . . . . . . . . . . . . . . . . 397,050 487,502 19,473,464

435,699(500,177)
52,359(2,057,733) 18,735,982

694,120

The accompanying notes are an integral part of these consolidated financial statements.
F-7(620,698)(63,764)(500,177)
52,35919,430,102

TOYOTA MOTOR CORPORATIONCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)
Yen in millions

Commonstock

Additional
paid-in
capitalRetainedearnings

Balances at March 31, 2018 . . . . . . . . . . . . . . 397,050 487,502 19,473,464
Cumulative effect of accounting changes . . . . .
Equity transaction with noncontrolling interestsand other . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss)
Foreign currency translation
adjustments . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on
securities . . . . . . . . . . . . . . . . . . . .
Pension liability adjustments . . . . . . .

1,282,082

Total
Accumulated
Toyota Motor
other
Treasury Corporation
Total
comprehensive
stock,
shareholders’ Noncontrolling shareholders’income (loss)
at costequityinterests
equity435,699(2,057,733) 18,735,982(1,309,620)(27,538)

105

19,430,102(27,538)

105(2,226)(2,121)

1,882,873

102,714

1,985,587

29,44829,448(2,432)27,016(21,111)(51,066)(21,111)(51,066)(54)(3,770)(21,165)(54,836)

1,840,144

96,458

1,936,602

1,882,873

Total comprehensive income . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation classshareholders . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporationcommon shareholders . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . .
Repurchase of treasury stock . . . . . . . . . . . . . . .
Reissuance of treasury stock . . . . . . . . . . . . . . .

694,120(4,850)(4,850)(4,850)(9,938)(9,938)(9,938)(636,116)(636,116)(69,367)(550,107)
915

(445)

Balances at March 31, 2019 . . . . . . . . . . . . . . 397,050 487,162 21,987,515(550,107)470(916,650) (2,606,925) 19,348,152

718,985

The accompanying notes are an integral part of these consolidated financial statements.
F-8(636,116)(69,367)(550,107)
470
20,067,137

TOYOTA MOTOR CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
Yen in millions
For the years ended March 31,
2017
2018
2019

Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,926,985
2,586,106
1,985,587
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,610,950
1,734,033
1,792,375
Provision (reversal) for doubtful accounts and credit losses . . . . . . . . . . . . .
98,66676,06980,065Pension and severance costs, less payments . . . . . . . . . . . . . . . . . . . . . . . . .
23,253
4,286
31,645Losses on disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,67335,28935,902
Unrealized losses (gains) on marketable securities . . . . . . . . . . . . . . . . . . . .
7,073
846
339,472
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(53,299)(237,961)(86,594)
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . .
(362,060)(470,083)(360,066)
Changes in operating assets and liabilities, and other
Increase in accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . .
(264,784)(105,435)(246,845)
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(246,326)(171,148)(166,902)(Increase) decrease in other current assets . . . . . . . . . . . . . . . . . . . . . .
2,135(149,463)(102,472)
Increase in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
145,957
46,64894,887
Increase (decrease) in accrued income taxes . . . . . . . . . . . . . . . . . . . . .
(121,032)
238,753(141,329)
Increase in other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
480,094
211,452
351,122
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
290,203423,736
159,750
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . .
3,568,488
4,223,128
3,766,597
Cash flows from investing activities
Additions to finance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,636,694) (15,058,516) (15,884,610)
Collection of finance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,885,944 14,013,204 14,834,709
Proceeds from sales of finance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,037
33,10824,394
Additions to fixed assets excluding equipment leased to others . . . . . . . . . . . . . . (1,223,878) (1,291,117) (1,452,725)
Additions to equipment leased to others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,317,559) (2,307,590) (2,286,162)
Proceeds from sales of fixed assets excluding equipment leased to others . . . . . .
41,23871,82065,437
Proceeds from sales of equipment leased to others . . . . . . . . . . . . . . . . . . . . . . . .
1,238,278
1,211,272
1,385,074
Purchases of marketable securities and security investments . . . . . . . . . . . . . . . . (2,517,008) (3,052,916) (1,840,355)
Proceeds from sales of marketable securities and security investments . . . . . . . .
260,039
275,574
1,134,127
Proceeds upon maturity of marketable securities and security investments . . . . .
1,641,502
2,247,964
1,564,671
Payment for additional investments in affiliated companies, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,274(576)
5,010
Changes in investments and other assets, and other . . . . . . . . . . . . . . . . . . . . . . .
571,888
197,681(246,811)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . (2,969,939) (3,660,092) (2,697,241)
Cash flows from financing activities
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,603,446
4,793,939
5,000,921
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,845,554) (4,452,338) (4,442,232)
Increase in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
273,037
347,738
164,282
Dividends paid to Toyota Motor Corporation class shareholders . . . . . . . . . . . . .
(3,697)(6,194)(8,690)
Dividends paid to Toyota Motor Corporation common shareholders . . . . . . . . . .
(634,475)(620,698)(636,116)
Dividends paid to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(63,936)(63,764)(69,367)
Reissuance (repurchase) of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(703,986)(447,818)(549,637)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . .
(375,165)(449,135)(540,839)
Effect of exchange rate changes on cash and cash equivalents and restricted cash andcash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,486)(43,588)(41,641)
Net increase in cash and cash equivalents and restricted cash and cash equivalents . .
209,898
70,313486,876
Cash and cash equivalents and restricted cash and cash equivalents at beginning ofyear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,939,428
3,149,326
3,219,639
Cash and cash equivalents and restricted cash and cash equivalents at end of year . . .
3,149,326
3,219,639
3,706,515

Cash and cash equivalents and restricted cash and cash equivalents for the fiscal year ended March 31, 2019
include restricted cash and cash equivalents of 167,370 million yen and 131,811 million yen at the beginning of
the year and the end of the year, respectively. Restricted cash and cash equivalents were included in Prepaid
expenses and other current assets in the consolidated balance sheets.
The accompanying notes are an integral part of these consolidated financial statements.
F-9

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of operations:Toyota and its affiliated companies are primarily engaged in the design, manufacture, and sale of sedans,
minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories throughout the world. In
addition, Toyota and its affiliated companies provide financing, vehicle leasing and certain other financial
services primarily to its dealers and their customers to support the sales of vehicles and other products
manufactured by Toyota and its affiliated companies.
2. Summary of significant accounting policies:
The parent company and its subsidiaries in Japan and its foreign subsidiaries maintain their records andprepare their financial statements in accordance with Japanese generally accepted accounting principles andthose of their countries of domicile. Certain adjustments and reclassifications have been incorporated in theaccompanying consolidated financial statements to conform to U.S.GAAP.
Significant accounting policies after reflecting adjustments for the above are as follows:
Basis of consolidation and accounting for investments in affiliated companies The consolidated financial statements include the accounts of the parent company, its majority-owned
subsidiary companies and variable interest entities of which Toyota is the primary beneficiary. All significant
intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which
Toyota exercises significant influence, but which it does not control, are stated at cost plus equity inundistributed earnings. Consolidated net income includes Toyota’s equity in current earnings of such companies,
after elimination of unrealized intercompany profits. Investments in such companies are reduced to fair value if adecline in market value is determined other-than-temporary.
Estimates The preparation of Toyota’s consolidated financial statements in conformity with U.S.GAAP requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those estimates. The more significant
estimates include: product warranties, liabilities accrued for recalls and other safety measures, allowance for
doubtful accounts and credit losses, residual values for leased assets, impairment of long-lived assets, pension
costs and obligations, fair value of derivative financial instruments, other-than-temporary losses on debt
securities, litigation liabilities and valuation allowance for deferred tax assets.
Translation of foreign currencies All asset and liability accounts of foreign subsidiaries and affiliated companies are translated into Japanese
yen at appropriate year-end current exchange rates and all income and expense accounts of those subsidiaries aretranslated at the average exchange rates for each period. The foreign currency translation adjustments areincluded as a component of accumulated other comprehensive income.
Foreign currency receivables and payables are translated at appropriate year-end current exchange rates andthe resulting transaction gains or losses are recorded in operations currently.

F-10

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Revenue recognition In the automotive operations, performance obligations are considered to be satisfied when completed
vehicles and parts are delivered to the agreed locations with dealers. For parts for overseas production, it is when
they are loaded on a ship to foreign manufacturing companies. We do not have any material significant payment
terms as payment is received at or shortly after the point of sale.
Toyota’s sales incentive programs principally consist of cash payments to dealers calculated based on
vehicle volume or a model sold by a dealer during a certain period of time. Toyota accrues these incentives asrevenue reductions upon the sale of a vehicle corresponding to the program by the amount determined in therelated incentive program utilizing the most likely outcome method.
The sale of certain vehicles includes a contractual right, which entitles customers to free vehicle
maintenance. We use an observable price to determine the stand-alone selling price for separate performanceobligations or a cost plus margin approach when one is not available. Such revenues from free maintenancecontracts are deferred and recognized as revenue over the period of the contract in proportion to the costs
expected to be incurred in satisfying the obligations under the contract.
Revenues from the sales of vehicles under which Toyota conditionally guarantees the minimum resale value
are recognized on a pro rata basis from the date of sale to the first exercise date of the guarantee in accordancewith lease accounting. The underlying vehicles of these transactions are recorded as assets and are depreciated inaccordance with Toyota’s depreciation policy.
We have elected to recognize the cost of transport service activities after the customer gains control as
expenses at the time that control of products transfers.
Revenues from retail financing contracts and finance leases are recognized using the effective yield method.
Revenues from operating leases are recognized on a straight-line basis over the lease term.
All other operations business of Toyota includes the design, manufacture and sales of housing. Certain
revenues from the housing business, such as those of ordered housing are recognized only to the extent of thecosts incurred until such time that it can reasonably measure the outcome of the performance obligation.
If the period between satisfaction of the performance obligation and receipt of consideration is expected to
be within one year or less, as a practical expedient, we do not adjust the promised amount of consideration for theeffects of a significant financing component.
Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental
authorities.
Other costs Advertising and sales promotion costs are expensed as incurred. Advertising costs were ¥448,780 million,¥509,653 million and ¥490,093 million for the years ended March 31, 2017, 2018 and 2019, respectively.
Toyota generally warrants its products against certain manufacturing and other defects. Provisions for
product warranties are provided for specific periods of time and/or usage of the product and vary depending upon
the nature of the product, the geographic location of the sale and other factors. Toyota records a provision for
estimated product warranty costs at the time the related sale is recognized based on estimates that Toyota will
incur to repair or replace product parts that fail while under warranty. The amount of accrued estimated warranty
costs is primarily based on historical experience as to product failures as well as current information on repair
costs. The amount of warranty costs accrued also contains an estimate of warranty claim recoveries to bereceived from suppliers.
In addition to product warranties above, Toyota accrues for costs of recalls and other safety measures basedon management’s estimates when it is probable a liability has been incurred and the amount of loss can bereasonably estimated. Toyota mainly employs an estimation model, to accrue at the time of vehicle sale, anamount that represents management’s best estimate of expenses related to future recalls and other safetymeasures. The estimation model for recalls and other safety measures takes into account Toyota’s historicalexperience of recalls and other safety measures.
F-11

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Litigation liabilities are established to cover probable losses on various lawsuits based on the information
currently available. Attorneys’ fees are expensed as incurred.
Research and development costs are expensed as incurred. Research and development costs were
¥1,037,528 million, ¥1,064,269 million and ¥1,048,882 million for the years ended March 31, 2017, 2018 and2019, respectively.
Restricted cash and cash equivalents Cash and cash equivalents include all highly liquid investments with original maturities of three months or less,that are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk ofchanges in value because of changes in interest rates. Restricted cash and cash equivalents mainly include customer
collections on securitized receivables to be distributed to investors as payments on the related secured debt.
Marketable securities and other securities investments Marketable securities and other securities investments consist of debt and equity securities. Debt securities
designated as available-for-sale are carried at fair value and the difference between fair value and acquisition costis reflected as a component of accumulated other comprehensive income in shareholders’ equity, net of
applicable taxes. Individual securities classified as available-for-sale are reduced to fair value for other-thantemporary declines in market value. In determining if a decline in value is other-than-temporary, Toyota
considers the length of time during and the extent to which the fair value has been less than the carrying value,
the financial condition and prospects of the entity issuing such securities and Toyota’s ability and intent to retain
its investment in the entity for a period of time sufficient to allow for any anticipated recovery in market value.
Realized gains and losses, which are determined based on the average-cost method, are reflected in the
consolidated statements of income when realized.
Changes in fair value on equity securities with readily determinable fair values are recognized in net
income. Equity securities without readily determinable fair values are measured at cost minus impairment, if any,plus or minus changes resulting from observable price changes in orderly transactions for the identical or asimilar investment of the same issuer.
Finance receivables Finance receivables recorded on Toyota’s consolidated balance sheets are comprised of the unpaid principalbalance, plus accrued interest, less charge-offs, net of any unearned income and deferred origination costs andthe allowance for credit losses. Deferred origination costs are amortized so as to approximate a level rate of
return over the term of the related contracts.
The determination of portfolio segments is based primarily on the qualitative consideration of the nature of Toyota’s
business operations and finance receivables. The three portfolio segments within finance receivables are as follows:
Retail receivables portfolio segment The retail receivables portfolio segment consists of retail installment sales contracts acquired mainly fromdealers (“auto loans”) including credit card loans. These contracts acquired must first meet specified credit
standards. Thereafter, Toyota retains responsibility for contract collection and administration.
The contract periods of auto loans primarily range from 2 to 7 years. Toyota acquires security interests inthe vehicles financed and has the right to repossess vehicles if customers fail to meet their contractual
obligations. Almost all auto loans are non-recourse, which relieves the dealers from financial responsibility in theevent of repossession.
F-12

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Toyota classifies retail receivables portfolio segment into one class based on common risk characteristics
associated with the underlying finance receivables, the similarity of the credit risks, and the quantitative materiality.
Finance lease receivables portfolio segment Toyota acquires new vehicle lease contracts originated primarily through dealers. The contract periods ofthese primarily range from 2 to 5 years. Lease contracts acquired must first meet specified credit standards after
which Toyota assumes ownership of the leased vehicle. Toyota is responsible for contract collection andadministration during the lease period.
Toyota is generally permitted to take possession of the vehicle upon a default by the lessee. The residual
value is estimated at the time the vehicle is first leased. Vehicles returned to Toyota at the end of their leases are
sold by auction.
Toyota classifies finance lease receivables portfolio segment into one class based on common risk
characteristics associated with the underlying finance receivables and the similarity of the credit risks.
Wholesale and other dealer loan receivables portfolio segment Toyota provides wholesale financing to qualified dealers to finance inventories. Toyota acquires security
interests in vehicles financed at wholesale. In cases where additional security interests would be required, Toyota
takes dealership assets or personal assets, or both, as additional security. If a dealer defaults, Toyota has the rightto liquidate any assets acquired and seek legal remedies.
Toyota also makes term loans to dealers for business acquisitions, facilities refurbishment, real estatepurchases and working capital requirements. These loans are typically secured with liens on real estate, otherdealership assets and/or personal assets of the dealers.
Toyota classifies wholesale and other dealer loan receivables portfolio segment into three classes ofwholesale, real estate and working capital, based on the risk characteristics associated with the underlying
finance receivables.
A receivable account balance is considered impaired when, based on current information and events, it isprobable that Toyota will be unable to collect all amounts due according to the terms of the contract. Factors such as
payment history, compliance with terms and conditions of the underlying loan agreement and other subjective
factors related to the financial stability of the borrower are considered when determining whether a loan is impaired.
Impaired finance receivables include certain nonaccrual receivables for which a specific reserve has been assessed.
An account modified as a troubled debt restructuring is considered to be impaired. A troubled debt restructuring
occurs when an account is modified through a concession to a borrower experiencing financial difficulty.
All classes of wholesale and other dealer loan receivables portfolio segment are placed on nonaccrual statuswhen full payment of principal or interest is in doubt, or when principal or interest is 90 days or more contractuallypast due, whichever occurs first. Collateral dependent loans are placed on nonaccrual status if collateral isinsufficient to cover principal and interest. Interest accrued but not collected at the date a receivable is placed on
nonaccrual status is reversed against interest income. In addition, the amortization of net deferred fees is suspended.
Interest income on nonaccrual receivables is recognized only to the extent it is received in cash. Accounts
are restored to accrual status only when interest and principal payments are brought current and future payments
are reasonably assured. Receivable balances are written-off against the allowance for credit losses when it is
F-13

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
probable that a loss has been realized. Retail receivables class and finance lease receivables class are not placed
generally on nonaccrual status when principal or interest is 90 days or more past due. However, these receivables
are generally written-off against the allowance for credit losses when payments due are no longer expected to bereceived or the account is 120 days contractually past due, whichever occurs first.
As of March 31, 2018 and 2019, finance receivables on nonaccrual status are as follows:
Yen in millions
March 31,
2018
2019

Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,897
2,117
12,484
13,856
105

9,401
2,431
18,21718,281—35,45948,330

As of March 31, 2018 and 2019, finance receivables 90 days or more past due and accruing are as follows:
Yen in millions
March 31,
2018
2019

Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,007
3,812

28,4383,821

29,81932,259Allowance for credit losses Allowance for credit losses is established to cover probable losses on finance receivables and vehicles andequipment on operating leases, resulting from the inability of customers to make required payments. Provision
for credit losses is included in selling, general and administrative expenses.
The allowance for credit losses is based on a systematic, ongoing review and evaluation performed as partof the credit-risk evaluation process, historical loss experience, the size and composition of the portfolios, current
economic events and conditions, the estimated fair value and adequacy of collateral and other pertinent factors.
Vehicles and equipment on operating leases are not within the scope of accounting guidance governing thedisclosure of portfolio segments.
Retail receivables portfolio segment Toyota calculates allowance for credit losses to cover probable losses on retail receivables by applying
reserve rates to such receivables. Reserve rates are calculated mainly by historical loss experience, current
economic events and conditions and other pertinent factors.

F-14

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Finance lease receivables portfolio segment Toyota calculates allowance for credit losses to cover probable losses on finance lease receivables byapplying reserve rates to such receivables. Reserve rates are calculated mainly by historical loss experience,current economic events and conditions and other pertinent factors such as used car markets.
Wholesale and other dealer loan receivables portfolio segment Toyota calculates allowance for credit losses to cover probable losses on wholesale and other dealer loan
receivables by applying reserve rates to such receivables. Reserve rates are calculated mainly by financial conditions of
the dealers, terms of collateral setting, current economic events and conditions and other pertinent factors.
Toyota establishes specific reserves to cover the estimated losses on individually impaired receivables
within the wholesale and other dealer loan receivables portfolio segment. Specific reserves on impaired
receivables are determined by the present value of expected future cash flows or the fair value of collateral when
it is probable that such receivables will be unable to be fully collected. The fair value of the underlying collateralis used if the receivable is collateral-dependent. The receivable is determined collateral-dependent if therepayment of the loan is expected to be provided by the underlying collateral. For the receivables in which thefair value of the underlying collateral was in excess of the outstanding balance, no allowance was provided.
Troubled debt restructurings in the retail receivables and finance lease receivables portfolio segments are
specifically identified as impaired and aggregated with their respective portfolio segments when determining theallowance for credit losses. Impaired loans in the retail receivables and finance lease receivables portfolio
segments are insignificant for individual evaluation and Toyota has determined that allowance for credit losses
for each of the retail receivables and finance lease receivables portfolio segments would not be materiallydifferent if they had been individually evaluated for impairment.
Specific reserves on impaired receivables within the wholesale and other dealer loan receivables portfolio
segment are recorded by an increase to the allowance for credit losses based on the related measurement of
impairment. Related collateral, if recoverable, is repossessed and sold and the account balance is written-off.
Any shortfall between proceeds received and the carrying cost of repossessed collateral is charged to theallowance. Recoveries are reversed from the allowance for credit losses.
Allowance for residual value losses Toyota is exposed to risk of loss on the disposition of off-lease vehicles to the extent that sales proceeds are
not sufficient to cover the carrying value of the leased asset at lease termination. Toyota maintains an allowanceto cover probable estimated losses related to unguaranteed residual values on its owned portfolio. The allowanceis evaluated considering projected vehicle return rates and projected loss severity. Factors considered in thedetermination of projected return rates and loss severity include historical and market information on used
vehicle sales, trends in lease returns and new car markets, and general economic conditions. Management
evaluates the foregoing factors, develops several potential loss scenarios, and reviews allowance levels todetermine whether reserves are considered adequate to cover the probable range of losses.
The allowance for residual value losses is maintained in amounts considered by Toyota to be appropriate inrelation to the estimated losses on its owned portfolio. Upon disposal of the assets, the allowance for residual
losses is adjusted for the difference between the net book value and the proceeds from sale.

F-15

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Inventories Inventories are valued at cost, not in excess of net realizable value, cost being determined on the “averagecost” basis, except for the cost of finished products carried by certain subsidiary companies which is determinedon the “specific identification” basis or “last-in, first-out” (“LIFO”) basis. Inventories valued on the LIFO basis
totaled ¥472,717 million and ¥470,208 million at March 31, 2018 and 2019, respectively. Had the “first-in,
first-out” basis been used for those companies using the LIFO basis, inventories would have been
¥22,778 million and ¥25,302 million higher than reported at March 31, 2018 and 2019, respectively.
Property, plant and equipment Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized; minor
replacements, maintenance and repairs are charged to current operations. Depreciation of property, plant andequipment is mainly computed on the declining-balance method for the parent company and Japanesesubsidiaries and on the straight-line method for foreign subsidiary companies at rates based on estimated useful
lives of the respective assets according to general class, type of construction and use. The estimated useful lives
range from 2 to 65 years for buildings and from 2 to 20 years for machinery and equipment.
Vehicles and equipment on operating leases to third parties are originated by dealers and acquired by certain
consolidated subsidiaries. Such subsidiaries are also the lessors of certain property that they acquire directly.
Vehicles and equipment on operating leases are depreciated primarily on a straight-line method over the leaseterm, generally from 2 to 5 years, to the estimated residual value. Incremental direct costs incurred in connection
with the acquisition of operating lease contracts are capitalized and amortized on a straight-line method over thelease term.
Long-lived assets Toyota reviews its long-lived assets for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset group may not be recoverable. An impairment loss would be recognizedwhen the carrying amount of an asset group exceeds the estimated undiscounted cash flows expected to result
from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is
calculated by the excess of the carrying value of the asset group over its fair value. Fair value is determined
mainly using a discounted cash flow valuation method.
Goodwill and intangible assets Goodwill is not material to Toyota’s consolidated balance sheets.
Intangible assets consist mainly of software. Intangible assets with a definite life are amortized on a straightline basis with estimated useful lives mainly of 5 years. Intangible assets with an indefinite life are tested for
impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not
be recoverable.
An impairment loss would be recognized when the carrying amount of an asset exceeds the estimatedundiscounted cash flows used in determining the fair value of the asset. The amount of the impairment loss to berecorded is generally determined by the difference between the fair value of the asset using a discounted cash
flow valuation method and the current book value.
Employee benefit obligations Toyota has both defined benefit and defined contribution plans for employees’ retirement benefits.
Retirement benefit obligations are measured by actuarial calculations in accordance with U.S.GAAP. The funded
status of the defined benefit postretirement plans is recognized on the consolidated balance sheets as prepaid
pension and severance costs or accrued pension and severance costs, and the funded status change is recognizedin the year in which it occurs through other comprehensive income.
F-16

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Environmental matters Environmental expenditures relating to current operations are expensed or capitalized as appropriate.
Expenditures relating to existing conditions caused by past operations, which do not contribute to current or
future revenues, are expensed. Liabilities for remediation costs are recorded when they are probable andreasonably estimable, generally no later than the completion of feasibility studies or Toyota’s commitment to aplan of action. The cost of each environmental liability is estimated by using current technology available andvarious engineering, financial and legal specialists within Toyota based on current law. Such liabilities do notreflect any offset for possible recoveries from insurance companies and are not discounted. There were nomaterial changes in these liabilities for all periods presented.
Income taxes The provision for income taxes is computed based on the pretax income included in the consolidated
statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities forthe expected future tax consequences of temporary differences between the carrying amounts and the tax bases ofassets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than
not that a tax benefit will not be realized.
Derivative financial instruments Toyota employs derivative financial instruments, including forward foreign currency exchange contracts,
foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options tomanage its exposure to fluctuations in interest rates and foreign currency exchange rates. All derivative financial
instruments are recorded on the consolidated balance sheets at fair value, taking into consideration the effects oflegally enforceable master netting agreements that allow us to net settle positive and negative positions and offset
cash collateral held with the same counterparty on a net basis. Toyota does not use derivatives for speculation or
trading purposes. Changes in the fair value of derivatives are recorded each period in current earnings or throughother comprehensive income, depending on whether a derivative is designated as part of a hedge transaction andthe type of hedge transaction. The ineffective portion of all hedges is recognized currently in operations.
Net income attributable to Toyota Motor Corporation per common share Basic net income attributable to Toyota Motor Corporation per common share is calculated by dividing net
income attributable to common shareholders by the weighted-average number of common shares outstanding
during the reported period. The calculation of diluted net income attributable to Toyota Motor Corporation percommon share is done by adjusting net income attributable to common shareholders and the weighted-average
number of common shares outstanding, which includes the additional dilution from the assumed conversion ofmodel AA class shares and the assumed exercise of dilutive stock options.
Stock-based compensation Toyota measures compensation expense for its stock-based compensation plan based on the grant-date fairvalue of the award, and accounts for the award.

F-17

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other comprehensive income Other comprehensive income refers to revenues, expenses, gains and losses that, under U.S.GAAP are
included in comprehensive income, but are excluded from net income as these amounts are recorded directly as
an adjustment to shareholders’ equity. Toyota’s other comprehensive income is primarily comprised of
unrealized gains/losses on marketable securities designated as available-for-sale, foreign currency translation
adjustments and adjustments attributed to pension liabilities associated with Toyota’s defined benefit pension
plans.
Accounting changes In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance on therecognition of revenue from contracts with customers. This guidance requires an entity to recognize revenue
when promised goods or services are transferred to customers in an amount that reflects the consideration towhich the entity expects to be entitled in exchange for those goods or services and supersedes the current revenue
recognition guidance. Toyota applied the modified retrospective method of adoption to contracts that were notcompleted as of the adoption on April 1, 2018. The adoption of this guidance did not have a material impact on
Toyota’s consolidated financial statements. See note 26 to the consolidated financial statements for the disclosure
by adoption of this guidance.
In January 2016, the FASB issued updated guidance for financial instruments. This guidance addresses
certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and requires
entities to measure equity investments at fair value and recognize any changes in fair value in net income. Toyota
adopted this guidance on April 1, 2018. Toyota recognized a cumulative-effect adjustment to retained earnings of¥1,309,725 million as of April 1, 2018 for after-tax unrealized gains (losses) on equity securities previously
recognized in accumulated other comprehensive income. Unrealized gains (losses) on equity securities, which ismainly included in “Unrealized gains (losses) on equity securities” and “Equity in earnings of affiliatedcompanies” of Toyota’s consolidated statements of income for the fiscal year ended March 31, 2019, was lossesof ¥419,429 million. See note 5 to the consolidated financial statements for the disclosure by adoption of thisguidance.
In August 2016, the FASB issued updated guidance for classification of statement of cash flows. This
guidance clarifies classification of certain cash receipts and cash payments of statement of cash flows. Toyota
adopted this guidance on April 1, 2018. The adoption of this guidance did not have a material impact on Toyota’s
consolidated financial statements.
In October 2016, the FASB issued updated guidance that would require entities to recognize the income tax
consequences of intercompany asset transfers other than inventory. Toyota adopted this guidance on April 1,
2018. The adoption of this guidance did not have a material impact on Toyota’s consolidated financial
statements.
In November 2016, the FASB issued updated guidance for the statement of cash flows. This guidance
requires that restricted cash and restricted cash equivalents should be included with cash and cash equivalents. It
also requires entities to disclose how the statement of cash flows that includes restricted cash with cash and cash
equivalents reconciles to the balance sheet. Toyota adopted this guidance on April 1, 2018. The adoption of thisguidance did not have a material impact on Toyota’s consolidated financial statements.

F-18

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Recent pronouncements to be adopted in future periods In February 2016, the FASB issued updated guidance for leases. This guidance will require lessees torecognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. This guidance iseffective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
This guidance may be adopted retrospectively to each prior reporting period presented or retrospectively with the
cumulative effect of initially applying this guidance recognized at the date of initial application. Toyota will
apply the modified retrospective method of adoption from the fiscal year beginning April 1, 2019. Management
is evaluating the impact of adopting this guidance on Toyota’s consolidated financial statements, but expects torecord an increase in total assets by approximately 1%.
In June 2016, the FASB issued updated guidance for measurement of credit losses on financial instruments.
This guidance introduces an approach to estimate credit losses on certain types of financial instruments based on
expected losses. It also modifies the impairment model for available-for-sale debt securities. This guidance iseffective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
Management is evaluating the impact of adopting this guidance on Toyota’s consolidated financial statements.
In August 2017, the FASB issued updated guidance for hedge accounting. This guidance simplifies andexpands the application of hedge accounting. This guidance is effective for fiscal years beginning after
December 15, 2018, including interim periods within those fiscal years. Management does not expect thisguidance to have a material impact on Toyota’s consolidated financial statements.
In August 2018, the FASB issued updated guidance for fair value measurements. This guidance adds,
removes and modifies fair value measurement disclosure requirements. This guidance is effective for fiscal years
beginning after December 15, 2019, including interim periods within those fiscal years. Management isevaluating the potential impacts of this guidance on Toyota’s disclosures.
Other information On April 1, 2018, Toyota changed the exchange rate used to translate foreign currency-denominatedtransactions as well as foreign currency-denominated monetary receivables and payables from the Telegraphic
Transfer Buying Rate and Telegraphic Transfer Selling Rate to the Telegraphic Transfer Middle Rate. As aresult, for the year ended March 31, 2019, net revenues and operating income increased by ¥56,127 million and¥136,272 million, respectively, other income (expense) decreased by ¥103,300 million and income before
income taxes and equity in earnings of affiliated companies increased by ¥32,972 million.
Reclassifications Certain prior year amounts have been reclassified to conform to the presentations as of and for the year
ended March 31, 2019.
3. Supplemental cash flow information:
Cash payments for income taxes were ¥854,600 million, ¥500,214 million and ¥836,619 million for theyears ended March 31, 2017, 2018 and 2019, respectively. Interest payments during the years ended March 31,
2017, 2018 and 2019 were ¥362,602 million, ¥422,720 million and ¥507,812 million, respectively.
Capital lease obligations of ¥5,975 million, ¥4,467 million and ¥6,086 million were incurred for the years
ended March 31, 2017, 2018 and 2019, respectively.
F-19

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
4. Acquisitions and dispositions:Toyota Housing Corporation, a consolidated subsidiary of Toyota Motor Corporation, increased its
ownership interest in Misawa Homes Co., Ltd. (Business description: Production and sale of housing materials
and components, etc.) to 51% by acquiring 11,181,798 shares of common stock of Misawa Homes Co., Ltd.
through a tender offer on December 29, 2016 as well as a third-party allotment of Misawa Homes Co., Ltd.
shares to Toyota Housing Corporation and a disposal of Misawa Homes Co., Ltd. treasury stock on January 5,
2017, in order to increase competitiveness through enhanced cooperation with Misawa Homes Co., Ltd. As aresult, Misawa Homes Co., Ltd., previously an affiliated company accounted for under the equity method, is now
accounted for as a consolidated subsidiary of Toyota Motor Corporation.
The acquisition was accounted for under the acquisition method. Acquisition-related costs were accounted
as expense when incurred, and the estimated fair values of the assets acquired, liabilities assumed andnoncontrolling interests as of the date of the acquisition of control are immaterial in value.
The amount of sales of Misawa Homes Co., Ltd. after the date of the acquisition of control, which isincluded in “Sales of products” of Toyota’s consolidated statements of income for fiscal 2017, is¥130,046 million. Misawa Homes’ net income does not have a material effect on net income attributable to
Toyota Motor Corporation in term of monetary value.
In addition to the above, Toyota made several acquisitions and dispositions during the years ended
March 31, 2017, 2018 and 2019, however the assets and liabilities acquired or transferred were not material.
5. Marketable securities and other securities investments:
Marketable securities and other securities investments include public and corporate bonds and common
stocks for which the aggregate cost, gross unrealized gains and losses and fair value are as follows:

Cost

Available-for-sale
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,276,811
676,959
730,334
7,684,104

Securities not practicable to determine fair value
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,980109,875
139,855

F-20

Yen in millions
March 31, 2018
Gross
Gross
unrealized
unrealized
gains
lossesFair value

150,198
1,910,767
8,058
2,069,023

6,308,734
2,582,115
736,979
9,627,828

118,275
5,611
1,413
125,299

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cost

Available-for-sale
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,837,423
289,285
6,126,708

Securities not practicable to determine fair value
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . .

32,922

Yen in millions
March 31, 2019
Gross
Gross
unrealized
unrealized
gains
losses82,022
5,406
87,42873,256845
74,101

Fair value

5,846,189
293,846
6,140,035

Note: Due to the adoption of the new guidance for financial instruments, as of March 31, 2019, equity securities withreadily determinable fair values are measured at fair value with changes in the fair value recognized in net income.
Public and corporate bonds include government bonds, and “Other” includes investment trusts.
Unrealized losses continuing over a 12 month period or more in the aggregate were not material as ofMarch 31, 2018 and 2019.
As of March 31, 2018 and 2019, maturities of public and corporate bonds included in available-for-sale aremainly from 1 to 10 years.
Proceeds from sales of available-for-sale securities were ¥251,940 million and ¥248,046 million for theyears ended March 31, 2017 and 2018, respectively. On those sales, gross realized gains were ¥61,038 millionand ¥7,684 million and gross realized losses were ¥108 million and ¥278 million, respectively.
During the years ended March 31, 2017 and 2018, Toyota recognized impairment losses onavailable-for-sale securities of ¥7,073 million and ¥846 million, respectively, which are included in “Other
income (loss), net” and other in the accompanying consolidated statements of income.
The carrying amount of equity securities with readily determinable fair values was ¥2,154,951 million as ofMarch 31, 2019.
Gains and losses related to equity securities for the year ended March 31, 2019 are as follows:
Yen in millions

Net gains (losses) recognized on equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net gains (losses) recognized on equity securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(334,636)
4,836

Unrealized gains (losses) on equity securities still held as of March 31, 2019 . . . . . . . . . . . . . . . . .

(339,472)

Toyota did not recognize any material impairment or other adjustments on equity securities without readily
determinable fair values for the years ended March 31, 2019. The carrying amount of equity securities without
readily determinable fair values was ¥279,178 million as of March 31, 2019.

F-21

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6. Finance receivables:
Finance receivables consist of the following:
Yen in millions
March 31,
2018
2019

Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and other dealer loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred origination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and other dealer loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,995,174
1,460,600
3,281,427

12,768,305
1,636,536
3,489,757

16,737,201 17,894,598
181,764
204,304(919,967)(986,928)(103,457)(28,817)(36,800)(117,594)(26,483)(39,008)(169,074)(183,085)

15,829,924 16,928,889(6,348,306) (6,647,771)
9,481,618

10,281,118

Finance receivables were geographically distributed as follows: in North America 55.7%, in Asia 12.3%, in
Europe 12.1%, in Japan 8.2% and in Other 11.7% as of March 31, 2018, and in North America 55.2%, in Asia
13.0%, in Europe 12.3%, in Japan 8.2% and in Other 11.3% as of March 31, 2019.
The contractual maturities of retail receivables, the future minimum lease payments on finance leases andthe contractual maturities of wholesale and other dealer loans at March 31, 2019 are summarized as follows:
Yen in millions

Years ending March 31,

FinanceleasesWholesaleand other
dealer loans

4,089,096
3,035,992
2,434,026
1,728,217
942,876
538,098

418,450
325,744251,888
113,040
42,5826,538

2,495,356
235,985
237,026
140,418
143,747
237,225

12,768,305

1,158,242

3,489,757

Retail2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-22

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Finance leases consist of the following:
Yen in millions
March 31,
2018
2019

Minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated unguaranteed residual values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,039,103
421,497

Deferred origination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,460,600 1,636,536
10,411
11,929(120,884) (143,838)(28,817)(26,483)

Finance leases, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,321,310

1,158,242
478,294

1,478,144

Toyota is exposed to credit risk on Toyota’s finance receivables. Credit risk is the risk of loss arising fromthe failure of customers or dealers to meet the terms of their contracts with Toyota or otherwise fail to perform asagreed. Toyota estimates allowance for credit losses by variety of credit-risk evaluation process to cover probableand estimable losses above.
The table below shows the amount of the finance receivables segregated into aging categories based on thenumber of days outstanding as of March 31, 2018 and 2019:
Yen in millions
March 31, 2018
RetailFinanceleasesWholesale

Real estate

Working
capitalCurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30-59 days past due . . . . . . . . . . . . . . . . . . . . . . . .
60-89 days past due . . . . . . . . . . . . . . . . . . . . . . . .
90 days or greater past due . . . . . . . . . . . . . . . . . .

11,802,032
127,830
32,40832,904

1,448,989
5,741
1,760
4,110

1,721,225
138
5,112
—

823,007——65

731,877——3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,995,174

1,460,600

1,726,475

823,072

731,880

Yen in millions
March 31, 2019
RetailFinanceleasesWholesale

Real estate

Working
capitalCurrent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30-59 days past due . . . . . . . . . . . . . . . . . . . . . . . .
60-89 days past due . . . . . . . . . . . . . . . . . . . . . . . .
90 days or greater past due . . . . . . . . . . . . . . . . . .

12,554,265
141,11135,09037,8391,625,893
4,972
1,396
4,275

1,806,305
191
100
393

873,427——
106

808,755——
480

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,768,305

1,636,536

1,806,989

873,533

809,235

The tables below show the recorded investment for credit quality of the finance receivable within thewholesale and other dealer loan receivables portfolio segment as of March 31, 2018 and 2019:
The wholesale and other dealer loan receivables portfolio segment is primarily segregated into credit
qualities below based on internal risk assessments by dealers.
F-23

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Performing: Account not classified as either Credit Watch, At Risk or Default
Credit Watch: Account designated for elevated attention
At Risk: Account where there is an increased likelihood that default may exist based on qualitative andquantitative factors
Default: Account is not currently meeting contractual obligations or we have temporarily waived certain
contractual requirements

Wholesale

Yen in millions
March 31, 2018
Real estate Working capital

Performing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,532,786
126,181
39,33828,170716,187
68,92325,36912,593

711,193
12,0166,270
2,401

2,960,166
207,120
70,977
43,164

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,726,475

823,072

731,880

3,281,427

Wholesale

Yen in millions
March 31, 2019
Real estate Working capital

Performing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,566,475
156,740
58,55025,224

743,379
81,84845,564
2,742

789,948
8,610
10,189488

3,099,802
247,198
114,303
28,454

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,806,989

873,533

809,235

3,489,757

F-24

Total

Total

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The tables below summarize information about impaired finance receivables:
Recorded investment
March 31,
2018
2019

Yen in millions
Unpaid principal balance
March 31,
2018
2019

Individually evaluated allowance
March 31,
2018
2019

Impaired account balances individually evaluated for impairment with an allowance:
Wholesale . . . . . . . . . . . . . .
11,582
18,187
11,582
18,187
1,525
Real estate . . . . . . . . . . . . . .
9,353
10,545
9,353
10,545
588
Working capital . . . . . . . . .
5,858
7,451
5,858
7,451
5,429
Total . . . . . . . . . . . . . .

26,79336,183

26,79336,183

7,542

3,141
1,280
6,670
11,091

Impaired account balances individually evaluated for impairment without an allowance:
Wholesale . . . . . . . . . . . . . .
8,818
14,4298,818
14,429Real estate . . . . . . . . . . . . . .
15,086
16,87015,086
16,870Working capital . . . . . . . . .
2,337
2,220
2,337
2,220
Total . . . . . . . . . . . . . .

26,241

33,51926,241

33,519Impaired account balances aggregated and evaluated for impairment:
Retail . . . . . . . . . . . . . . . . .
27,151
29,537
26,41828,788Finance leases . . . . . . . . . . .
100
99
74
75
Total . . . . . . . . . . . . . .

27,251

29,636

26,492

28,863

Total impaired account balances:
Retail . . . . . . . . . . . . . . . . .
27,151
Finance leases . . . . . . . . . . .
100
Wholesale . . . . . . . . . . . . . .
20,400Real estate . . . . . . . . . . . . . .
24,439Working capital . . . . . . . . .
8,195

29,53799
32,616
27,415
9,671

26,41874
20,40024,4398,195

28,78875
32,616
27,415
9,671

Total . . . . . . . . . . . . . .

99,33879,526

98,56580,285The amount of finance receivables modified as a troubled debt restructuring for the year ended March 31,
2019 was not significant for all classes of finance receivables. Finance receivables modified as troubled debt
restructurings for the year ended March 31, 2019 and for which there was a payment default were not significant
for all classes of such receivables.
7. Other receivables:
Other receivables relate to arrangements with certain component manufacturers whereby Toyota procuresinventory for these component manufactures and is reimbursed for the related purchases.

F-25

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
8. Inventories:
Inventories consist of the following:
Yen in millions
March 31,
2018
2019

Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,683,694
435,360
304,929
115,806

1,746,159
475,504
324,921
109,812

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,539,789

2,656,396

9. Vehicles and equipment on operating leases:
Vehicles and equipment on operating leases consist of the following:
Yen in millions
March 31,
2018
2019

Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Deferred income and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,124,699
13,373(203,679)

Less - Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,934,393 6,139,163(1,352,840) (1,428,779)(15,013)(13,314)

Vehicles and equipment on operating leases, net . . . . . . . . . . . . . . . . . . . . . . . . .

4,566,540

6,383,788
14,499(259,124)

4,697,070

Rental income from vehicles and equipment on operating leases was ¥850,210 million, ¥927,443 millionand ¥959,497 million for the years ended March 31, 2017, 2018 and 2019, respectively. Future minimum rentals
from vehicles and equipment on operating leases are due in installments as follows:
Years ending March 31,

Yen in millions

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

805,907537,742
245,145
50,834
9,860
1,983

Total minimum future rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,651,471

The future minimum rentals as shown above should not be considered indicative of future cash collections.

F-26

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. Allowance for doubtful accounts and credit losses:
The net changes in the allowance for doubtful accounts relating to trade accounts and notes receivable forthe years ended March 31, 2017, 2018 and 2019 are as follows:
Yen in millions
For the years ended March 31,
2017
2018
2019

Allowance for doubtful accounts at beginning of year . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts, net of reversal . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts at end of year . . . . . . . . . . . . . . . . . . . . . .

94,853 100,712
6,519
(74)
(3,839)(2,374)
3,179
326

98,590(1,375)(2,472)(4,370)100,71290,373

98,590“Other” includes the impact of currency translation adjustments for the years ended March 31, 2017, 2018and 2019.
A portion of the allowance for doubtful accounts balance at March 31, 2018 and 2019 totaling¥72,665 million and ¥74,003 million, respectively, is attributed to certain non-current receivable balances which
are reported as “Other” assets in the consolidated balance sheets.
The net changes in the allowance for credit losses relating to finance receivables and vehicles andequipment on operating leases for the years ended March 31, 2017, 2018 and 2019 are as follows:
Yen in millions
For the years ended March 31,
2017
2018
2019

Allowance for credit losses at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses, net of reversal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for credit losses at end of year . . . . . . . . . . . . . . . . . . . . . . . . . .

167,330 178,101 184,087
92,147
76,14381,440(99,550) (96,444) (91,698)
21,75725,344
26,178(3,583)943(3,608)178,101

184,087

196,399“Other” primarily includes the impact of currency translation adjustments for the years ended March 31,
2017, 2018 and 2019.

F-27

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The net changes in the allowance for credit losses above relating to retail receivables portfolio segment,
finance lease receivables portfolio segment and wholesale and other dealer loan receivables portfolio segment for
the years ended March 31, 2017, 2018 and 2019 are as follows:
Yen in millions
For the year ended March 31, 2017
Wholesale andother dealer
RetailFinance leases
loans

Allowance for credit losses at beginning of year . . . . . . . . . . . . . . . . . . . .
Provision for credit losses, net of reversal . . . . . . . . . . . . . . . . . . . . . . . . .
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98,85367,433(78,114)
18,282(2,100)24,6001,657(2,007)
194(482)

30,828
854
(324)
160
(622)

Allowance for credit losses at end of year . . . . . . . . . . . . . . . . . . . . .

104,354

23,96230,896

Yen in millions
For the year ended March 31, 2018
Wholesale andother dealer
RetailFinance leases
loans

Allowance for credit losses at beginning of year . . . . . . . . . . . . . . . . . . . . 104,354
Provision for credit losses, net of reversal . . . . . . . . . . . . . . . . . . . . . . . . .
52,891
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (74,868)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,511Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
569
Allowance for credit losses at end of year . . . . . . . . . . . . . . . . . . . . .

103,457

23,962
7,115(2,708)315
133

30,896
6,497
(823)
59
171

28,81736,800

Yen in millions
For the year ended March 31, 2019
Wholesale andother dealer
RetailFinance leases
loans

Allowance for credit losses at beginning of year . . . . . . . . . . . . . . . . . . . . 103,457
Provision for credit losses, net of reversal . . . . . . . . . . . . . . . . . . . . . . . . .
68,470Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,657)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,485
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,161)
Allowance for credit losses at end of year . . . . . . . . . . . . . . . . . . . . .

F-28

117,594

28,817710(2,903)345(486)

36,8003,990(1,111)45(716)

26,48339,008TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
11. Affiliated companies and variable interest entities:
Investments in and transactions with affiliated companies Summarized financial information for affiliated companies accounted for by the equity method is shown
below:
Yen in millions
March 31,
2018
2019

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,766,962 13,555,478
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,326,689 12,464,250
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,093,651 26,019,728
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,061,342 8,322,336
Long-term liabilities and noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,940,549 6,398,659
Affiliated companies accounted for by the equity method shareholders’ equity . . . . . . . 11,091,760 11,298,733
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,093,651 26,019,728
Toyota’s share of affiliated companies accounted for by the equity method
shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,162,711

3,313,703

Number of affiliated companies accounted for by the equity method at end of period . .

57

63

Yen in millions
For the years ended March 31,
2017
2018
2019

Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,309,263 30,680,535 32,200,711
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,644,267

4,065,344

4,070,621

Net income attributable to affiliated companies accounted for by theequity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,099,080

1,344,687

857,832

Equity in earnings of affiliated companies attributable to Toyota Motor
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

362,060

470,083

360,066

Entities comprising a significant portion of Toyota’s investment in affiliated companies and percentage ofownership are presented below:
Percentage of ownership
March 31,
2018
2019

Name of affiliated companies

Denso Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota Industries Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aisin Seiki Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyota Tsusho Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toyoda Gosei Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.4%
24.9%
24.9%
22.0%
43.0%

24.5%
24.9%
24.9%
22.0%
43.0%

Certain affiliated companies accounted for by the equity method with carrying amounts of¥2,334,642 million and ¥2,430,251 million at March 31, 2018 and 2019, respectively, were quoted on various
established markets at an aggregate value of ¥3,145,940 million and ¥2,513,886 million, respectively. Toyota
F-29

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
evaluated its investments in affiliated companies, considering the length of time and the extent to which thequoted market prices have been less than the carrying amounts, the financial condition and near-term prospectsof the affiliated companies and Toyota’s ability and intent to retain those investments in the companies for aperiod of time. Toyota did not recognize any impairment loss for the years ended March 31, 2017, 2018 and2019.
Account balances and transactions with affiliated companies are presented below:
Yen in millions
March 31,
2018
2019

Trade accounts and notes receivable, and other receivables . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

301,335
736,023

362,831
845,755

Yen in millions
For the years ended March 31,
2017
2018
2019

Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,914,318
5,357,682

2,004,632
5,749,430

2,213,236
6,431,464

Dividends from affiliated companies accounted for by the equity method for the years ended March 31,
2017, 2018 and 2019 were ¥180,326 million, ¥196,403 million and ¥204,322 million, respectively.
Toyota does not have any significant related party transactions other than transactions with affiliatedcompanies in the ordinary course of business.
Variable Interest Entities Toyota enters into securitization transactions using special-purpose entities, that are considered variableinterest entities (“VIEs”). Although the finance receivables and vehicles on operating leases related tosecuritization transactions have been legally sold to the VIEs, Toyota has both the power to direct the activitiesof the VIEs that most significantly impact the VIEs’ economic performance and the obligation to absorb losses of
the VIEs or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As aresult, Toyota is considered the primary beneficiary of the VIEs and therefore consolidates the VIEs.
Related to securitization transactions, ¥1,964,350 million and ¥1,872,564 million retail finance receivables,¥618,787 million and ¥609,694 million vehicles on operating leases, ¥146,828 million and ¥131,804 million
restricted cash and ¥1,952,973 million and ¥1,893,073 million secured debt were included in Toyota’s
consolidated financial statements as of March 31, 2018 and 2019, respectively. The creditors of the VIEs do nothave recourse to Toyota’s general credit with the exception of debts guaranteed by Toyota. Risks to which
Toyota is exposed including credit, interest rate, and/or prepayment risks are not incremental compared with thesituation before Toyota enters into securitization transactions.

F-30

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Toyota has variable interests in investment trusts that are VIEs. With respect to some of the investment
trusts, Toyota has both the obligation to absorb losses of or the right to receive benefits from the VIEs that could
potentially be significant to the VIEs and the power to direct the activities of the VIEs that most significantly
impact the VIEs’ economic performance through the asset manager. As a result, Toyota is considered the primary
beneficiary of the VIEs and therefore consolidates the VIEs. Related to such investment trusts, ¥2,790,679
million marketable securities and other securities investments were included in Toyota’s consolidated financial
statements as of March 31, 2019.
As for other investment trusts, Toyota determined that it was not the primary beneficiary due to lack of thepower to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance and,
therefore, does not consolidate the VIEs. Investments in the trusts are held at fair value and are included in“Marketable securities and other securities investments” in the accompanying consolidated balance sheets. As of
March 31, 2019, the maximum exposure to loss is limited to the carrying value of its investment in the trusts,
which totaled ¥22,001 million, compared to ¥446,778 million as of March 31, 2018. Toyota does not provide
support that is not contractually required to the trusts.
As for VIEs other than those specified above, neither the aggregate size nor Toyota’s involvements arematerial to Toyota’s consolidated financial statements.
12. Short-term borrowings and long-term debt:
Short-term borrowings at March 31, 2018 and 2019 consist of the following:
Yen in millions
March 31,
2018
2019

Loans, principally from banks, with a weighted-average interest at March 31, 2018
and March 31, 2019 of 2.14% and of 2.11% per annum, respectively . . . . . . . . . . . .
Commercial paper with a weighted-average interest at March 31, 2018 and March 31,
2019 of 1.65% and of 2.28% per annum, respectively . . . . . . . . . . . . . . . . . . . . . . . .

1,254,444

1,468,430

3,900,469

3,876,544

5,154,913

5,344,973

As of March 31, 2019, Toyota has unused short-term lines of credit amounting to ¥1,892,166 million ofwhich ¥274,058 million related to commercial paper programs. Under these programs, Toyota is authorized toobtain short-term financing at prevailing interest rates for periods not in excess of 360 days.

F-31

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-term debt at March 31, 2018 and 2019 comprises the following:
Yen in millions
March 31,
2018
2019

Unsecured loans, representing obligations principally to banks, due 2018 to 2036 in2018 and due 2019 to 2041 in 2019 with a weighted-average interest at March 31,2018 and March 31, 2019 of 2.70% and of 2.78% per annum, respectively . . . . . . .
Secured loans, representing obligations principally to finance receivables
securitization due 2018 to 2030 in 2018 and due 2019 to 2026 in 2019 with aweighted-average interest at March 31, 2018 and March 31, 2019 of 1.99% and of
2.47% per annum, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medium-term notes of consolidated subsidiaries, due 2018 to 2046 in 2018 and due
2019 to 2048 in 2019 with a weighted-average interest at March 31, 2018 andMarch 31, 2019 of 2.18% and of 2.46% per annum, respectively . . . . . . . . . . . . . . .
Unsecured notes of parent company, due 2018 to 2037 in 2018 and due 2019 to 2037
in 2019 with a weighted-average interest at March 31, 2018 and March 31, 2019 of
0.94% and of 1.84% per annum, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured notes of consolidated subsidiaries, due 2018 to 2031 in 2018 and due 2019
to 2031 in 2019 with a weighted-average interest at March 31, 2018 and March 31,
2019 of 2.20% and of 2.12% per annum, respectively . . . . . . . . . . . . . . . . . . . . . . . .
Secured notes of consolidated subsidiaries, due 2018 to 2021 in 2018 and due 2019 to2022 in 2019 with a weighted-average interest at March 31, 2018 and March 31,
2019 of 7.90% and of 7.78% per annum, respectively . . . . . . . . . . . . . . . . . . . . . . . .
Long-term capital lease obligations, due 2018 to 2035 in 2018 and due 2019 to 2035
in 2019 with interest ranging from 0.37% to 14.73% per annum in 2018 and from
0.12% to 14.73% per annum in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Current portion due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,215,309

3,441,336

1,963,057

1,840,204

6,994,629

7,372,550

370,000

511,980

1,569,517

1,566,994

59,51353,12020,626

19,021

14,192,651 14,805,205(4,186,277) (4,254,260)
10,006,374

10,550,945

As of March 31, 2019, approximately 48%, 11%, 11%, 9%, 5% and 16% of long-term debt are denominatedin U.S. dollars, euros, Japanese yen, Australian dollars, Canadian dollars and other currencies, respectively.
As of March 31, 2019, property, plant and equipment with a book value of ¥641,465 million and otherassets aggregating ¥1,936,680 million were pledged as collateral mainly for certain debt obligations ofsubsidiaries. These other assets principally consist of securitized finance receivables.
The aggregate amounts of annual maturities of long-term debt during the next five years are as follows:
Years ending March 31,

2020
2021
2022
2023
2024

Yen in millions......................................................................
......................................................................
......................................................................
......................................................................
......................................................................

F-32

4,254,260
3,057,026
3,033,332
2,221,041
1,123,524

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Standard agreements with certain banks include provisions that collateral (including sums on deposit withsuch banks) or guarantees will be furnished upon the banks’ request and that any collateral furnished, pursuant tosuch agreements or otherwise, will be applicable to all present or future indebtedness to such banks. During theyear ended March 31, 2019, Toyota has not received any significant requests from these banks.
As of March 31, 2019, Toyota has unused long-term lines of credit amounting to ¥6,457,394 million.
Interest expense during the years ended March 31, 2017, 2018 and 2019 were ¥352,691 million,¥415,094 million and ¥499,871 million, respectively. Interest expense related to the financial services business is
included in “Cost of financing operations” in the accompanying consolidated statements of income.
13. Product warranties and recalls and other safety measures:
Toyota provides product warranties for certain defects mainly resulting from manufacturing based on
warranty contracts with its customers at the time of sale of products. Toyota accrues estimated warranty costs to
be incurred in the future in accordance with the warranty contracts. In addition to product warranties, Toyota
initiates recalls and other safety measures to repair or to replace parts which might be expected to fail fromproducts safety perspectives or customer satisfaction standpoints. Toyota accrues for costs of recalls and othersafety measures based on the amount estimated from historical experience.
Liabilities for product warranties and liabilities for recalls and other safety measures have been combined
into a single table showing an aggregate liability for quality assurances due to the fact that both are liabilities forcosts to repair or replace defects of vehicles and the amounts incurred for recalls and other safety measures may
affect the amounts incurred for product warranties and vice versa.
Liabilities for quality assurances are included in “Accrued expenses” in the consolidated balance sheets.
The net changes in liabilities for quality assurances above for the years ended March 31, 2017, 2018 and2019 consist of the following:
Yen in millions
For the years ended March 31,
2017
2018
2019

Liabilities for quality assurances at beginning of year . . . . . . . . . . . . . . . . .
Payments made during year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for quality assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes relating to pre-existing quality assurances . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,403,764 1,696,938 1,702,312(604,853) (586,943) (489,461)
919,086
649,377
565,012(24,147)(56,769)(1,411)
3,088(291)(7,177)

Liabilities for quality assurances at end of year . . . . . . . . . . . . . . . . . . . . . .

1,696,938

1,702,312

1,769,275“Other” primarily includes the impact of currency translation adjustments and the impact of consolidationand deconsolidation of certain entities due to changes in ownership interest.

F-33

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below shows the net changes in liabilities for recalls and other safety measures which arecomprised in liabilities for quality assurances above for the years ended March 31, 2017, 2018 and 2019.
Yen in millions
For the years ended March 31,
2017
2018
2019

Liabilities for recalls and other safety measures at beginning of year . . . . .
Payments made during year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for recalls and other safety measures . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

925,475 1,275,200 1,275,256(444,416) (456,177) (396,971)
794,009454,391
428,613132
1,842(4,589)Liabilities for recalls and other safety measures at end of year . . . . . . . . . .

1,275,200

1,275,256

1,302,309

14. Other payables:
Other payables are mainly related to purchases of property, plant and equipment and non-manufacturing
purchases.
15. Income taxes:
The components of income before income taxes comprise the following:
Yen in millions
For the years ended March 31,
2017
2018
2019

Income before income taxes:
Parent company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,423,208
770,617

1,880,971
739,458

1,552,975
732,490

2,193,825

2,620,429

2,285,465

The provision for income taxes consists of the following:
Yen in millions
For the years ended March 31,
2017
2018
2019

Current income tax expense:
Parent company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

435,560
246,639565,998
176,369

599,521147,017

Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

682,199742,367

746,538

Deferred income tax expense (benefit):
Parent company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(21,756)(31,543)

45,097(283,058)(110,608)
24,014

Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(53,299)(237,961)(86,594)

Total provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

628,900

504,406

659,944

Net deferred liabilities as of March 31, 2018 decreased by ¥218,323 million and provision for income taxes
for the year ended March 31, 2018 decreased by ¥249,694 million, respectively, resulting from the Tax Cuts andJobs Act of 2017 of the United States.
F-34

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Toyota is subject to a number of different income taxes which, in the aggregate, indicate a statutory rate inJapan of approximately 31.1%, 31.1% and 30.9% for the years ended March 31, 2017, 2018 and 2019,respectively. The statutory tax rates in effect for the year in which the temporary differences are expected toreverse are used to calculate the tax effects of temporary differences which are expected to reverse in the futureyears. Reconciliation of the differences between the statutory tax rate and the effective income tax rate is asfollows:
For the years ended March 31,
2017
2018
2019

Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (reduction) in taxes resulting from:
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities on undistributed earnings of foreignsubsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities on undistributed earnings of affiliatedcompanies accounted for by the equity method . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The difference between the statutory tax rate in Japan and that offoreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits adjustments . . . . . . . . . . . . . . . . . . . . . . . .
Revision to reduce deferred tax assets and liabilities at the fiscal
year-end due to changes in tax rates . . . . . . . . . . . . . . . . . . . . . . . .
Effect of the Tax Cuts and Jobs Act of 2017 of the United States . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31.1%

31.1%

30.9%

0.4

0.4

0.4

1.3

1.1

1.2

3.3
(0.6)
(4.8)

3.8
(2.0)
(4.3)

3.1
0.2
(5.3)

(1.9)
0.4

(1.5)
0.2

(2.3)
(0.1)

—
—
(0.5)

—
(9.5)
(0.1)

—
—
0.8

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.7%

19.2%

28.9%

F-35

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Significant components of deferred tax assets and liabilities are as follows:
Yen in millions
March 31,
2018
2019

Deferred tax assets
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and liabilities for quality assurances . . . . . . . . . . . . . . . . . . . .
Other accrued employees’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss carryforwards for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts and credit losses . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199,366
609,257
112,316
203,897
63,223249,320
348,852

256,478
664,950
121,024364,220
69,049266,866
338,744

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,786,231(93,814)2,081,331(93,599)

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,692,417

1,987,732(635,292)(29,967)(493,052)(25,972)(794,485)(30,768)(751,292)(74,658)(836,860)(29,116)(946,128)(169,583)

Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,316,462)(2,500,711)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(624,045)(512,979)

Deferred tax liabilities
Unrealized gains on securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of affiliated companies accounted for by the equity
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basis difference of acquired assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The deferred tax assets and liabilities above that comprise the net deferred tax liability are included in the
consolidated balance sheets as follows:
Yen in millions
March 31,
2018
2019

Deferred tax assets
Investments and other assets - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities
Deferred income taxes (Long-term liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

494,120

501,872(1,118,165)(1,014,851)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(624,045)(512,979)

The factors used to assess the likelihood of realization of the deferred tax assets are the future reversal ofexisting taxable temporary differences, the future taxable income and available tax planning strategies that are
prudent and feasible. All available evidence, both positive and negative, is considered to determine whether,based on the weight of that evidence, a valuation allowance is needed for deferred tax assets which are not morelikely-than-not to be realized.

F-36

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The accounting for deferred tax assets represents Toyota’s current best estimate based on all available
evidence. Unanticipated events or changes could result in re-evaluating the realizability of deferred tax assets.
Operating loss carryforwards for tax purposes as of March 31, 2019 in Japan and foreign countries were¥23,548 million and ¥1,658,779 million, respectively, and are available as an offset against future taxable
income. The majority of these carryforwards in Japan and foreign countries expire in years 2020 to 2029 andexpire in years 2020 to 2039, respectively. Tax credit carryforwards as of March 31, 2019 in Japan and foreigncountries were ¥3,296 million and ¥65,796 million, respectively, and the majority of these carryforwards inJapan and foreign countries expire in years 2020 to 2022 and expire in years 2020 to 2039, respectively.
The valuation allowance mainly relates to deferred tax assets of operating loss and foreign tax credit
carryforwards for tax purposes that are not more-likely-than-not to be realized. The net changes in the total
valuation allowance for deferred tax assets for the years ended March 31, 2017, 2018 and 2019 consist of thefollowing:
Yen in millions
For the years ended March 31,
2017
2018
2019

Valuation allowance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151,665 146,623
27,147
16,106(37,891) (74,435)
5,702
5,520

93,814
13,967(9,801)(4,381)

Valuation allowance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

146,623

93,59993,814“Other” includes the impact of consolidation and deconsolidation of certain entities due to changes inownership interest and currency translation adjustments during the years ended March 31, 2017, 2018 and 2019.
Because management intends to reinvest undistributed earnings of foreign subsidiaries to the extent not
expected to be remitted in the foreseeable future, management has made no provision for income taxes on those
undistributed earnings aggregating ¥3,850,458 million as of March 31, 2019. Toyota estimates an additional tax
provision of ¥150,714 million would be required if the full amount of those undistributed earnings were remitted.
A summary of the gross unrecognized tax benefits changes for the years ended March 31, 2017, 2018 and2019 is as follows:
Yen in millions
For the years ended March 31,
2017
2018
2019

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . .
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions related to lapse of statute of limitations . . . . . . . . .
Reductions for settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,2508,187
6,076(5,593)(9)(6,317)(41)

21,553612
13,954(13,217)—(26)(1,312)

21,564
1,212
1,304
(819)
—
(6,696)
703

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,553

21,564

17,268

F-37

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was notmaterial at March 31, 2017, 2018 and 2019, respectively. Toyota does not believe it is reasonably possible thatthe total amounts of unrecognized tax benefits will significantly increase or decrease within the next
twelve months.
Interest and penalties related to income tax liabilities are included in “Other income (loss), net”. The
amounts of interest and penalties accrued as of and recognized for the years ended March 31, 2017, 2018 and2019, were not material.
Toyota remains subject to income tax examination for the tax returns related to the years beginning on andafter April 1, 2012 and April 1, 2002, with various tax jurisdictions in Japan and foreign countries, respectively.
16. Class Shares:
TMC issued First Series Model AA Class Shares (the “Model AA Class Shares”) on July 24, 2015.
Presented below is additional information regarding the Model AA Class Shares:
Total number of shares issued:

47,100,000 shares

Issue price:

10,598 yen per share

Purchase price:

10,121.09 yen per share

Voting rights:

Model AA Class Shares shall have voting rights. The number ofshares constituting one unit with respect to Model AA Class Sharesshall be 100.

Restrictions on transfer:

Model AA Class Shares shall have restrictions on transfer.

Dividends:(1) If the record date falls in the fiscal year ending on March 31,
2016 : 0.5% of the issue price(2) If the record date falls in the fiscal year ending on March 31,2017 through March 31, 2020 : the annual dividend rate forthe previous fiscal year plus 0.5% of the issue price(3) If the record date falls in the fiscal year ending on March 31,
2021 or later : 2.5% of the issue price

Shareholder’s right:(1) Shareholder’s conversion right into Common Shares
Shareholders of the Model AA Class Shares may demand
TMC to acquire all or a part of their Model AA Class Sharesin exchange for Common Shares on the first business day ofApril and October of every year, starting October 1, 2020.
(2) Shareholder’s cash put option
Shareholders of the Model AA Class Shares may demand
TMC to acquire all or a part of their Model AA Class Sharesin exchange for cash on the last business day of March, June,
September and December of each year, starting on
September 1, 2020.

TMC’s right:

TMC may acquire, on or after April 2, 2021, all of the outstanding
Model AA Class Shares in exchange for cash.

F-38

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Model AA Class Shares will not be treated as shareholders’ equity because the shareholders of theModel AA Class Shares will have cash put options and hence, the Model AA Class Shares will be reported asmezzanine equity, a separate line item between liabilities and shareholders’ equity.
Unpaid dividends included in mezzanine equity as of March 31, 2018 and 2019 were ¥3,721 million and¥4,969 million, respectively.
The difference between the issuance amount and initial carrying amount of the mezzanine equity is adjusted
for accretion of the mezzanine equity over a period of time from the issuance date until the Class Shares can firstbe redeemed.
17. Shareholders’ equity:
Changes in the number of shares of common stock issued have resulted from the following:
2017

Common stock issued
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Issuance during the year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and retirement . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . .

For the years ended March 31,
2018
2019

3,337,997,492 3,262,997,492——(75,000,000)—

3,262,997,492——

3,262,997,492

3,262,997,492

3,262,997,492

Annual dividends per common share were ¥210, ¥220 and ¥220 for the years ended March 31, 2017, 2018and 2019, respectively.
The Companies Act provides that an amount equal to 10% of distributions from surplus paid by the parent
company and its Japanese subsidiaries be appropriated as a capital reserve or a retained earnings reserve. No
further appropriations are required when the total amount of the capital reserve and the retained earnings reserve
reaches 25% of stated capital.
The retained earnings reserve included in retained earnings as of March 31, 2018 and 2019 were¥194,890 million and ¥198,605 million, respectively. The Companies Act provides that the retained earnings
reserve of the parent company and its Japanese subsidiaries is restricted and unable to be used for dividend
payments, and is excluded from the calculation of the profit available for dividend.
The amounts of statutory retained earnings of the parent company available for dividend payments toshareholders were ¥9,256,045 million and ¥9,958,581 million as of March 31, 2018 and 2019, respectively. In
accordance with customary practice in Japan, the distributions from surplus are not accrued in the financial
statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’approval has been obtained. Retained earnings at March 31, 2019 include amounts representing year-end cash
dividends of ¥339,892 million, ¥120 per common share, which were resolved at the Meeting of the Board of
Directors held on May 8, 2019.
Retained earnings at March 31, 2019 include ¥2,771,434 million relating to equity in undistributed earnings
of affiliated companies accounted for by the equity method.

F-39

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The repurchase, reissuance and retirement of treasury stock for the years ended March 31, 2017, 2018 and2019 are as follows:
For the year ended March 31, 2017
Repurchase of treasury stock
Reason for repurchasing treasury stock The repurchase was made to return capital to shareholders in addition to promoting capital efficiency andagile capital policy in view of the business environment.
Details of matters relating to repurchase Number of common shares repurchased . . . . . . . . . . . . . . . . . . . . . . . .
Total purchase price for repurchase of shares . . . . . . . . . . . . . . . . . . . .

116,555,700 shares¥699,986 million

Reissuance of treasury stock
Reason for reissuing treasury stock and details of matters relating to reissuance On August 1, 2016, the parent company implemented share exchange as a result of which the parent
company became a wholly owning parent company and Daihatsu Motor Co., Ltd. (“Daihatsu”) became a wholly
owned subsidiary, and the parent company acquired additional shares of Daihatsu. As a result of this shareexchange, the parent company issued 52,856,096 shares of treasury stock, treasury stock decreased by¥283,561 million and gains on disposal of treasury stock occurred in the amount of ¥27,972 million. As a result,additional paid-in capital increased by ¥27,972 million. As a result of acquiring additional shares of Daihatsu,
additional paid-in capital, noncontrolling interests and accumulated other comprehensive income (loss) decreasedby ¥53,742 million, ¥255,565 million and ¥2,226 million, respectively.
Retirement of treasury stock
Reason for retiring treasury stock The retirement was made to relieve concerns regarding the dilution of common share value due toreissuance of treasury stock in the future.
Details of matters relating to retirement Number of common shares retired . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75,000,000 shares

The amount on retirement of treasury stock was treated as a reduction in additional paid-in capital andretained earnings. As a result, treasury stock, additional paid-in capital and retained earnings decreased by¥407,383 million, ¥27,374 million and ¥380,009 million, respectively.

F-40

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For the year ended March 31, 2018
Repurchase of treasury stock
Reason for repurchasing treasury stock The repurchase was made to return capital to shareholders in addition to promoting capital efficiency andagile capital policy in view of the business environment.
Details of matters relating to repurchase Number of common shares repurchased . . . . . . . . . . . . . . . . . . . . . . .
Total purchase price for repurchase of shares . . . . . . . . . . . . . . . . . . .

73,708,400 shares¥499,989 million

Reissuance of treasury stock
Reason for reissuing treasury stock On August 4, 2017, the parent company and Mazda Motor Corporation (Mazda) signed an agreement toenter a business and capital alliance, with the aim of further strengthening their lasting partnership. The parent
company acquired common stock newly issued by Mazda through a third-party allotment. Mazda acquired theparent company’s shares that were equivalent in value to the Mazda shares through a disposition of treasury
stock involving a third-party allotment implemented by the parent company.
Details of matters relating to reissuance Number of common shares reissued . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,293,300 shares¥50,000 million

For the year ended March 31, 2019
Repurchase of treasury stock
Reason for repurchasing treasury stock The repurchase was made to return capital to shareholders in addition to promoting capital efficiency andagile capital policy in view of the business environment.
Details of matters relating to repurchase Number of common shares repurchased . . . . . . . . . . . . . . . . . . . . . . .
Total purchase price for repurchase of shares . . . . . . . . . . . . . . . . . . .

F-41

77,622,700 shares¥549,986 million

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
18. Accumulated other comprehensive income:Changes in accumulated other comprehensive income (loss) are as follows:
Yen in millions
Foreigncurrencytranslation
adjustments

Unrealized
gains (losses)
on securities

Pensionliability
adjustments

Accumulated
othercomprehensive
income (loss)

Balance at March 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before
reclassifications, net of taxes of ¥9,240 million,¥(9,048) million, ¥(40,099) million and¥(39,907) million . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications, net of taxes of ¥— million,¥23,275 million, ¥(5,255) million and¥18,020 million . . . . . . . . . . . . . . . . . . . . . . . . . . .

(499,055)

1,424,945(315,122)

610,768(57,926)

41,13482,93966,147—(36,855)

10,373(26,482)

Other comprehensive income (loss), net of tax . . . . . . . .
Less - Other comprehensive income attributable tononcontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Equity transaction with noncontrolling interests andother . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(57,926)

4,279

93,312

39,665

5,499(12,281)(503)(7,285)(8,626)

9,060(2,660)(2,226)

Balance at March 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before
reclassifications, net of taxes of ¥(3,624) million,¥38,539 million, ¥(7,568) million and¥27,347 million . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications, net of taxes of ¥— million,¥9,729 million, ¥(2,500) million and¥7,229 million . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(560,108)

1,426,003(224,973)

640,922(113,942)(72,501)

15,814(170,629)(6,664)(22,058)

6,501(22,221)

Other comprehensive income (loss), net of tax . . . . . . . .
Less - Other comprehensive income attributable tononcontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Equity transaction with noncontrolling interests andother . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(120,606)(94,559)

22,315(192,850)

1,629(2,022)

(580)

(973)

—

162

(11,562)(11,400)

Balance at March 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .
Effect of change in accounting policy . . . . . . . . . . . . . . .
Other comprehensive income (loss) before
reclassifications, net of taxes of ¥8,703 million,¥3,382 million, ¥25,795 million and¥37,880 million . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifications, net of taxes of ¥— million,¥6,963 million, ¥(2,892) million and¥4,071 million . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(679,085)
105

1,329,584(1,309,725)(214,800)—

435,699(1,309,620)

25,639(6,139)(62,288)(42,788)1,377(15,026)

7,452(6,197)

Other comprehensive income (loss), net of tax . . . . . . . .
Less - Other comprehensive income attributable tononcontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .

27,016(21,165)(54,836)(48,985)

2,432

54

3,770

6,256

Balance at March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . .

(649,532)(1,252)(265,866)(916,650)

F-42

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Reclassifications for the years ended March 31, 2017, 2018 and 2019 consist of the following:
Yen in millions
For the years ended March 31,
Affected line items
2017
2018
2019
in the consolidated statements of income

Foreign currency translation adjustments:—(6,664)

1,377

Other income (loss), net—(6,664)

1,377

Income before income taxes andequity in earnings of affiliatedcompanies—(6,664)

1,377

Net income

Unrealized gains (losses) on securities:(24,553) (4,567)
1,243 Financing operations(3,572) (25,247) (22,374) Foreign exchange gain, net(31,685) (1,993)(827) Other income (loss), net(59,810) (31,807) (21,958) Income before income taxes andequity in earnings of affiliatedcompanies
23,275
9,729
6,963 Provision for income taxes(320)20(31) Equity in earnings of affiliatedcompanies(36,855) (22,058) (15,026) Net income
Pension liability adjustments:
Recognized net actuarial loss . . . . . . . . .
Amortization of prior service costs . . . .

Total reclassifications, net of tax . . . . . . . . . .

19,432(3,804)

12,914(3,913)

14,029 *1(3,685) *1

15,628

9,001

10,344(5,255)(2,500)

Income before income taxes andequity in earnings of affiliatedcompanies(2,892) Provision for income taxes

10,373

6,501

7,452

(26,482) (22,221)(6,197)

Net income

Amounts of reclassifications in parentheses indicate gains in the consolidated statements of income.
*1: These components are included in the computation of net periodic pension cost. See note 20 to theconsolidated financial statements for additional information.
19. Stock-based compensation:
In June 1997, the parent company’s shareholders approved a stock option plan for board members. In June
2001, the shareholders approved an amendment of the plan to include both board members and key employees.
Each year until June 2010, since the plans’ inception, the shareholders have approved the authorization for the
grant of options for the purchase of the parent company’s common stock. Authorized shares for each year thatremain ungranted are unavailable for grant in future years. Stock options granted in and after August 2006 haveterms of 8 years and an exercise price equal to 1.025 times the closing price of Toyota’s common stock on thedate of grant. These options generally vest 2 years from the date of grant.
F-43

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
There were no stock-based compensation expenses for stock options as selling, general and administrative
expenses for the years ended March 31, 2017, 2018 and 2019, respectively.
The following table summarizes Toyota’s stock option activity:
Yen inmillions

Yen
Weightedaverageremaining
contractual
life in years

Aggregate
intrinsic
value

Number ofshares

Weightedaverage
exercise price

Options outstanding at March 31, 2016 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,093,500—(785,600)(115,600)

3,858
—
4,006
4,682

1.56

4,384

Options outstanding at March 31, 2017 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,192,300—(643,800)(264,900)

3,682
—
3,726
4,154

0.80

2,813

Options outstanding at March 31, 2018 . . . . . . . . . . . . . . . .

283,600

3,153

0.33

1,041

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—(155,100)(128,500)

—
3,156
3,153

Options outstanding at March 31, 2019 . . . . . . . . . . . . . . . .

—

—

—

—

Options exercisable at March 31, 2017 . . . . . . . . . . . . . . . . . .
Options exercisable at March 31, 2018 . . . . . . . . . . . . . . . . . .
Options exercisable at March 31, 2019 . . . . . . . . . . . . . . . . . .

1,192,300
283,600
—

3,682
3,153
—

0.80
0.33
—

2,813
1,041
—

The total intrinsic value of options exercised for the years ended March 31, 2017, 2018 and 2019 was¥1,632 million, ¥1,881 million and ¥618 million, respectively.
Cash received from the exercise of stock options for the years ended March 31, 2017, 2018 and 2019 was¥3,147 million, ¥2,399 million and ¥490 million, respectively.

F-44

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
20. Employee benefit plans:
Pension and severance plans Upon terminations of employment, employees of the parent company and subsidiaries in Japan are entitled,under the retirement plans of each company, to lump-sum indemnities or pension payments, based on current
rates of pay and lengths of service or the number of “points” mainly determined by those. Under normal
circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement.
Employees receive additional benefits on involuntary retirement, including retirement at the age limit.
Effective October 1, 2004, the parent company amended its retirement plan to introduce a “point” based
retirement benefit plan. Under the new plan, employees are entitled to lump-sum or pension payments
determined based on accumulated “points” vested in each year of service.
There are three types of “points” that vest in each year of service consisting of “service period points” which
are attributed to the length of service, “job title points” which are attributed to the job title of each employee, and“performance points” which are attributed to the annual performance evaluation of each employee. Under normal
circumstances, the minimum payment prior to retirement age is an amount reflecting an adjustment rate applied
to represent voluntary retirement. Employees receive additional benefits upon involuntary retirement, including
retirement at the age limit.
Effective October 1, 2005, the parent company partly amended its retirement plan and introduced the quasi
cash-balance plan under which benefits are determined based on the variable-interest crediting rate rather than
the fixed-interest crediting rate as was in the pre-amended plan.
The parent company and most subsidiaries in Japan have contributory funded defined benefit pension plans,
which are pursuant to the Corporate Defined Benefit Pension Plan Law (CDBPPL). The contributions to theplans are funded with several financial institutions in accordance with the applicable laws and regulations. These
pension plan assets consist principally of common stocks, government bonds and insurance contracts.
Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of theiremployees under which the cost of benefits are currently invested or accrued. The benefits for these plans are
based primarily on lengths of service and current rates of pay.
Toyota uses a March 31 measurement date for its benefit plans.

F-45

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Information regarding Toyota’s defined benefit plans is as follows:
Yen in millions
March 31,
Japanese plans
Foreign plans
2018
2019
2018
2019

Change in benefit obligation
Benefit obligation at beginning of year . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . .
Plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit obligation at end of year . . . . . . . . . . . . . . . . .
Change in plan assets
Fair value of plan assets at beginning of year . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets at end of year . . . . . . . . . . . .
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,930,498 2,019,310 1,026,024 1,097,981
88,964
99,83835,88746,93013,252
12,96737,81740,708
1,266
974
912
1,045
(58)
(1,067)(12)
1335,01767,391
66,0397,755
18,206(20,786)(26,616)
21,634(67,835)(78,554)(42,070)(29,169)
2,019,310 2,100,073 1,097,981 1,186,897
1,483,889 1,612,879
111,278
3,208
14,615(13,705)
42,09541,276
1,266
974(40,264)(44,141)
1,612,879 1,600,491
406,431499,582

758,306
89,924(16,009)
20,961
912(38,611)815,483
282,498

815,483
59,237
12,696
18,952
1,045(24,629)882,784
304,113

Amounts recognized in the consolidated balance sheets as of March 31, 2018 and 2019 are comprised of thefollowing:
Yen in millions
March 31,
Japanese plans
Foreign plans
2018
2019
2018
2019

Accrued expenses (Accrued pension and severance costs) . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . .
Investments and other assets - Other (Prepaid pension andseverance costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,718647,134

34,298657,380

2,982
284,048

3,234
306,026(268,421)(192,096)(4,532)(5,147)

Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . .

406,431499,582

282,498

304,113

F-46

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Amounts recognized in accumulated other comprehensive income (loss) as of March 31, 2018 and 2019 arecomprised of the following:
Yen in millions
March 31,
Japanese plans
Foreign plans
2018
2019
2018
2019

Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(248,791)
32,812—(339,814)
29,801—(119,407)(1,826)—(91,072)(1,612)—

Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(215,979)(310,013)(121,233)(92,684)

The accumulated benefit obligation for all defined benefit pension plans was ¥1,959,533 million and¥2,040,344 million in Japanese plans, ¥1,023,094 million and ¥1,120,453 million in Foreign plans at March 31,2018 and 2019, respectively.
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which theaccumulated benefit obligations exceed plan assets are as follows:
Yen in millions
March 31,
Japanese plans
Foreign plans
2018
2019
2018
2019

Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

833,080
806,774
170,234

872,867
847,017
198,315490,844468,611201,402535,630
515,918
215,006

Components of the net periodic pension cost are as follows:2017

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . .
Amortization of prior service costs . . . . . . . . . . . .
Recognized net actuarial loss . . . . . . . . . . . . . . . . .
Amortization of net transition obligation . . . . . . . .
Net periodic pension cost . . . . . . . . . . . . . . . .

Yen in millions
For the years ended March 31,
Japanese plans
Foreign plans
2018
2019
2017
2018

2019

89,443 88,964
8,800 13,252(33,524) (36,409)(4,148) (4,226)
14,298
7,462——

99,838 41,733 35,887 46,930
12,967 35,593 37,817 40,708(38,551) (38,893) (41,048) (37,530)(3,904)
344
313
219
6,927
5,134
5,452
7,102
—
—
—
—

74,86977,277

F-47

69,043

43,911

38,421

57,429

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as
follows:
Yen in millions
For the years ended March 31,
Japanese plans
Foreign plans
2018
2019
2017
2018

2017

2019

Net actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . .
Recognized net actuarial loss . . . . . . . . . . . . . . . . .
Prior service costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service costs . . . . . . . . . . . .
Amortization of net transition obligation . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93,85914,29821(4,148)—811

39,852 (102,734)
7,462
6,927
58
1,067
(4,226)(3,904)——(7,979)4,610

13,647
5,134
996
344
—
1,962

(17,163)
5,452
12
313
—
9,004

13,952
7,102
(13)
219
—
7,289

Total recognized in other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . .

104,841

35,16722,083(2,382)28,549(94,034)“Other” includes the impact of consolidation and deconsolidation of certain entities due to changes inownership interest and currency translation adjustments during the years ended March 31, 2017, 2018 and 2019.
The estimated prior service costs and net actuarial loss that will be amortized from accumulated othercomprehensive income (loss) into net periodic pension cost during the year ending March 31, 2020 are ¥ (3,400)
million and ¥10,100 million in Japanese plans, ¥200 million and ¥4,500 million in Foreign plans , respectively.
Weighted-average assumptions used to determine benefit obligations as of March 31, 2018 and 2019 are as
follows:
March 31,
Japanese plans
Foreign plans
2018
2019
2018
2019

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7%
3.3%

0.6%
3.1%

3.9%
3.6%

3.8%
3.5%

As of March 31, 2018 and 2019, the parent company and certain subsidiaries in Japan employ “point” based
retirement benefit plans and do not use the rates of compensation increase to determine benefit obligations.
Weighted-average assumptions used to determine net periodic pension cost for the years ended March 31,
2017, 2018 and 2019 are as follows:

2017

Discount rate . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . .
Rate of compensation increase . . . . . . . . .

For the years ended March 31,
Japanese plans
Foreign plans
2018
2019
2017
2018

0.5%
2.4%
2.7%

0.7%
2.4%
2.9%

0.7%
2.4%
3.3%

4.2%
6.1%
3.9%

4.0%
6.0%
3.8%

2019

3.9%
5.6%
3.6%

During the years ended March 31, 2017, 2018 and 2019, the parent company and certain subsidiaries inJapan employ “point” based retirement benefit plans and do not use the rates of compensation increase todetermine net periodic pension cost.
F-48

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The expected rate of return on plan assets is determined after considering several applicable factors
including, the composition of plan assets held, assumed risks of asset management, historical results of the
returns on plan assets, Toyota’s principal policy for plan asset management, and forecasted market conditions.
Toyota’s policy and objective for plan asset management is to maximize returns on plan assets to meet
future benefit payment requirements under risks which Toyota considers permissible. Asset allocations under theplan asset management are determined based on plan asset management policies of each plan which areestablished to achieve the optimized asset compositions in terms of the long-term overall plan asset management.
In Japanese plans, excepting equity securities contributed by Toyota, approximately 40% of the plan assets isinvested in equity securities, approximately 30% is invested in debt securities, and the rest of them is invested ininsurance contracts and other products. In Foreign plans, excepting equity securities contributed by Toyota,
approximately 50% of the plan assets is invested in equity securities, approximately 40% is invested in debt
securities, and the rest of them is invested in other products. When actual allocations are not in line with target
allocations, Toyota rebalances its investments in accordance with the policies. Prior to making individual
investments, Toyota performs in-depth assessments of corresponding factors including category of products,
industry type, currencies and liquidity of each potential investment under consideration to mitigate
concentrations of risks such as market risk and foreign currency exchange rate risk. To assess performance of theinvestments, Toyota establishes bench mark return rates for each individual investment, combines these
individual bench mark rates based on the asset composition ratios within each asset category, and compares the
combined rates with the corresponding actual return rates on each asset category.
The following table summarizes the fair value of classes of plan assets as of March 31, 2018 and 2019. Seenote 28 to the consolidated financial statements for three levels of input which are used to measure fair value.
Japanese plans

Level 1

Yen in millions
March 31, 2018
Level 2
Level 3

Total

620,281——
202,816——620,281
202,816620,281

202,816—

823,097

88,959———284,870
36,567——
19

88,959284,870
36,586

88,959321,437

19

410,415

Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments measured at net asset value . . . . . . . . . . . . . . . . . . . . . . .

—41,446—201,141
61,301————

201,141
102,747
75,479Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

750,686

786,695

19

1,612,879

Equity securities
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-49

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Level 1

Yen in millions
March 31, 2019
Level 2
Level 3

Total

531,159——
192,012——531,159
192,012531,159

192,012—723,171

98,578———286,783
54,652———

98,578286,783
54,652

98,578341,435—

440,013

Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments measured at net asset value . . . . . . . . . . . . . . . . . . . . . . .

—84,208—226,093
38,439
—

—
4,242
—

226,093
126,889
84,325

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

713,945797,979

4,242

1,600,491

Level 1

Yen in millions
March 31, 2018
Level 2
Level 3

Total

178,476——
197,566——

178,476
197,566

178,476

197,566—

376,042

89,928———
11,64235,032———

89,928
11,64235,032

89,92846,674—

136,602

Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments measured at net asset value . . . . . . . . . . . . . . . . . . . . . . .

—12,487——
18,107——31,288——61,882240,957

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

280,891

262,347

31,288815,483

Equity securities
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign plans

Equity securities
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-50

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Level 1

Yen in millions
March 31, 2019
Level 2
Level 3

Total

123,875——
215,386——

123,875
215,386

123,875

215,386—

339,261

141,054————
164,877———

141,054—
164,877

141,054

164,877—

305,931

Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments measured at net asset value . . . . . . . . . . . . . . . . . . . . . . .

—10,292——
24,810——27,903——63,005
174,587

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

275,221405,073

27,903882,784

Equity securities
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commingled funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certain investments that are measured at fair value using the net asset value per share (or its equivalent)
practical expedient have not been classified in the fair value hierarchy.
The following is description of the assets, information about the valuation techniques used to measure fairvalue, key inputs and significant assumptions:
Quoted market prices for identical securities are used to measure fair value of common stocks. Japanesestocks and foreign stocks represent 76% and 24% (as of March 31, 2018) and 73% and 27% (as of March 31,2019) of common stocks, respectively, in Japanese plans. Common stocks include mainly foreign stocks as ofMarch 31, 2018 and 2019 in Foreign plans.
Quoted market prices for identical securities are used to measure fair value of government bonds. Japanese
government bonds and foreign government bonds represent 29% and 71% (as of March 31, 2018) and 33% and
67% (as of March 31, 2019) of government bonds, respectively, in Japanese plans. Government bonds include
mainly foreign government bonds as of March 31, 2018 and 2019 in Foreign plans.
Commingled funds are beneficial interests of collective trust. The fair values of commingled funds aremeasured using the net asset value (“NAV”) provided by the administrator of the fund, and are categorized by theability to redeem investments by the NAV.
The fair values of insurance contracts are measured using contracted amount with accrued interest.
“Other” consists of cash equivalents, other private placement investment funds and other assets. The fairvalues of other private placement investment funds are measured using the NAV provided by the administrator of
the fund, and are categorized by the ability to redeem investments by the NAV.

F-51

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables summarize the changes in Level 3 plan assets measured at fair value for the years
ended March 31, 2017, 2018 and 2019:Japanese plans

2017
Debt
securities Other

Balance at beginning of year . . . . . . . . .
Actual return on plan assets . . . . . .
Purchases, sales and settlements . . .
Other . . . . . . . . . . . . . . . . . . . . . . . .

146
—
(65)
—

Balance at end of year . . . . . . . . . . . . . . .

81

Yen in millions
For the years ended March 31,
2018
2019
Debt
Debt
Total securities Other Total securities Other

2,518 2,664
(11)
(11)
(2,011) (2,076)
—
—
496

577

Total

81
—
(62)
—

496
577
(4)
(4)
(492) (554)
—
—

19
—
(19)
—

—
19
(164) (164)—(19)
4,406 4,406

19

—

—

4,242 4,242

19

Foreign plans
Yen in millions
For the years ended March 31,
2017
2018
2019
Other
Other
Other

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,758279—(134)

30,903
2,024—(1,639)31,288(4,784)—
1,399

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,90331,28827,903

Toyota expects to contribute ¥40,124 million in Japanese plans and ¥14,330 million in Foreign plans to its
pension plans in the year ending March 31, 2020.
The following pension benefit payments, which reflect expected future service, as appropriate, are expected
to be paid:
Yen in millions
Japanese plans Foreign plans

Years ending March 31,

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
from 2025 to 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,333
79,217
82,63886,90690,064455,028

26,35027,75029,42331,28133,094
190,987

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

872,186

338,885

F-52

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Postretirement benefits other than pensions and postemployment benefits Toyota’s U.S. subsidiaries provide certain health care and life insurance benefits to eligible retired
employees. In addition, Toyota provides benefits to certain former or inactive employees after employment, but
before retirement. These benefits are provided through various insurance companies, health care providers andothers. The costs of these benefits are recognized over the period the employee provides credited service toToyota. Toyota’s obligations under these arrangements are not material.
21. Derivative financial instruments:
Toyota employs derivative financial instruments, including foreign exchange forward contracts, foreign
currency options, interest rate swaps, interest rate currency swap agreements and interest rate options to manage
its exposure to fluctuations in interest rates and foreign currency exchange rates. Toyota does not use derivatives
for speculation or trading.
Fair value hedges Toyota enters into interest rate swaps and interest rate currency swap agreements mainly to convert its
fixed-rate debt to variable-rate debt. Toyota uses interest rate swap agreements in managing interest rate risk
exposure. Interest rate swap agreements are executed as either an integral part of specific debt transactions or ona portfolio basis. Toyota uses interest rate currency swap agreements to hedge exposure to currency exchange
rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes andloans payable issued in foreign currencies are hedged by concurrently executing interest rate currency swap
agreements, which involve the exchange of foreign currency principal and interest obligations for each functional
currency obligations at agreed-upon currency exchange and interest rates.
For the years ended March 31, 2017, 2018 and 2019, the ineffective portion of Toyota’s fair value hedge
relationships was not material. For fair value hedging relationships, the components of each derivative’s gain orloss are included in the assessment of hedge effectiveness.
Undesignated derivative financial instruments Toyota uses foreign exchange forward contracts, foreign currency options, interest rate swaps, interest ratecurrency swap agreements, and interest rate options, to manage its exposure to foreign currency exchange rate
fluctuations and interest rate fluctuations from an economic perspective, and for some of which Toyota is unable
to or has elected not to apply hedge accounting.

F-53

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair value and gains or losses on derivative financial instruments The following table summarizes the fair values of derivative financial instruments as of March 31, 2018 and2019:
Yen in millions
March 31,
2018
2019

Derivative assets
Derivative financial instruments designated as hedging instruments
Interest rate and currency swap agreements
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

154
668
822

—
—
—

Undesignated derivative financial instruments
Interest rate and currency swap agreements
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46,425
175,635
222,060

74,971
114,642
189,613

Foreign exchange forward and option contracts
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets - Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,922—
34,922

10,720—10,720Total derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Counterparty netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateral received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying value of derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

257,804(97,617)(92,146)
68,041

200,333(89,364)(46,590)64,379Derivative liabilities
Derivative financial instruments designated as hedging instruments
Interest rate and currency swap agreements
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—

—
—
—

Undesignated derivative financial instruments
Interest rate and currency swap agreements
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange forward and option contracts
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Counterparty netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateral posted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying value of derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-54(34,716) (28,911)(158,830) (189,157)(193,546) (218,068)(3,610)—(3,610)(13,847)—(13,847)(197,156) (231,915)
97,61789,36455,650 110,159(43,889) (32,392)

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the notional amounts of derivative financial instruments as of March 31,2018 and 2019:
Yen in millions
March 31,2018
Designated Undesignatedderivative
derivative
financialfinancial
instruments
instruments

2019
Designated Undesignatedderivative
derivative
financialfinancial
instruments
instruments

Interest rate and currency swap agreements . . . . . . . . . . . . .
Foreign exchange forward and option contracts . . . . . . . . . .

12,643—19,895,085
2,731,534——

21,001,883
4,005,578

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,643

22,626,619—

25,007,461

The following table summarizes the gains and losses on derivative financial instruments and hedged items
reported in the consolidated statements of income for the years ended March 31, 2017, 2018 and 2019:
Yen in millions
For the years ended March 31,
2017
2018
2019
Gains or
Gains or
Gains or(losses) on(losses) on(losses) on
derivative
Gains orderivative
Gains orderivative
Gains orfinancial(losses) on
financial(losses) on
financial(losses) on
instruments hedged items instruments hedged items instruments hedged items

Derivative financial instruments
designated as hedging instruments
Interest rate and currency swap
agreements
Cost of financing
operations . . . . . . . . . . . .
Undesignated derivative financial
instruments
Interest rate and currency swap
agreements
Cost of financing
operations . . . . . . . . . . . .
Foreign exchange gain
(loss), net . . . . . . . . . . . . .
Foreign exchange forward andoption contracts
Cost of financing
operations . . . . . . . . . . . .
Foreign exchange gain
(loss), net . . . . . . . . . . . . .

(339)

1,212

782

(227)

(822)

(61,884)

42,220(18,433)

12,51630,33937,124

2,614

6,442

2,240

81,614

73,115(69,826)

799

Undesignated derivative financial instruments are used to manage economic risks of fluctuations in foreign
currency exchange rates and interest rates of certain receivables and payables. Those economic risks are offset bychanges in the fair value of undesignated derivative financial instruments.
F-55

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Cash flows from transactions of derivative financial instruments are included in cash flows from operating
activities in the consolidated statements of cash flows.
Credit risk related contingent features Toyota enters into International Swaps and Derivatives Association Master Agreements with counterparties.
These Master Agreements contain a provision requiring either Toyota or the counterparty to settle the contract or
to post assets to the other party in the event of a ratings downgrade below a specified threshold.
The aggregate fair value amount of derivative financial instruments that contain credit risk related
contingent features that are in a net liability position after being offset by cash collateral as of March 31, 2019 is¥4,126 million. The aggregate fair value amount of assets that are already posted as cash collateral as ofMarch 31, 2019 is ¥105,460 million. If the ratings of Toyota decline below specified thresholds, the maximum
amount of assets to be posted or for which Toyota could be required to settle the contracts is ¥4,126 million as ofMarch 31, 2019.
22. Other financial instruments:
Toyota has certain financial instruments, including financial assets and liabilities which arose in the normal
course of business. These financial instruments are executed with creditworthy financial institutions, andvirtually all foreign currency contracts are denominated in U.S. dollars, euros and other currencies of major
developed countries. Financial instruments involve, to varying degrees, market risk as instruments are subject toprice fluctuations, and elements of credit risk in the event a counterparty should default. In the unlikely event thecounterparties fail to meet the contractual terms of a foreign currency or an interest rate instrument, Toyota’s risk
is limited to the fair value of the instrument. Although Toyota may be exposed to losses in the event of
non-performance by counterparties on financial instruments, it does not anticipate significant losses due to thenature of its counterparties. Counterparties to Toyota’s financial instruments represent, in general, international
financial institutions. Additionally, Toyota does not have a significant exposure to any individual counterparty.
Toyota believes that the overall credit risk related to its financial instruments is not significant.
The following table summarizes the estimated fair values of Toyota’s financial instruments, excluding
marketable securities, other securities investments, investments and other assets in affiliated companies andderivative financial instruments. See note 28 to the consolidated financial statements for three levels of input
which are used to measure fair value.

Assets (Liabilities)
Cash and cash equivalents . . . . . . .
Time deposits . . . . . . . . . . . . . . . . .
Total finance receivables, net . . . . .
Other receivables . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . .
Long-term debt including thecurrent portion . . . . . . . . . . . . . .

Carrying amount

Level 1

3,052,269
901,244
14,508,614
489,338(5,154,913)

2,278,060————(14,172,025)

—

F-56

Yen in millions
March 31, 2018
Estimated fair value
Level 2
Level 3774,209—901,244——
14,615,409—
489,338(5,154,913)
—

Total

3,052,269
901,244
14,615,409
489,338(5,154,913)(12,265,260) (1,940,888) (14,206,148)

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets (Liabilities)
Cash and cash equivalents . . . . . . .
Time deposits . . . . . . . . . . . . . . . . .
Total finance receivables, net . . . . .
Other receivables . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . .
Long-term debt including thecurrent portion . . . . . . . . . . . . . .

Carrying amount

Level 1

3,574,704
1,126,352
15,450,745
568,156(5,344,973)

2,980,504————(14,786,184)—

Yen in millions
March 31, 2019
Estimated fair value
Level 2
Level 3594,200—
1,126,352——
15,668,542—
568,156(5,285,807)(59,166)

Total

3,574,704
1,126,352
15,668,542
568,156(5,344,973)(12,786,541) (1,833,623) (14,620,164)

Cash and cash equivalents and time deposits In the normal course of business, substantially all cash and cash equivalents and time deposits are highly
liquid and are carried at amounts which approximate fair value due to its short duration. Cash equivalents andtime deposits include negotiable certificate of deposit measured at fair value on a recurring basis. Where money
market funds produce a daily net asset value in an active market, this value is used to determine the fair value ofthe fund investment, and the investment is classified in Level 1. All other types of cash and cash equivalents andtime deposits are classified in Level 2.
Finance receivables, net The fair values of finance receivables are estimated by discounting expected cash flows to present value
using internal assumptions, including prepayment speeds, expected credit losses and collateral value. Certain
impaired finance receivables are measured at fair value on a nonrecurring basis based on collateral values.
As unobservable inputs are utilized, finance receivables are classified in Level 3.
Other receivables Other receivables are short-term receivables. These receivables are carried at amounts which approximate
fair value, and the difference between the carrying amount and the fair value is not material. These receivables
are classified in Level 3.
Short-term borrowings and long-term debt The fair values of short-term borrowings and long-term debt including the current portion, except for
secured loans provided by securitization transactions using special-purpose entities, are estimated based on the
discounted amounts of future cash flows using Toyota’s current borrowing rates for similar liabilities. As these
inputs are observable, these debts are classified in Level 2.
The fair values of the secured loans provided by securitization transactions are estimated based on current
market rates and credit spreads for debt with similar maturities. Internal assumptions including prepayment
speeds and expected credit losses are used to estimate the timing of cash flows to be paid on the underlying
securitized assets. As these valuations utilize unobservable inputs, the secured loans are classified in Level 3. Seenote 11 to the consolidated financial statements for information regarding the secured loans.
F-57

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
23. Lease commitments:
Toyota leases certain assets under capital lease and operating lease arrangements.
An analysis of leased assets under capital leases is as follows:
Yen in millions
March 31,
2018
2019

Class of property
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,934 18,519
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,217 28,836
Less - Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,853) (30,016)
18,29817,339Amortization expenses under capital leases for the years ended March 31, 2017, 2018 and 2019 were
¥4,586 million, ¥5,541 million and ¥7,879 million, respectively.
Future minimum lease payments under capital leases together with the present value of the net minimum
lease payments as of March 31, 2019 are as follows:
Years ending March 31,

Yen in millions

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,536
3,988
2,301
2,081
1,919
5,947

Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Amount representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,772(3,751)

Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less - Current obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,021(5,747)Long-term capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,274

Rental expenses under operating leases for the years ended March 31, 2017, 2018 and 2019 were¥92,321 million, ¥112,934 million and ¥115,503 million, respectively.

F-58

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The minimum rental payments required under operating leases relating primarily to land, buildings andequipment having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2019 are as
follows:
Years ending March 31,

Yen in millions

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,07813,396
11,862
10,2198,034
32,598

Total minimum future rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

92,187

24. Other commitments and contingencies, concentrations and factors that may affect future operations:
Commitments Commitments outstanding as of March 31, 2019 for the purchase of property, plant and equipment, otherassets and services totaled ¥363,319 million.
Guarantees Toyota enters into contracts with Toyota dealers to guarantee customers’ payments of their installment
payables that arise from installment contracts between customers and Toyota dealers, as and when requested by
Toyota dealers. Guarantee periods are set to match maturity of installment payments, and as of March 31, 2019,
range from 1 month to 35 years; however, they are generally shorter than the useful lives of products sold.
Toyota is required to execute its guarantee primarily when customers are unable to make required payments.
The maximum potential amount of future payments as of March 31, 2019 is ¥3,078,955 million. Liabilities
for guarantees totaling ¥8,921 million have been provided as of March 31, 2019. Under these guarantee
contracts, Toyota is entitled to recover any amount paid by Toyota from the customers whose original obligations
Toyota has guaranteed.
Legal proceedings From time-to-time, Toyota issues vehicle recalls and takes other safety measures including safety campaigns
relating to its vehicles. Since 2009, Toyota issued safety campaigns related to the risk of floor mat entrapment ofaccelerator pedals and vehicle recalls related to slow-to-return or sticky accelerator pedals.
Personal injury and wrongful death claims involving allegations of unintended acceleration are still pending
in several consolidated proceedings in federal and state courts, as well as in individual cases in various otherstates. The judges in the consolidated federal action and the consolidated California state action have approved
an Intensive Settlement Process (“ISP”) for such claims in those actions. Under the ISP, all individual claims
within the consolidated actions are stayed pending completion of a process to assess whether they can be
resolved on terms acceptable to the parties. Cases not resolved after completion of the ISP will then proceed to
discovery and toward trial. Toyota has offered the ISP process to plaintiffs in other consolidated actions and inindividual cases, as well.

F-59

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Toyota has been named as a defendant in 33 economic loss class action lawsuits in the United States, which,
together with similar lawsuits against Takata and other automakers, have been made part of a multi-district
litigation proceeding in the United States District Court for the Southern District of Florida, arising out ofallegations that airbag inflators manufactured by Takata are defective. Toyota has reached a settlement with theplaintiffs in the United States economic loss class actions. The court approved the settlement on October 31,
2017, and the subsequent appeals have been withdrawn, making the settlement final. The economic loss classaction lawsuits against Toyota have been dismissed. Toyota and other automakers have also been named incertain class actions filed in Mexico, Canada, Australia, Israel and Brazil, as well as some other actions by states
or territories of the United States. Those actions have not been settled and are being litigated.
Toyota self-reported a process gap in fulfilling certain emissions defect information reporting requirementsof the U.S. Environmental Protection Agency (“EPA”) and California Air Resources Board, including updates on
its repair completion rates for recalled emissions components and certain other reports concerning emissions
related defects. Toyota is involved in discussions with the EPA and the Civil Division of the Southern District of
New York (“SDNY”) on this reporting issue. These agencies have requested certain follow-up information
regarding this reporting issue, and Toyota is cooperating with the request.
Toyota also has various other pending legal actions and claims, including without limitation personal injury
and wrongful death lawsuits and claims in the United States, and is subject to government investigations fromtime-to-time.
Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a
range of reasonably possible loss, if any, for the pending legal matters because (i) many of the proceedings are inevidence gathering stages, (ii) significant factual issues need to be resolved, (iii) the legal theory or nature of theclaims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of othermatters of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Basedupon information currently available to Toyota, however, Toyota believes that its losses from these matters, ifany, beyond the amounts accrued, would not have a material adverse effect on Toyota’s financial position, resultsof operations or cash flows.
The parent company has a concentration of labor supply in employees working under collective bargaining
agreements and a substantial portion of these employees are working under the agreement that will expire on
December 31, 2020.
25. Segment data:
The operating segments reported below are the segments of Toyota for which separate financial information
is available and for which operating income/loss amounts are evaluated regularly by executive management indeciding how to allocate resources and in assessing performance.

F-60

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The major portions of Toyota’s operations on a worldwide basis are derived from the Automotive andFinancial Services business segments. The Automotive segment designs, manufactures and distributes sedans,
minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories. The Financial Services
segment consists primarily of financing, and vehicle leasing operations to assist in the merchandising of theparent company and its affiliated companies products as well as other products. The All Other segment includes
the design, manufacturing and sales of housing, telecommunications and other businesses.
The following tables present certain information regarding Toyota’s industry or geographic segments andoverseas revenues by destination as of and for the years ended March 31, 2017, 2018 and 2019.
Segment operating results and assets As of and for the year ended March 31, 2017:
Yen in millions

Automotive

Financial
Services

All Other

Inter-segment
Elimination/
UnallocatedAmountNet revenues
Sales to external customers . . . . . . . . . .
Inter-segment sales and transfers . . . . . .

25,032,229
49,618

1,783,697
39,903

781,267
539,785—(629,306)

27,597,193—

Total . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . .

25,081,847
23,388,874

1,823,600
1,601,172

1,321,052
1,239,725(629,306)(626,950)

27,597,193
25,602,821

Operating income . . . . . . . . . . . . . . . . . . . . . .

1,692,973

222,428

81,327(2,356)

1,994,372

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in equity method investees . . . . .
Depreciation expenses . . . . . . . . . . . . . . . . . .
Capital expenditure . . . . . . . . . . . . . . . . . . . .

16,156,496
2,745,437
912,797
1,293,564

22,507,613
9,792
671,155
2,182,149

2,170,498—
26,99853,7107,915,579
90,193—12,01448,750,186
2,845,422
1,610,950
3,541,437

Consolidated

Consolidated

As of and for the year ended March 31, 2018:
Yen in millions

Automotive

Financial
Services

All Other

Inter-segment
Elimination/
UnallocatedAmountNet revenues
Sales to external customers . . . . . . . . . .
Inter-segment sales and transfers . . . . . .

26,347,229
50,711

1,959,234
57,774

1,073,047
573,071—(681,556)

29,379,510—

Total . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . .

26,397,940
24,386,805

2,017,008
1,731,462

1,646,118
1,545,306(681,556)(683,925)

29,379,510
26,979,648

Operating income . . . . . . . . . . . . . . . . . . . . . .

2,011,135

285,546

100,8122,369

2,399,862

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in equity method investees . . . . .
Depreciation expenses . . . . . . . . . . . . . . . . . .
Capital expenditure . . . . . . . . . . . . . . . . . . . .

17,054,209
3,054,583
976,735
1,381,122

23,055,981
11,713723,061
2,166,805

2,178,118—
34,23762,447

8,019,941
96,415—(11,667)

50,308,249
3,162,711
1,734,033
3,598,707

F-61

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of and for the year ended March 31, 2019:
Yen in millions

Automotive

Financial
Services

All Other

Inter-segment
Elimination/
UnallocatedAmountNet revenues
Sales to external customers . . . . . . . . . .
Inter-segment sales and transfers . . . . . .

27,034,492
44,5852,120,343
33,204

1,070,846
605,531—(683,320)

30,225,681—

Total . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . .

27,079,077
25,040,193

2,153,547
1,830,726

1,676,377
1,570,839(683,320)(683,622)

30,225,681
27,758,136

Operating income . . . . . . . . . . . . . . . . . . . . . .

2,038,884

322,821

105,538302

2,467,545

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in equity method investees . . . . .
Depreciation expenses . . . . . . . . . . . . . . . . . .
Capital expenditure . . . . . . . . . . . . . . . . . . . .

17,799,376
3,215,856
997,3121,520,366

24,044,700
12,172758,847
2,165,609

2,125,271—
36,216
66,075

7,967,602
85,675—(13,163)

51,936,949
3,313,703
1,792,375
3,738,887

Consolidated

Geographic information As of and for the year ended March 31, 2017:
Yen in millions

Japan

Net revenues
Sales to externalcustomers . . . . . . . .
Inter-segment sales
and transfers . . . . .

NorthAmerica

Europe

Asia

Other

8,798,903 10,033,419 2,517,601 4,279,617 1,967,653
6,031,965

205,672

163,438

540,204

Inter-segment
Elimination/
UnallocatedAmountConsolidated—

193,421 (7,134,700)

27,597,193—

Total . . . . . . . . . 14,830,868 10,239,091 2,681,039 4,819,821 2,161,074 (7,134,700) 27,597,193
Operating expenses . . . . . . 13,628,623 9,927,897 2,693,283 4,384,642 2,102,380 (7,134,004) 25,602,821
Operating income (loss) . .

1,202,245

311,194(12,244)

58,694(696) 1,994,372

Assets . . . . . . . . . . . . . . . . 14,791,969 17,365,237 2,846,469 4,486,021 2,819,935
Long-lived assets . . . . . . . . 3,376,157 5,274,928 313,182 828,619 404,223

6,440,555 48,750,186— 10,197,109

F-62

435,179

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of and for the year ended March 31, 2018:
Yen in millions

Japan

Net revenues
Sales to externalcustomers . . . . . . . .
Inter-segment sales
and transfers . . . . .

NorthAmerica

Europe

Asia

Other

Inter-segment
Elimination/
UnallocatedAmountConsolidated

9,273,672 10,347,266 2,940,243 4,497,374 2,320,955
6,751,172

227,144244,981

650,765—

132,344 (8,006,406)

29,379,510—

Total . . . . . . . . . 16,024,844 10,574,410 3,185,224 5,148,139 2,453,299 (8,006,406) 29,379,510
Operating expenses . . . . . . 14,364,926 10,435,511 3,110,198 4,714,940 2,340,636 (7,986,563) 26,979,648
Operating income . . . . . . .

1,659,918

138,899

75,026433,199

112,663(19,843) 2,399,862

Assets . . . . . . . . . . . . . . . . 15,797,024 16,936,704 3,346,179 4,893,582 2,986,661
Long-lived assets . . . . . . . . 3,511,663 5,179,139 359,355 797,435 420,081

6,348,099 50,308,249— 10,267,673

As of and for the year ended March 31, 2019:
Yen in millions

Japan

Net revenues
Sales to externalcustomers . . . . . . .
Inter-segment sales
and transfers . . . . .

NorthAmerica

Europe

Asia

Other

Inter-segment
Elimination/
UnallocatedAmountConsolidated

9,520,148 10,585,934 3,055,654 4,832,392 2,231,553
7,105,213

231,313183,197

680,639—

101,890 (8,302,252)

30,225,681—

Total . . . . . . . . . 16,625,361 10,817,247 3,238,851 5,513,031 2,333,443 (8,302,252) 30,225,681
Operating expenses . . . . . . 14,933,686 10,702,732 3,113,983 5,055,542 2,242,333 (8,290,140) 27,758,136
Operating income . . . . . . .

1,691,675

114,515

124,868

457,489

91,110Assets . . . . . . . . . . . . . . . . 16,465,702 17,452,216 3,872,301 5,176,990 3,067,270
Long-lived assets . . . . . . . 3,607,843 5,469,262 453,921 729,494 424,974(12,112)2,467,545

5,902,470 51,936,949— 10,685,494“Other” consists of Central and South America, Oceania, Africa and the Middle East.
Revenues are attributed to geographies based on the country location of the parent company or thesubsidiary that transacted the sale with the external customer.
There are no any individually material countries with respect to revenues, and long-lived assets included inother foreign countries.
Unallocated amounts included in assets represent assets held for corporate purposes, which mainly consistof cash and cash equivalents and marketable securities and other securities investments. Such corporate assets
were ¥9,177,953 million, ¥9,386,399 million and ¥9,329,020 million, as of March 31, 2017, 2018 and 2019,respectively.
F-63

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Transfers between industry or geographic segments are made at terms and conditions in the ordinary courseof business. In measuring the reportable segments’ income or losses, operating income consists of revenue lessoperating expenses.
Overseas revenues by destination The following information shows revenues that are attributed to countries based on location of customers,
excluding customers in Japan. In addition to the disclosure requirements under U.S.GAAP, Toyota discloses thisinformation in order to provide financial statements users with valuable information.
Yen in millions
For the years ended March 31,
2017
2018
2019

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,054,431
2,341,364
4,414,236
3,923,621

10,403,647
2,730,915
4,793,110
4,186,666“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

F-64

10,675,298
2,873,737
5,355,991
3,944,854

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Certain financial statements data on non-financial services and financial services businesses The financial data below presents separately Toyota’s non-financial services and financial services
businesses.
Balance sheets Yen in millions
March 31,
2018
2019

Assets
Non-Financial Services Businesses
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts and notes receivable, less allowance for doubtful
accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . .

2,390,524
1,546,459

2,790,212
1,108,540

2,304,676
2,539,497
1,818,687

2,489,105
2,656,396
2,118,922

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,599,843

11,163,175

Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,861,394
5,901,958

11,643,209
6,178,503

Total Non-Financial Services Businesses assets . . . . . . . . . . . . . . .

28,363,195

28,984,887

Financial Services BusinessCurrent assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . .

661,745
221,901
6,348,306
957,122784,492
18,6206,647,771
997,116

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,189,074

8,447,999

Noncurrent finance receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,481,618
1,019,574
4,365,715

10,281,118
808,592
4,506,991

Total Financial Services Business assets . . . . . . . . . . . . . . . . . . . .

23,055,981

24,044,700

Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets in the non-financial services include unallocated corporate assets.

F-65(1,110,927) (1,092,638)
50,308,249

51,936,949

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Yen in millions
March 31,
2018
2019

Liabilities
Non-Financial Services Businesses
Current liabilities
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

541,968
179,9942,556,393
2,980,981
429,616
1,797,724

579,901
173,379
2,616,143
3,075,411
300,703
1,755,737

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,486,676

8,501,274

Long-term liabilities
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

642,691
917,133
1,111,843

784,256
948,377
1,059,237

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,671,667

2,791,870

Total Non-Financial Services Businesses liabilities . . . . . . . . . . . .

11,158,343

11,293,144

Financial Services BusinessCurrent liabilities
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,929,478
4,053,538
40,251
145,127
32,711870,634

5,113,888
4,127,133
39,187
161,105
20,295997,842

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,071,739

10,459,450

Long-term liabilities
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,574,118
14,049678,858

9,974,516
15,029722,279

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,267,025

10,711,824

Total Financial Services Business liabilities . . . . . . . . . . . . . . . . . .

20,338,764

21,171,274

Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,110,934) (1,092,679)

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,386,173

31,371,739

Mezzanine equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

491,974

498,073

Total Toyota Motor Corporation shareholders’ equity . . . . . . . . . . . . . . . . . .

18,735,982

19,348,152

Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

694,120

718,985

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,430,102

20,067,137

Total liabilities, mezzanine equity and shareholders’ equity . . . . .

50,308,249

51,936,949

F-66

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Statements of income Yen in millions
For the years ended March 31,
2017
2018
2019

Non-Financial Services Businesses
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,845,453

27,448,165

28,133,676

Costs and expenses
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . .

21,557,194
2,511,647

22,613,450
2,721,362

23,400,550
2,591,249

Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . .

24,068,841

25,334,812

25,991,799

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,776,612

2,113,353

2,141,877

Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200,370

222,326(161,608)

Income before income taxes and equity in earnings of affiliatedcompanies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,976,982

2,335,679

1,980,269

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . .

562,452
360,130

738,763467,718580,031357,527

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,774,660

2,064,634

1,757,765

Less - Net income attributable to noncontrolling interests . . . . . . . .

(89,337)(89,533)(97,500)

Net income attributable to Toyota Motor Corporation- Non-Financial Services Businesses . . . . . . . . . . . . . . . . . . . . . .

1,685,323

1,975,101

1,660,265

Financial Services BusinessNet revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,823,600

2,017,008

2,153,547

Costs and expenses
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . .

1,221,268
379,904

1,320,348
411,114

1,418,636
412,090

Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . .

1,601,172

1,731,462

1,830,726

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

222,428

285,546

322,821

Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5,618)(794)(17,658)

Income before income taxes and equity in earnings of affiliatedcompanies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

216,810284,752

305,163

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . .

66,583
1,930(234,356)
2,365

79,903
2,539

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

152,157

521,473

227,799

Less - Net income attributable to noncontrolling interests . . . . . . . .

(6,518)(2,589)(5,214)

Net income attributable to Toyota Motor Corporation- Financial Services Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .

145,639

518,884

222,585

Eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

147

(2)

23

Net income attributable to Toyota Motor Corporation . . . . . . . . . . .

1,831,109

2,493,983

1,882,873

F-67

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Statements of cash flows Yen in millions
Yen in millions
For the year ended March 31, 2017
For the year ended March 31, 2018
Non-Financial Financial
Non-Financial Financial
Services
Services
Services
Services
Businesses
Business Consolidated Businesses
Business Consolidated
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (reversal) for doubtful accounts and credit
losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and severance costs, less payments . . . . .
Losses on disposal of fixed assets . . . . . . . . . . . . .
Unrealized losses (gains) on marketablesecurities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . .
Changes in operating assets and liabilities, andother . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . .
Cash flows from investing activities
Additions to finance receivables . . . . . . . . . . . . . . . . . .
Collection of and proceeds from sales of financereceivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to fixed assets excluding equipment leased
to others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to equipment leased to others . . . . . . . . . . . .
Proceeds from sales of fixed assets excluding
equipment leased to others . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of equipment leased to others . . . .
Purchases of marketable securities and security
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of and maturity of marketablesecurities and security investments . . . . . . . . . . . . . .
Payment for additional investments in affiliatedcompanies, net of cash acquired . . . . . . . . . . . . . . . .
Changes in investments and other assets, and other . . .
Net cash used in investing activities . . . . . . .

1,774,660

152,157

1,926,985

2,064,634

521,473

2,586,106

939,795

671,155

1,610,950

1,010,972

723,061

1,734,033

6,519
21,79630,461

92,1471,457
212

98,66623,25330,673(74)
5,027
35,01076,143(741)
279

76,0694,286
35,2894,422(59,668)(360,130)

2,651
6,504
(1,930)7,073(53,299)(362,060)

459
64,143(467,718)

387(302,103)(2,365)846(237,961)(470,083)

206,455

258,091

286,247

205,434

312,828

494,5432,564,310

1,182,444

3,568,488

2,917,887

1,328,962

4,223,128—(22,894,114) (13,636,694)—(25,153,088) (15,058,516)—

22,006,010 12,927,981—

24,117,335 14,046,312(1,206,738)(152,550)
40,18972,659(17,140) (1,223,878)(2,165,009) (2,317,559)
1,049
1,165,619(1,276,788)(155,114)(14,329) (1,291,117)(2,152,476) (2,307,590)

41,2381,238,278

70,75563,402

1,065
1,147,870

71,8201,211,272(2,104,202)(412,806) (2,517,008)(2,273,805)(779,111) (3,052,916)

1,435,267

466,274

1,901,541

1,762,189

761,349

2,523,538

44,274
582,649—(60,345)

44,274
571,888(576)
260,015—(106,597)(576)
197,681(1,288,452)(1,910,462) (2,969,939)(1,549,922)(2,177,982) (3,660,092)

111,727(82,840)
51,5234,541,541 4,603,446(3,773,644) (3,845,554)
233,331
273,037

212,387(170,072)(122,222)

4,666,579 4,793,939(4,314,294) (4,452,338)
461,052
347,738

Cash flows from financing activities
Proceeds from issuance of long-term debt . . . . . . . . . .
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in short-term borrowings . . . . . . . .
Dividends paid to Toyota Motor Corporation classshareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporation commonshareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . . . . . .
Reissuance (repurchase) of treasury stock . . . . . . . . . .

(3,697)—(3,697)(6,194)—(6,194)(634,475)(63,936)(703,986)———(634,475)(63,936)(703,986)(620,698)(63,764)(447,818)———(620,698)(63,764)(447,818)

Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,325,684)

1,001,228(375,165)(1,218,381)

813,337(449,135)

Effect of exchange rate changes on cash and cash
equivalents and restricted cash and cash equivalents . . . .

(11,262)(2,224)(13,486)(16,124)(27,464)(43,588)

Net increase (decrease) in cash and cash equivalents andrestricted cash and cash equivalents . . . . . . . . . . . . . . . . .

(61,088)

270,986

209,898

133,460(63,147)

70,313

Cash and cash equivalents and restricted cash and cash
equivalents at beginning of year . . . . . . . . . . . . . . . . . . . .

2,318,152

621,276

2,939,428

2,257,064

892,262

3,149,326

Cash and cash equivalents and restricted cash and cash
equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . .

2,257,064

892,262

3,149,326

2,390,524

829,115

3,219,639

F-68

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Yen in millions
For the year ended March 31, 2019
Non-Financial
Financial
Services
Services
Businesses
Business
Consolidated
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (reversal) for doubtful accounts and credit losses . . . . . . . . . . . .
Pension and severance costs, less payments . . . . . . . . . . . . . . . . . . . . . . . .
Losses on disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized losses (gains) on marketable securities . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, and other . . . . . . . . . . . . . . . . .

1,757,765

227,799

1,985,587

1,033,528(1,375)30,47733,676338,626(110,346)(357,527)(17,488)758,847
81,440
1,168
2,226
846
23,742(2,539)15,557

1,792,375
80,06531,64535,902
339,472(86,594)(360,066)(51,789)

2,707,336

1,109,086

3,766,597——(1,435,964)(137,314)
63,95560,657(1,737,107)(26,000,249)
24,925,930(16,761)(2,148,848)
1,482
1,324,417(103,248)(15,884,610)
14,859,103(1,452,725)(2,286,162)
65,437
1,385,074(1,840,355)

2,255,635

443,1632,698,798

5,010(268,946)—(4,130)5,010(246,811)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,194,074)(1,578,244)(2,697,241)

Cash flows from financing activities
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporation class shareholders . . . . . . . . . . . .
Dividends paid to Toyota Motor Corporation common shareholders . . . . . . . . .
Dividends paid to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reissuance (repurchase) of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

286,085(142,556)
49,161(8,690)(636,116)(69,367)(549,637)

4,747,506(4,336,250)
144,277————

5,000,921(4,442,232)
164,282(8,690)(636,116)(69,367)(549,637)

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . .

(1,071,120)

555,533(540,839)

Effect of exchange rate changes on cash and cash equivalents and restricted cash
and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(42,454)813(41,641)

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Additions to finance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collection of and proceeds from sales of finance receivables . . . . . . . . . . . . . . .
Additions to fixed assets excluding equipment leased to others . . . . . . . . . . . . .
Additions to equipment leased to others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of fixed assets excluding equipment leased to others . . . . .
Proceeds from sales of equipment leased to others . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities and security investments . . . . . . . . . . . . . . .
Proceeds from sales of and maturity of marketable securities and security
investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for additional investments in affiliated companies, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in investments and other assets, and other . . . . . . . . . . . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents and restricted cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents and restricted cash and cash equivalents at beginning ofyear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

399,688

87,188486,876

2,390,524

829,115

3,219,639

Cash and cash equivalents and restricted cash and cash equivalents at end of year . .

2,790,212

916,3033,706,515

F-69

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
26. Net revenues
Summary by business segments and products The table below shows Toyota’s net revenues from external customers by business and by product category.
Yen in millions
For the year ended March 31, 2019

Sales of products
Automotive
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parts and components for overseas production . . . . . . . . . . .
Parts and components for after service . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,066,190
625,483
2,093,437
1,249,382

Total automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,034,492
1,070,846

Total sales of products . . . . . . . . . . . . . . . . . . . . . .
Financial services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28,105,338
2,120,343

Total net revenues . . . . . . . . . . . . . . . . . . . . .

30,225,681

The majority of sales of products are revenues recognized from contracts with customers based on ASC 606“Revenue from Contracts with customers,” and receivables related to such revenues are recognized as “Tradeaccounts and notes receivable, less allowance for doubtful accounts.” For the year ended March 31, 2019,¥84,230 million of financial service revenues were accounted for under ASU 2014-09.
Contract liabilities Contract liabilities consist of the following:
Yen in millions
April 1, 2018
March 31, 2019

Contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

519,422675,018

Contract liabilities are mainly related to advances received from customers. On the consolidated financial
statements, contract liabilities are included in “Other current liabilities” or “Other long-term liabilities”. For theyear ended March 31, 2019, the amount of revenue recognized which was included in the contract liability
balance as of April 1, 2018 was ¥336,206 million.
Performance obligations As of March 31, 2019, which is the end of the reporting period, the aggregate amount of transaction priceallocated to unsatisfied performance obligations related to contracts that have original expected durations inexcess of one year was ¥553,218 million.
The main contents of unsatisfied performance obligations related to contracts are insurance revenues andmaintenance revenues.
For insurance revenues, we receive the payment agreed upon in the contract at the inception of the contract,
and revenue is recognized over the term of the contract, which ranges from 3 to 120 months. As of March 31,
2019, the unsatisfied performance obligations related to insurance revenues was ¥212,384 million, and we expect
to recognize as revenue ¥63,611 million in fiscal 2020, and ¥148,773 million thereafter.
F-70

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For maintenance revenues, we receive the payment agreed upon in the contract at the inception of thecontract, and revenue is recognized over the term of the contract, which ranges from 18 to 84 months.
Unsatisfied performance obligations for sales of products related to contracts that have an original expected
duration of one year or less have been excluded from this disclosure.
27. Per share amounts:
Reconciliations of the differences between basic and diluted net income attributable to Toyota Motor
Corporation per common share for the years ended March 31, 2017, 2018 and 2019 are as follows:

For the year ended March 31, 2017
Net income attributable to Toyota Motor Corporation . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation
Model AA Class Shareholders . . . . . . . . . . . . . . . . . . . . . . .
Basic net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities
Model AA Class Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed exercise of dilutive stock options . . . . . . . . . . . . . . .
Diluted net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the year ended March 31, 2018
Net income attributable to Toyota Motor Corporation . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation
Model AA Class Shareholders . . . . . . . . . . . . . . . . . . . . . . .
Basic net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities
Model AA Class Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed exercise of dilutive stock options . . . . . . . . . . . . . . .
Diluted net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the year ended March 31, 2019
Net income attributable to Toyota Motor Corporation . . . . . . . . . . .
Accretion to Mezzanine equity . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends to Toyota Motor Corporation
Model AA Class Shareholders . . . . . . . . . . . . . . . . . . . . . . .

F-71

Yen inmillions

Thousandsof shares

Net income
attributable to
Toyota Motor
Corporation

Weightedaveragecommon shares

Yen
Net income
attributable to
Toyota Motor
Corporation
per common
share1,821,314

3,008,088

605.479,795(6)47,100638

1,831,103

3,055,826

599.222,481,692

2,947,365842.0012,291(4)

47,100301

2,493,979

2,994,766

1,831,109(4,849)(4,946)2,493,983(4,849)(7,442)

1,882,873(4,850)(9,938)832.78TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Basic net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities
Model AA Class Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed exercise of dilutive stock options . . . . . . . . . . . . . . .
Diluted net income attributable to Toyota Motor Corporation
per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen inmillions

Thousandsof shares

Net income
attributable to
Toyota Motor
Corporation

Weightedaveragecommon shares

Yen
Net income
attributable to
Toyota Motor
Corporation
per common
share1,868,085

2,871,534

650.55

14,788(0)47,10040

1,882,873

2,918,674

645.11

In addition to the disclosure requirements under U.S.GAAP, Toyota discloses the information below inorder to provide financial statements users with valuable information.
The following table shows Toyota Motor Corporation shareholders’ equity per share as of March 31, 2018and 2019. Toyota Motor Corporation shareholders’ equity per share amounts are calculated by dividing Toyota
Motor Corporation shareholders’ equities’ amount at the end of each period by the number of shares issued andoutstanding, excluding treasury stock at the end of the corresponding period.
Yen inmillions

As of March 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of March 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Toyota Motor
Corporation
shareholders’equityThousandsof shares
Common sharesissued andoutstandingat the end of
the year(excluding
treasurystock)

Toyota Motor
Corporation
shareholders’equityper share

18,735,982
19,348,152

2,909,924
2,832,439

6,438.65
6,830.92

Yen

28. Fair value measurements:
In accordance with U.S.GAAP, Toyota classifies fair value into three levels of input as follows which areused to measure it.
Level 1:

Quoted prices in active markets for identical assets or liabilities

Level 2:

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical orsimilar assets or liabilities in markets that are not active; valuation of assets or liabilities using
inputs, other than quoted prices, that are observable

Level 3:

Valuation of assets or liabilities using unobservable inputs which reflect the reporting entity’s
assumptions

F-72

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the fair values of the assets and liabilities measured at fair value on arecurring basis as of March 31, 2018 and 2019. Transfers between levels of the fair value are recognized at theend of their respective reporting periods:

Level 1

Yen in millions
March 31, 2018
Level 2
Level 3

Total

AssetsCash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,897
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Marketable securities and other securities investments
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . 4,778,019
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,582,115
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
169,282
Investments measured at net asset value . . . . . . . . . . . .
—Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . .
—774,209400,000——

819,106
400,000

1,523,227—
50,746—
257,795

7,488
—
—
—
9

6,308,734
2,582,115
220,028
516,951
257,804

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,574,313

3,005,977

7,497

11,104,738

Liabilities
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . .

—(194,935) (2,221)(197,156)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—(194,935) (2,221)(197,156)

Level 1

Yen in millions
March 31, 2019
Level 2
Level 3

Total

594,200
520,000——

843,393520,000

1,452,475 15,171
—
—
6,007
—
—
—
200,256
77

5,846,189
2,154,951
195,396
98,451
200,333

AssetsCash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
249,193
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Marketable securities and other securities investments
Public and corporate bonds . . . . . . . . . . . . . . . . . . . . . . 4,378,543
Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,154,951
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
189,389
Investments measured at net asset value . . . . . . . . . . . .
—Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . .
—Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,972,076

2,772,938

15,2489,858,713

Liabilities
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . .

—(231,915)—(231,915)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—(231,915)—(231,915)

Certain investments that are measured at fair value using the net asset value per share (or its equivalent)
practical expedient have not been classified in the fair value hierarchy.
The following is description of the assets and liabilities measured at fair value, information about thevaluation techniques used to measure fair value, key inputs and significant assumptions:

F-73

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Cash equivalents and time deposits Cash equivalents include money market funds and other investments with original maturities of threemonths or less. Cash equivalents classified in Level 2 include negotiable certificate of deposit with original
maturities of three months or less. These are measured at fair value using primarily observable interest rates in
the market. Time deposits consist of negotiable certificates of deposit with original maturities over three months.
These are measured at fair value using primarily observable interest rates in the market.
Marketable securities and other securities investments Marketable securities and other securities investments include public and corporate bonds, common stocks
and other investments. Public and corporate bonds include government bonds. Japanese bonds and foreign bonds
including U.S., European and other bonds represent 16% and 84% (as of March 31, 2018) and 17% and 83% (asof March 31, 2019) of public and corporate bonds, respectively. Listed stocks on the Japanese stock markets
represent 93% and 91% of common stocks as of March 31, 2018 and 2019, respectively. Toyota uses primarily
quoted market prices for identical assets to measure fair value of these securities.
Derivative financial instruments See note 21 to the consolidated financial statements about derivative financial instruments. Toyota primarily
estimates the fair value of derivative financial instruments using industry-standard valuation models that require
observable inputs including interest rates and foreign exchange rates, and the contractual terms. The usage ofthese models does not require significant judgment to be applied. These derivative financial instruments areclassified in Level 2. In other certain cases when market data is not available, key inputs to the fair value
measurement include quotes from counterparties, and other market data. Toyota assesses the reasonableness ofchanges of the quotes using observable market data. These derivative financial instruments are classified in
Level 3. Toyota’s derivative fair value measurements consider assumptions about counterparty and Toyota’s own
non-performance risk, using such as credit default probabilities.

F-74

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on arecurring basis for the periods ended March 31, 2017, 2018 and 2019:
Yen in millions
For the year ended March 31, 2017Marketablesecurities andDerivative
other securities
financialinvestments
instruments
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses)
Included in income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . . . . . . . .
Purchases and issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,334

2,849

13,183

(16)
60
1,126
(2,282)(275)(7,310) (7,326)
—
60
—
1,126
(2,693) (4,975)
(368)
(643)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,947(7,522)

1,425

Yen in millions
For the year ended March 31, 2018
Marketablesecurities andDerivative
other securities
financialinvestments
instruments
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses)
Included in income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . . . . . . . .
Purchases and issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,947(7,522)

1,425

17
(12)
3,860
(4,739)
(585)

805
—
—
4,320
185

822
(12)
3,860
(419)
(400)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,488(2,212)

5,276

Yen in millions
For the year ended March 31, 2019Marketablesecurities andDerivative
other securities
financialinvestments
instruments
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gains (losses)
Included in income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in other comprehensive income (loss) . . . . . . . . . . . . . . .
Purchases and issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,488(2,212)

182
5,254(2,875)
337

3,169
3,170
—
82
—
5,254
(784) (3,659)
(96)
241

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,287

F-75

77

5,276

10,364

TOYOTA MOTOR CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)“Included in income (loss)” in marketable securities and other securities investments and derivative
financial instruments are included in “Other income (loss), net” and “Cost of financing operations” in theaccompanying consolidated statements of income, respectively.
In the reconciliation table above, derivative financial instruments are presented net of assets and liabilities.
“Other” includes the currency translation adjustments for the years ended March 31, 2017, 2018 and 2019.
As of March 31, 2019, the Level 3 assets and liabilities measured at fair value on a recurring basis are notsignificant.
Certain assets and liabilities are measured at fair value on a nonrecurring basis. During the years ended
March 31, 2018 and 2019, Toyota measured certain finance receivables at fair value of ¥45,492 million and¥58,611 million based on the collateral value, resulting in loss of ¥4,190 million and loss of ¥3,305 million,
respectively. This fair value measurement on a nonrecurring basis is classified in Level 3. See note 22 to theconsolidated financial statements for the fair value measurement. These Level 3 financial assets are notsignificant.
29. Significant subsequent events:
At the Meeting of the Board of Directors held on May 9, 2019, Toyota resolved to conclude contracts aimed
toward the establishment of a new joint venture (“Prime Life Technologies Corporation” or “joint venture”)
related to a town development business with Panasonic Corporation.
Toyota will make Toyota Housing Corporation and Misawa Homes Co., Ltd. its wholly-owned subsidiaries
and thereafter will transfer all of the outstanding shares of those two subsidiaries to the joint venture by a joint
share transfer. Management is evaluating the impact of this agreement on Toyota’s consolidated financial
statements.

F-76

ITEM 19. EXHIBITS
Index to Exhibits
1.1

Amended and Restated Articles of Incorporation of the Registrant (English translation)(incorporated by reference to Exhibit 1.1 to Toyota’s Annual Report on Form 20-F for the fiscal
year ended March 31, 2015, filed with the SEC on June 24, 2015 (file no. 001-14948))

1.2

Amended and Restated Regulations of the Board of Directors of the Registrant (English
translation)

1.3

Amended and Restated Regulations of the Audit & Supervisory Board of the Registrant (English
translation) (incorporated by reference to Exhibit 1.3 to Toyota’s Annual Report on Form 20-F
for the fiscal year ended March 31, 2016, filed with the SEC on June 24, 2016 (file no.
001-14948))

2.1

Amended and Restated Share Handling Regulations of the Registrant (English translation)(incorporated by reference to Exhibit 2.1 to Toyota’s Annual Report on Form 20-F for the fiscal
year ended March 31, 2015, filed with the SEC on June 24, 2015 (file no. 001-14948))

2.2

Form of Deposit Agreement among the Registrant, The Bank of New York (predecessor of The
Bank of New York Mellon), as depositary, and the owners and beneficial owners from time totime of American Depositary Receipts, including the form of American Depositary Receipt(incorporated by reference to Exhibit 1 to Toyota’s Registration Statement on Form F-6, filedwith the SEC on November 7, 2006 (file no. 333-138477))

2.3

Form of ADR (included in Exhibit 2.2)

2.4

Description of Securities

8.1

List of Principal Subsidiaries (See “Organizational Structure” in “Item 4. Information on the
Company”)

11.1

Code of Ethics of the Registrant applicable to its members of the board of directors and operating
officers, including its principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions (English translation)

12.1

Certifications of the Registrant’s President and Executive Vice President, both Members of theBoard, pursuant to Section 302 of the Sarbanes-Oxley Act

13.1

Certifications of the Registrant’s President and Executive Vice President, both Members of theBoard, pursuant to Section 906 of the Sarbanes-Oxley Act

15.1

Consent of Independent Registered Public Accounting Firm

101.INSXBRL Instance Document

101.SCHXBRL Taxonomy Extension Schema

101.CALXBRL Taxonomy Extension Calculation Linkbase

101.DEFXBRL Taxonomy Extension Definition Linkbase

101.LABXBRL Taxonomy Extension Label Linkbase

101.PREXBRL Taxonomy Extension Presentation Linkbase132

SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this annual report on its behalf.
TOYOTA MOTOR CORPORATION

Date: June 21, 2019

By:/s/ Masayoshi Shirayanagi

Name:
Title:

Masayoshi Shirayanagi
Operating Officer

For reference purpose only
Exhibit 1.2(TRANSLATION)REGULATIONS OF
THE BOARD OF DIRECTORSOFTOYOTA MOTOR CORPORATION
Established: February 27, 1952
As last amended on June 1, 2019
(Aa004-26)
Article 1. (Regulations of the Board of Directors)
Except as provided for in laws, ordinances or the Articles of Incorporation, matters relating to the Board of
Directors of Toyota Motor Corporation (the “Company”) shall be governed by the provisions of theseRegulations.
Article 2. (Purpose and Composition)
1.

The Board of Directors shall be composed of all the Members of the Board of Directors and shall makedecisions on the execution of business, supervise the execution of the duties of Members of the Board of
Directors, and designate and dismiss the Representative Directors.

2.

Audit & Supervisory Board Members shall be present and, whenever necessary, give their opinions at a
meeting of the Board of Directors.

3.

The Board of Directors is able to request Operating Officers and other members admitted by the Chairman
to be present and give explanation or comment. However, Operating Officers and other members admitted
by the Chairman are not able to participate in resolutions.

Article 3. (Person to Convene Meeting and Notice of Meeting)1.

A meeting of the Board of Directors shall be convened by the Chairman of the Board of Directors or the
President, Member of the Board of Directors. In the event that the positions of both the Chairman of theBoard of Directors and the President, Member of the Board of Directors are vacant or that both of them areprevented from convening, such meeting shall be convened by the Vice Chairman of the Board of Directors,
or other Members of the Board of Directors in that order and according to their rank, if there are multiple
persons holding the same position.

2.

Notice of convening a meeting of the Board of Directors shall be dispatched to each Member of the Boardof Directors and each Audit & Supervisory Board Member at least three (3) days before the date of themeeting. In the case of urgency, however, such period may be shortened.

3.

A meeting of the Board of Directors may be held without following the convening procedure, if consented
to by all the Members of the Board of Directors and the Audit & Supervisory Board Members.

Article 4. (Chairmanship and Method of Adopting Resolutions)
1.

The Chairman of the Board of Directors or the President, Member of the Board of Directors shall preside aschairman at a meeting of the Board of Directors. In the event that the positions of both the Chairman of theBoard of Directors and the President, Member of the Board of Directors are vacant or that both of them areprevented from so presiding as chairman, the Vice Chairman of the Board of Directors or other Members of
the Board of Directors shall preside as chairman in that order and according to their rank in the case that
there are multiple persons holding the same position.

2.

Resolutions of the Board of Directors shall be adopted at meetings at which a majority of the Members of
the Board of Directors who are entitled to vote shall be present, by a majority of the Members of the Boardof Directors so present.

3.

With respect to matters to be resolved by the Board of Directors, the Company shall deem that such matterswere approved by a resolution of the Board of Directors when all the Members of the Board of Directors
express their agreement in writing or by electronic records. Provided, however, that this provision shall not
apply when any Audit & Supervisory Board Member expresses his/her objection to such matters.

4.

With respect to matters to be reported to the Board of Directors, Members of the Board of Directors,
Audit & Supervisory Board Members or Accounting Auditors shall not be required to report such matters to
the Board of Directors when such matters are notified to all the Members of the Board of Directors andAudit & Supervisory Board Members.

Article 5. (Matters to be Resolved)
The following matters shall be subject to the resolution of the Board of Directors:(1) Matters provided for in the Corporation Act or other laws or ordinances;(2) Matters provided for in the Articles of Incorporation;(3) Matters delegated to the Board of Directors by resolution of a general meeting of shareholders; and(4) Other important managerial matters.
Article 6. (Matters to Be Reported)
Members of the Board of Directors shall report to the Board of Directors on the following matters:(1) State of execution of business and such other matters as are provided for in the Corporation Act orother laws or ordinances; and(2) Such other matters as the Board of Directors may deem necessary.
Article 7. (Meetings and Minutes)
1.

A meeting of the Board of Directors shall be held in Japanese, minutes shall be prepared each time ameeting of the Board of Directors is held and such minutes shall be kept on file at the head office for ten
years.

2.

Minutes shall set forth matters provided for in the laws or ordinances and the Members of the Board of
Directors and Audit & Supervisory Board Members present shall sign or affix their names and seals thereto.

3.

Minutes shall be prepared in Japanese.

Article 8. (TMC Executives’ Meeting)
1.

The Board of Directors shall establish TMC Executives’ meeting in which important matters are discussed
in order to enhance efficiency and effectiveness of decision-making on management and execution of thecompany.

2.

Matters related to the establishment, function changes, and abolition of TMC Executives’ meeting shall be
submitted to the Board of Directors.
Supplementary Provisions

Article 1. (Effective Date)
These Regulations shall become effective as of June 1, 2019.
Article 2. (Amendment to Regulations)
Any amendment to these Regulations shall be made by a resolution of the Board of Directors.

MATTERS TO BE SUBMITTED TO THE BOARD OF DIRECTORS
General Rules of the “Matters To Be Submitted To The Board of Directors” (this “List”)
1.

Pursuant to Article 5(1), (2) and (3) of the Regulations of the Board of Directors, matters and items definedin I-1, 2 and 3 of this List shall, without fail, be submitted to the Board of Directors.

2.

In addition, pursuant to Article 5(4) of the Regulations of the Board of Directors, for matters and items
defined in I-4 of this List, materiality must be appropriately judged and matters must be submitted
accordingly to the Board of Directors.

3.

Materiality shall be determined by the Executive(s) and others responsible for their divisions and for theaccounting areas,* taking into consideration “submission standards,” “special rules,” “definitions” and“explanations” in this List. If the amount of transaction does not meet the submission standards at first, butthere occurs a possibility that it may exceed such standards later on, such transaction shall be submitted to
the Board of Directors at the time such possibility arises.

4.

Pursuant to Article 6 of the Regulations of the Board of Directors, matters and items defined in II of this
List shall be reported to the Board of Directors without delay.

*

Business Unit/Company President or Executive Vice President, or Chief Officer / Chief Executive Officer
or Deputy Chief Officer (TMC Executives’ meeting : Chairman of applicable meetings / Divisions notbelonging to a group: Operating Officer or Executive General Manager responsible for the applicabledivision)Standard for re-submission
If material changes are made to a matter previously submitted to the Board of Directors (such as 20% ormore of increase in the amount approved by the Board of Directors), such matter shall be re-submitted to theBoard of Directors.
I. Matters to be Resolved:
1.

Matters provided for in the Companies Act or other laws or ordinances:Classifications

Items

Shares; stockacquisition rights:

Fixing the record date

Relevant Articles of Applicable Law

Companies Act
Article 124

Acquisition of the Company’s own shares heldby its subsidiaries

Article 163

Cancellation of the Company’s own shares

Article 178

Share-splits

Article 183

Free Allotment of shares

Article 186

Reduction of the number of shares constituting
one unit (tangen) of shares or abolition of theprovisions which define such number

Article 195

Auction of shares held by shareholders whose
whereabouts are unknown

Article 197

Issuance of new shares

Article 201

Disposition of the Company’s own shares

Article 201

Classifications

Items

Relevant Articles of Applicable Law

Approval of undertaking a contract for the total
number of shares of subscription or similar ones
with transfer restrictions

Articles 205 and 244

Issuance of stock acquisition rights

Article 240

Approval of transferring stock acquisition rights
with transfer restrictions

Article 265

Acquisition of stock acquisition rights withacquisition clause

Articles 273 and 274

Cancellation of stock acquisition rights

Article 276

General meetings ofshareholders:Free Allotment of stock acquisition rights

Board of Directors;
Members of theBoard of Directors:

Accounts:

Bonds:

Others:

Article 278

Convening of a general meeting of shareholders

Article 298

Designation and dismissal of Representative
Directors

Article 362

Approval of Members of the Board of Directors’competing transactions

Article 365

Approval of Members of the Board of Directors’transactions for their own account

Article 365

Approval of Members of the Board of Directors’transactions involving conflict of interests

Article 365

Approval of financial statements, business
reports and the accompanying detailed
statements

Article 436

Approval of extraordinary financial statements

Article 441

Approval of consolidated financial statements

Article 444

Reduction in the amount of capital (withconditions)

Article 447

Reduction in the amount of reserves (withconditions)

Article 448

Offering of bonds

Article 362

Issuance of bonds with stock acquisition rights

Article 240

Disposition
property*1

Article 362

andacquisitionofimportant

Borrowing of a large amount of money

Article 362

Appointment and removal of managers andother important employees

Article 362

Establishment, alteration and abolition of branch
offices and other important organizations

Article 362

Classifications

2.

Relevant Articles of Applicable Law

Development of a system to ensure theappropriateness of business operations of theCompany and business group consisting of theparent company and subsidiaries

Article 362

Other important business execution

Article 362

Matters provided for in the Articles of Incorporation:
Relevant Articlesof the Articles ofIncorporation

Classifications

Items

Shares:Acquisition of Company’s own shares

Articles 7 and 46

Acquisition of shares with acquisition clause

Article 19

Selection of registration agent and its location ofbusiness

Article 9

Amendment to the Share Handling Regulations

Article 10

Approval of transferring shares with transfer
restrictions

Article 21

The order in which to assume chairmanship of ageneral meeting of shareholders

Article 25

Appointment and removal of Members of theBoard of Directors with specific titles

Article 33

Amendment to the Regulations of the Board of
Directors

Article 32

Exemption of Members of the Board of
Directors from their liabilities

Article 35

General meeting ofshareholders:
Board of Directors;
Members of theBoard of Directors:

Audit & Supervisory
Board Members:
Exemption of Audit & Supervisory Board
Members from their liabilities

Article 42

Accounts:

Distribution of interim dividends from surplus

Article 46

Reduction in the amount of reserves

Article 46

Other disposition of surplus

Article 46

Distribution of dividends from surplus

Article 46

Appointment of Honorary Chairman and Senior
Advisor

Article 34

Others:3.

Items

Matters delegated to the Board of Directors by resolution of a general meeting of shareholders:Classifications

Items

Shares:Acquisition of Company’s own shares
Issuance of new shares or stock acquisition rights on favorable conditions

Others:Other matters delegated to the Board of Directors

4.

Other important managerial matters:
Classifications

Items

Management:

Business Plan (profit planning, Hoshin Guideline, etc.)
Important business alliances and important joint ventures
Launching of new projects
Short-form and simplified corporate splits
Short-form and simplified share exchanges
Simplified acquisition of an entire business of another company
Approval of interim and quarterly accounts
Approval of consolidated accounts (including interim and quarterly accounts)
Decision on filing, appealing or closing important disputes
Establishment, changes in functions, and abolition of TMC Executives’ meeting
Other important matters

Personnel affairs;organization:

Members of the Board of Directors, Operating Officers, and “senior professional/
senior management” (kanbushoku) assumption of offices in other companies (in thecase of new offices in listed companies only)
Members of the Board of Directors and Operating Officers’ assumption of offices inimportant associations (in the case of new offices only)
Assignment of Members of the Board of Directors and Operating Officers to takecharge of group, field, plant, technical center and any other organizations similar
thereto (Excluding changes in the same organization)
Treatment and discipline relating to Members of the Board of Directors andOperating Officers
Appointment and removal of Operating Officers
Appointment and removal of Senior Technical Executive (gikan) and Advisor(komon)Approval of Operating Officers’ competing transactions
Approval of Operating Officers’ transactions for their own accountApproval of Operating Officers’ transactions involving conflict of interests
Changes in important working conditions
Other important matters

Production;
Sales;
Technology
development:

Long-term or annual production, shipment or sales plans
Long-term or annual equipment plans
Licensing, acquisition or transfer of important intellectual property rights
Other important matters

Group management: Incorporation, dissolution, acquisition and transfer of subsidiaries
Important group managerial matters
Other important matters
Others:Other important managerial matters

II. Matters to be reported:
Items

Relevant Articles of Applicable Law

Companies Act
State of execution of business

Article 363

Important facts about a competing transaction

Article 365

Important facts about any Member of the Board of
Director’s transactions for his/her own accounts

Article 365

Important facts about any transactions involving conflictof interests

Article 365

Members of the Board of Directors, Operating Officers and“senior professional/senior management” (kanbushoku)
retirement from offices in other companies (Listedcompanies only)
Members of the Board of Directors and Operating
Officers’ retirement from offices in important associations
Audit & Supervisory Board Members’ assumption (in thecase of new offices only) and retirement from offices inother companies (Listed companies only)
Audit & Supervisory Board Members’ assumption (in thecase of new offices only) and retirement from offices inimportant associations
Monthly production/shipment/sales results
Important matters, such as incorporation of subsidiaries bya joint venture company
Management status of a system to ensure the appropriatenessof business operations of the Company and business groupconsisting of the parent company and subsidiaries

Article 362

Other important matters
1. Out of “I. Matters to be Resolved” of the “Matters to be Submitted to the Board of Directors”, the mattersdescribed in “Others” in “1. Matters provided for in the Companies Act or other laws or ordinances” shall be
submitted to the Board of Directors in accordance with the standards contained in this Appendix 1.
Appendix 1
Items

Standard(1) Disposition and acquisition of important property:
1purchase and disposition of land (excluding
land for business use)

5,000,000,000 Yen*2 or more per transaction2acquisition and transfer of leaseholds

5,000,000,000 Yen*3 or more per transaction

3

investments (excluding fund management
investments)

5,000,000,000 Yen*4 or more per transaction

4

capital expenditure (excluding model change
and renewal of aging assets)

30,000,000,000 Yen*5 or more per transaction

ItemsStandard

5loans (excluding renewal of bills and notes,
and loans as part of financial business)

5,000,000,000 Yen*6 or more per transaction, or loans
outstanding of 5,000,000,000 Yen*6 or more percompany6discharge of debts

200,000,000 Yen or more per transaction

7

donations (excluding those via Japan
Automobile Manufacturers Association, Inc.)

200,000,000 Yen or more per transaction(2) Disposition and Acquisition of important property

Important matters will be submitted at the initial
phase (overview, the maximum amount of money,etc.).
Discussion of overall project (delegation ofoperational details).
Multiple year appropriation is allowed if necessary.
(Report is required.)(3) Borrowings of large amounts of money:
1borrowing

5,000,000,000 Yen or more per transaction

2

guarantee of obligations

5,000,000,000 Yen*7 or more per transaction, or
outstanding guarantee of obligation of 5,000,000,000
Yen*6 or more per company(4) Appointment and removal of managers and otherimportant employees

Assignment of “senior professional/senior
management” (kanbushoku) to take charge of group,
field, plant, technical center and any otherorganizations similar thereto (excluding transfers
within the same organization)
Appointment of operating officers at membershipcompanies (limited liability company, etc.) andlimited liability partnerships, and removal of
operating officers at such companies*8(5) Establishment, alteration and abolition of branch
offices and other important organizations

Establishment, alteration and abolition of group,
field, plant, technical center and any other similarorganizations(*1) Purchase and disposition of land
In the case where any of the acquisition price, book value, or transaction price is 5,000,000,000 Yen or more
per transaction, a submission shall be required.
(*2) Definition of “leaseholds”“Leasehold” is a right which is obtained by a temporary payment of concession money as a setup fee forleasehold, when leasing land for the purpose of owning buildings (excluding parking space, etc.).
(*3) Special rules regarding “investment”(I)

Even if the amount is below 5,000,000,000 Yen, if the conditions match either of the following, asubmission shall be required.
(i)

Investment made to subsidiaries which were insolvent as of the end of the most recent closing dateof accounts or those anticipated to become insolvent during their current fiscal period.

(ii) Investment made to companies other than the subsidiaries.

(II) Notwithstanding (I) above, such submission may be omitted by the decision(s) of the Executive(s) andothers responsible for their divisions and for the accounting areas, in the case where the amount ofinvestment is below 2,000,000,000 Yen.
(III) After the investment is made, if such investment comes to fall under (i) or (ii) in (I) above, whether or
not to submit such matter to the Board of Directors shall be decided by the responsible Executive(s)and others as defined in (II) above.
(*4) Capital expenditure
1

Explanation of “capital expenditure”
The main coverage of this item shall be those such as the construction of new factories, productionlines, buildings and sales bases, among others, which change the structure of business and may
possibly pose new management risks.

2Special rules regarding “capital expenditure”(I)

Even if the amount is below 30,000,000,000 Yen, if new factories are constructed, a submission shallbe required.

(II) In making a submission, attention shall be made to show a project overall picture such as vehicles andunit components.
(*5) Special rules regarding “loans”(I)

Even if the amount is below 5,000,000,000 Yen, if the conditions match any of the following, asubmission shall be required.
(i)

Loans made available to companies which were insolvent as at the end of the most recent closing
date of accounts or those anticipated to become insolvent during their current fiscal period(whether or not such finance is directed to the subsidiaries).

(ii) Loans made available to companies (excluding the subsidiaries) which have their head officelocated in countries or areas having a country risk rating below A.
(iii) Unsecured loans made available to companies other than the subsidiaries.
(II) Notwithstanding (I) above, such submission may be omitted by the decision(s) of the Executive(s) andothers responsible for their divisions and for the accounting areas, in the case where amounts of loans
and loans outstanding are below 2,000,000,000 Yen.
(III) After the loan is made available, if such loan comes to fall under (i), (ii) or (iii) in (I) above, whether or
not to submit such matter to the Board of Directors shall be decided by the responsible Executive(s)and others as defined in (II) above.
(*6) Special rules regarding “guarantee of obligations”(I)

Even if the amount is below 5,000,000,000 Yen, if the conditions match either of the following, asubmission shall be required.
(i)

Guarantee of obligation made to subsidiaries which were insolvent as at the end of the most recent
closing date of accounts or those anticipated to become insolvent during their current fiscal
period.

(ii) Guarantee of obligation made to companies other than the subsidiaries.
(II) Notwithstanding (I) above, such submission may be omitted by the decision(s) of the Executive(s) andothers responsible for their divisions and for the accounting areas, in the case where amounts ofguarantee of obligation and outstanding guarantee of obligation are below 2,000,000,000 Yen.
(III) After the guarantee of obligation is made, if such guarantee comes to fall under (i) or (ii) in (I) above,
whether or not to submit such matter to the Board of Directors shall be decided by the responsible
Executive(s) and others as defined in (II) above.

(*7) Special rules regarding “membership companies (limited liability company, etc.) and limited liability
partnerships”(I)

An overall business plan must be submitted when a membership company (LLC, etc.) and LLP isestablished or investment is newly made.

(II) If material changes are made to a business plan previously submitted to a meeting of the Board of
Directors, such matters shall be re-submitted to a meeting of the Board of Directors.
2. Out of “I. Matters to be Resolved” of the “Matters to be Submitted to the Board of Directors”, the mattersrelating to “Management” in “4. Other important managerial matters” shall be submitted to the Board of
Directors in accordance with the standards contained in this Appendix 2.
Appendix 2
Items

Standard(1) Business Plan (profit planning, Hoshin Guideline,etc.):
1

Definition of “Business Plan”(1) “profit planning”

Short-term profit planning (revenue, capital
expenditure, R&D cost, etc.), Sales and Production
Plan, (initial annual plan, etc.), Mid-tem profit
planning, Vision, etc.

(2) “Hoshin Guideline”

Hoshin Guideline (if revised)(2) Important business alliances and important joint
ventures:1

2

Definition of “business alliance” and “joint
venture”(1) “Business alliance”

Used when businesses such as sales tie-up,
continuous provision of products, acceptance/
entrustment of production, joint production, joint
development, or technology licensing, etc. arecommenced or terminated, or material changes withrespect to these businesses are made.

(2) “Joint venture”

Used when Toyota Motor Corporation (“TMC”) anda business partner or its subsidiary make joint
investment to establish or acquire a joint venturecompany and have such joint venture company
conduct businesses for the purposes of the subject
joint venture.

Materiality standards for “important businessalliances and important joint ventures”*1(1) Monetary standard

In case TMC plans to spend 5,000,000,000 Yen or
more in total for loan and investment, capital
expenditures, etc. at the beginning of the plan.

(2) Qualitative standard

In case the subject business alliance or joint venture(including with a dominant competitor) may
materially affect TMC’s management in terms ofsales, profits, etc.

ItemsStandard(3) Launching of new projects:
1

Definition of “launching of new projects”

Used when TMC launches a business not relating to
its existing business areas (such as automobiles,
industrial vehicles, housing, information andtelecommunication, boats and ships, airplanes,
biotechnology or financial businesses.)
Other than launch of business by TMC itself, launchof business through business alliance or through its
subsidiary or joint venture company (excluding
companies in which TMC invests without being
required to include such companies’ operating results
in its consolidated financial statements pursuant to
the Financial Instruments and Exchange Act) shallalso be considered as “launching of new projects.”(4) Decision on filing, appealing or closing important
disputes*2
1

Monetary standard

In case that value of subjects (amount TMC sues foror amount to be borne by TMC*3) is 2,000,000,000
Yen or more.

2

Qualitative standard

In case of legal actions such as filing of legal action withrespect to important intellectual property rights or disputewith a public entity with respect to environmental issues,
which may materially affect TMC’s management,
business, rights or brand image, etc.

(*1) Materiality standards for “important business alliances and important joint ventures”
If a business alliance or joint venture falls under either the “Monetary standard” or “Qualitative standard”, itshall be submitted to the Board of Directors.
(*2) Materiality standards for “Decision on filing, appealing or closing important disputes”(*3) The reasonable settlement amount or the amount of the latest judgement, whichever is higher. However, theamount to be compensated by insurance and/or third party should be deducted from TMC’s responsibleamount.
If a case falls under either “Monetary standard” or “Qualitative standard”, it shall be submitted to the Boardof Directors.
3. Out of “I. Matters to be Resolved” of the “Matters to be Submitted to the Board of Directors”, the mattersrelating to “Personnel affairs, organization” in “4. Other important managerial matters” shall be submitted to theBoard of Directors in accordance with the standards contained in this Appendix 3.
Appendix 3
Items(1) Members of the Board of Directors and Operating
Officers’ assumption of offices in important
associations (in case of new offices only)Standard

In case that Members of the Board of Directors or
Operating Officers of TMC assume or resign from a
position such as chairman, board chairman,
committee chairman, etc. of Japan Business
Federation, The Japan Chamber of Commerce andIndustry, Japan Association of Corporate Executives,
Japan Automobile Manufacturer Association,

ItemsStandard

Counsel of government authorities or other important
associations comparable to these associations(2) Changes in important working conditions:

In case that certain actions such as changes inworking conditions with respect to employment
which may materially affect TMC’s management andemployees

4. Out of “I. Matters to be Resolved” of the “Matters to be Submitted to the Board of Directors”, the mattersrelating to “Production; Sales; Technology development” in “4. Other important managerial matters” shall be
submitted to the Board of Directors in accordance with the standards contained in this Appendix 4.
Appendix 4
Materiality standard for “licensing, acquisition or transfer of important intellectual property rights”
Certain actions such as licensing of intellectual property rights relating to TMC’s essential technologies ortransfer of TMC’s trademark, which may materially affect TMC’s management, such licensing, transfer or
acquisition shall be deemed material.
5. Out of “I. Matters to be Resolved” of the “Matters to be Submitted to the Board of Directors”, the mattersrelating to “Group Management” in “4. Other important managerial matters” shall be submitted to the Board of
Directors in accordance with the standards contained in this Appendix 5.
Appendix 5
Items

Standard(1) Incorporation, dissolution, acquisition and transferof subsidiaries:
1

Definition of “incorporation, dissolution,acquisition and transfer of subsidiaries”(1) “Subsidiary”

A joint stock company of which TMC holds amajority of its voting rights, or other companies
judged to be a subsidiary of TMC pursuant to Article
3 of the Implementation Rules of the Companies Act.
(including a membership company such as a limited
liability company, a partnership, any other business
entities similar thereto)(2) “Incorporation”

Used when a subsidiary is established.

(3) “Dissolution”

Used when a subsidiary is dissolved.

(4) “Acquisition”

Used when a subsidiary is obtained through, forexample, acquisition of shares (excluding cases
which fall under incorporation).

(5) “Transfer”

Used when a company loses its status as a subsidiaryof TMC through, for example, TMC’s sale of sharesof the subsidiary (excluding cases which fall under
dissolution).

ItemsStandard

2

Submission standard of “incorporation,
dissolution, acquisition and transfer ofsubsidiaries”(1) Directly held subsidiary*1

Matters to be resolved(2) Principal subsidiary, not falling under(1) above*2

Matters to be resolved(3) Subsidiary with capital of 2,000,000,000
Yen or more, not falling under (1) or (2)aboveMatters to be reported(4) Subsidiary, not falling under (1)-(3)above

Submission not necessary in principle(2) Important group managerial matters*3
1

Monetary standard

In case a wholly owned subsidiary*i conducts Items
1~5 of “Disposition and acquisition of important
property” as defined above, amounts, quantities,
special rules, definitions and explanations of thesame Items shall apply.
However, such submission may be omitted, in thecase where submission of a matter is a formality, thematter virtually requires no managerial decision(transfer of land/equipment conducted between
wholly owned subsidiaries etc.) and the matter isjudged not to have TMC’s group managerialmateriality.

2

Qualitative standard

If in case of “Disposition and acquisition ofimportant property”*ii, “Borrowing of a large amountof money”*iii, business alliance, joint venture or
reorganization of business, etc., conducted bysubsidiary of TMC, which may materially affect
TMC’s group management and reputation*iv.

(*1) “Directly held subsidiary” shall mean a subsidiary of which TMC directly holds a majority of the total
voting rights.
(*2) Examples of “principal subsidiary” are as follows:(i)

Subsidiary engaged in a new business(ii) Subsidiary with a substantial amount of capital (5,000,000,000 Yen or more)(iii) Subsidiary established as a result of a business alliance or joint venture with a dominantcompetitor(iv) Subsidiary which was insolvent as of the end of the most recent closing date of accounts or that is
anticipated to become insolvent during its current fiscal period (this shall apply only toacquisition)(v) Other managerially important subsidiary(*3) If a matter falls under either “Monetary standard” or “Qualitative standard”, it shall be submitted to theBoard of Directors.
(*i) “Wholly owned subsidiary” shall mean a subsidiary of which TMC directly or indirectly holds all of thetotal voting rights.

(*ii) In conducting Items 1~7 of “Disposition and acquisition of important property” as defined above,materiality shall be determined with reference to amount, quantity, special rules, definition and explanation
defined in the same Items.
(*iii) In conducting Items 1~2 of “Borrowing of a large amount of money” as defined above, materiality shall be
determined with reference to amount, quantity and special rules defined in the same Items.
(*iv)With respect to other items, materiality shall be determined with reference to TMC’s submission standardsof matters to be submitted to the Board of Directors.
6. Out of “II. Matters to be reported” of the “Matters to be Submitted to the Board of Directors”, the matters
falling under “State of execution of business” shall be submitted to the Board of Directors in accordance with thestandards contained in this Appendix 6.
Appendix 6
Items(1) Report of the execution status of business:

Standard

Improve contents of report to the supervision side
while enhancing the decision-making process by
operating officers(1) Progress of important investment in new
businesses and risk taking status shall be reported as
appropriate.
(2) As for report by in-house company/region, theannual plans will be confirmed in the Hoshin
Guideline. As for other organizations, report will bemade by project. (Outside Board Member Meetingcan be utilized.)Exhibit 2.4
DESCRIPTION OF THE COMMON STOCK AND RELATED MATTERS
Except as otherwise stated, set forth below is information relating to Toyota’s common stock and Model AA
Class Shares, including brief summaries of the relevant provisions of Toyota’s articles of incorporation and sharehandling regulations, as currently in effect, and of the Companies Act, the Book-Entry Transfer Act and related
legislation. Capitalized terms used but not defined herein have the meanings given to them in Toyota’s annual
report on Form 20-F for the fiscal year ended March 31, 2019.
GeneralToyota’s authorized number of shares as of March 31, 2018 was 10,000,000,000 common shares, of which
3,262,997,492 shares were issued. The articles of incorporation was amended at the 111th Ordinary General
Shareholders’ Meeting held in June 2015 and Toyota’s authorized number of shares was changed to
10,000,000,000 shares, with the total number of authorized shares per class, of 10,000,000,000 for commonshares, 50,000,000 for First Series Model AA Class Shares, 50,000,000 for Second Series Model AA
Class Shares, 50,000,000 for Third Series Model AA Class Shares, 50,000,000 for Fourth Series Model AA
Class Shares and 50,000,000 for Fifth Series Model AA Class Shares, and the total number of shares authorized
to be issued with respect to First Series Model AA Class Shares through the Fifth Series Model AA Class Shares
not to exceed 150,000,000 shares. As of June 23, 2017, there were 47,100,000 shares of First Series Model AA
Class Shares issued and outstanding. Neither the common shares nor the First Series Model AA Class Shares
have any par value.
Toyota does not issue share certificates for its shares. In accordance with the Companies Act, the BookEntry Transfer Act and Toyota’s articles of incorporation, Toyota’s common shares are recorded or registered on(i) Toyota’s register of shareholders and (ii) transfer account books of JASDEC, which is a book-entry transfer
institution and securities firms, banks or other account management institutions. The transfer of common shares
will generally become effective once the transfer is recorded in the transferee’s account. There are no restrictions
imposed by Toyota’s articles of incorporation or share handling regulations on the transfer of common shares. In
order to assert shareholders’ rights against Toyota, a shareholder must generally have his or her name andaddress recorded or registered on Toyota’s register of shareholders. A holder of common shares can assert
minority shareholders’ rights (shareholders’ rights for which Toyota has not set a record date) against Toyota if
JASDEC provides an individual shareholder notice to Toyota upon the shareholder’s request. The shareholder ofdeposited shares underlying the ADSs is the Depositary for the ADSs. Accordingly, holders of ADSs will not beable directly to assert shareholders’ rights.
A holder of common shares must have a transfer account to transfer shares. Holders of common shares who
do not have a transfer account with JASDEC must have an account with an account management institution that
directly or indirectly has a transfer account with JASDEC. Once Toyota decides on the record date for its
shareholders’ meeting or makes a request to JASDEC based on justifiable grounds, JASDEC will promptly
provide to Toyota names, addresses and other information with respect to the holders of Toyota’s common shares
who are recorded on the transfer account books of JASDEC or account management institutions. Upon receivingsuch information, Toyota will record or register such information received from JASDEC on its register ofshareholders. Accordingly, holders of common shares recorded or registered on Toyota’s register of shareholders
will be treated as holders of common shares of Toyota and may exercise rights, such as voting rights, and will
receive dividends (if any) and notices to holders of common shares directly from Toyota. Holders of commonshares wishing to assert minority shareholders’ rights against Toyota must request an individual shareholder
notice to JASDEC or the account management institution at which the shareholder has opened a transfer account.
In response to such request, JASDEC will provide the individual shareholders notice to Toyota. A holder ofcommon shares may assert his or her minority shareholders’ rights against Toyota for a period of four weeks
after the date the individual shareholder notice is provided to Toyota. The shares held by a person who is deemedto hold additional shares according to the transfer account books are aggregated for these purposes.

Model AA Class Shares, once issued, will be recorded or registered on Toyota’s register of shareholders.
The transfer of Model AA Class Shares, once issued, will be effective upon an agreement between the transferor
and the transferee, but entry or record of a change of holder in the register of shareholders will require an
approval from the board of directors.
Dividends
Dividends — General
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend.
Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to a
resolution of its board of directors. Toyota’s board of directors resolves to pay year-end dividends to holders ofcommon shares and registered pledgees of common shares of record as of March 31, the record date, in eachyear. In addition, the articles of incorporation provide that in the event that Toyota pays a year-end dividend toholders of common shares, it will pay AA Dividends in cash from surplus to any holders of Model AA
Class Shares or registered pledgees of Model AA Class Shares entered or recorded in the final register ofshareholders as of the record date for the year-end dividend, in preference to holders of common shares orregistered pledgees of common shares. The amount of annual AA Dividends per Model AA Class Share is
calculated by multiplying the amount per Model AA Class Share paid to Toyota as consideration by a rate
determined by the board of directors prior to the issuance of such Model AA Class Share, which rate is not toexceed 5%.
In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash
distributions from its distributable surplus to holders of common shares and pledgees of common shares of record
as of September 30, the record date, in each year by a resolution of its board of directors. The articles ofincorporation provide that in the event that Toyota pays such interim dividends, Toyota will pay AA Interim
Dividends in cash as interim dividend to any holders of Model AA Class Shares or registered pledgees of ModelAA Class Shares entered or recorded in the final register of shareholders as of the record date for the interim
dividend, in preference to holders of common shares or registered pledgees of common shares. If AA Interim
Dividends are paid during the fiscal year in which the record date for the year-end dividend falls, the amount of
AA Interim Dividends is deducted from AA Dividends to be paid per the above paragraph.
If the amount of the dividends from surplus paid in cash to holders of Model AA Class Shares or registeredpledgees of Model AA Class Shares is less than the prescribed amount of AA Dividends in any fiscal year, theamount of the shortfall will be carried forward to and accumulate in the following fiscal year and thereafter.
Dividends from surplus will be paid in cash to holders of Model AA Class Shares or registered pledgees ofModel AA Class Shares in preference to the payment of interim and year-end dividends until such payment
reaches the amount of the accumulated unpaid dividends.
In addition, under the Companies Act, dividends may be paid to holders of common shares and pledgees ofrecord of common shares as of any record date, other than those specified above, as set forth by Toyota’s articles
of incorporation or as determined by its board of directors from time to time. Under the Companies Act,
dividends may be distributed in cash or (except in the case of interim dividends mentioned in the second
preceding paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.
Dividends — Distributable amountUnder the Companies Act, Toyota is permitted to make distributions of surplus to the extent that theaggregate book value of the assets to be distributed to shareholders does not exceed the distributable amountprovided for by the Companies Act and the ordinance of the Ministry of Justice as at the effective date of such
distribution of surplus.
The amount of surplus at any given time shall be the amount of Toyota’s assets and the book value ofToyota’s treasury stock after subtracting and adding the amounts of items provided for by the Companies Act andthe ordinance of the Ministry of Justice, and the amount of surplus distributable for dividends is calculated byadding to and subtracting from this amount the amounts of items provided for by the Companies Act and theordinance of the Ministry of Justice.
Dividends — Prescription
Under its articles of incorporation, Toyota is not obligated to pay any dividends in cash which are left
unclaimed for a period of three years after the date on which they first became payable.
Japanese Unit Share System
General. Consistent with the requirements of the Companies Act, Toyota’s articles of incorporation providethat 100 common shares or Model AA Class Shares each constitute one “unit.” Although the number of sharesconstituting a unit is included in the articles of incorporation, any amendment to the articles of incorporation
reducing (but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit ofshares may be made by a resolution of the board of directors rather than by a special shareholders resolution,
which is otherwise required for amending the articles of incorporation.
Voting Rights under the Unit Share System. Under the unit share system, shareholders have one voting
right for each unit of shares that they hold. Any number of common shares or Model AA Class Shares less than afull unit will carry no voting rights.
Purchase by Toyota of Shares Constituting Less Than a Unit. A holder of shares constituting less than afull unit may require Toyota to purchase those shares at their market value in the case of common shares and atfair price in the case of Model AA Class Shares in accordance with the provisions of Toyota’s share handlingregulations and the Companies Act.
Voting Rights
Toyota holds its ordinary general shareholders’ meeting each year. In addition, Toyota may hold anextraordinary general shareholders’ meeting whenever necessary by giving at least two weeks’ advance notice.
Under the Companies Act, notice of any shareholders’ meeting must be given to each shareholder having voting
rights or, in the case of a non-resident shareholder, to his or her resident proxy or mailing address in Japan inaccordance with Toyota’s share handling regulations, at least two weeks prior to the date of the meeting.
Holders of common shares and holders of Model AA Class Shares shall have voting rights exercisable at a
general shareholders’ meeting. A holder of shares constituting one or more whole units is entitled to one vote perunit of shares subject to the limitations on voting rights set forth in this paragraph. In general, under theCompanies Act, a resolution can be adopted at a general shareholders’ meeting by a majority of the shares having
voting rights represented at the meeting. The Companies Act and Toyota’s articles of incorporation require aquorum for the election of members of the board of directors and audit & supervisory board members of not lessthan one-third of the total number of outstanding shares having voting rights. Toyota’s shareholders are notentitled to cumulative voting in the election of members of the board of directors. A corporate shareholder, themanagement of which is substantially under Toyota’s control as provided by an ordinance of the Ministry ofJustice, either through the holding of voting rights or for any other reason, does not have voting rights.
Shareholders may exercise their voting rights by attending the general shareholders’ meeting or in writingby mail. Shareholders who choose to exercise their voting rights by mail must fill out and return to Toyota thevoting right exercise form enclosed with the convocation notice of the general shareholders’ meeting by the datespecified in such convocation notice. In addition, from the general shareholders’ meeting for fiscal 2009,
shareholders may exercise their voting rights through the internet. Shareholders electing to exercise their voting
rights through the internet must log on to the “Website to Exercise Voting Rights” using the login ID andtemporary password provided in the voting right exercise form enclosed with the convocation notice and submit
their votes by a date specified in the convocation notice, following instructions appearing on the website.

Institutional investors may also use the Electronic Proxy Voting Platform operated by Investor Communications
Japan to exercise their voting rights through the use of the Internet, if such institutional investor applies to use theplatform in advance. Shareholders may also exercise their voting rights through proxies, provided that thoseproxies are also shareholders who have voting rights. Toyota may refuse a shareholder having two or more
proxies attend a general shareholders’ meeting.
The Companies Act provides that a quorum of at least one-third of outstanding shares with voting rights
must be present at a shareholders’ meeting to approve any material corporate actions such as:(1) any amendment of the articles of incorporation with certain exceptions in which a shareholders’
resolution is not required;(2) acquisition of its own shares from a specific party;(3) consolidation of shares;(4) any issue or transfer of its shares at a “specially favorable” price (or any issue of stock acquisitionrights or bonds with stock acquisition rights at “specially favorable” conditions by Toyota) to any
persons other than shareholders;(5) the removal of an audit & supervisory board member;(6) the exemption of liability of a director or audit & supervisory board member with certain exceptions;(7) a reduction of stated capital which meets certain requirements with certain exceptions;(8) a distribution of in-kind dividends which meets certain requirements;(9) dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is not
required;(10) the transfer of the whole or a material part of the business;(11) the transfer in entirety or in part of shares or equity interest of a subsidiary under certain conditions;(12) the taking over of the entire business of any other corporation with certain exceptions in which ashareholders’ resolution is not required;(13) share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships
with certain exceptions in which a shareholders’ resolution is not required; or(14) company split with certain exceptions in which a shareholders’ resolution is not required.
At least two-thirds of the shares having voting rights represented at the meeting must approve these actions.
The voting rights of holders of ADSs are exercised by the Depositary based on instructions from those
holders.
Rights to be Allotted Shares
Holders of common shares and Model AA Class Shares have no preemptive rights under Toyota’s articles
of incorporation. Under the Companies Act, the board of directors may, however, determine that shareholders
shall be given rights to be allotted shares or stock acquisition rights on request in connection with a particularissue or transfer of shares, or issue of stock acquisition rights, respectively. In this case, such rights must be given
on uniform terms to all shareholders as of a specified record date by at least two weeks’ prior public notice toshareholders of the record date.
Rights to be allotted shares are nontransferable. However, a shareholder may be allotted stock acquisitionrights without consideration thereto, and may transfer such rights.

Liquidation Rights
In the event of a liquidation of Toyota, the assets remaining after payment of all debts, liquidation expenses
and taxes will be distributed as follows. First, an amount per First Series Model AA Class Share through Fifth
Series Model AA Class Share, determined by resolution of the board of directors or calculated using a formuladetermined by a resolution of the board of directors prior to the issuance of such Model AA Class Shares basedon the amount per Model AA Class Shares paid to Toyota as consideration, shall be paid in cash to holders ofModel AA Class Shares or registered pledgees of Model AA Class Shares. No other distribution of residual
assets shall be made to holders of Model AA Class Shares or registered pledgees of Model AA Class Shares. The
remaining residual assets shall be distributed among the holders of common shares or registered pledgees ofcommon shares in proportion to the respective number of shares they own.
Liability to Further Calls or Assessments
All of Toyota’s currently outstanding shares, including shares represented by the ADSs, are fully paid andnonassessable.
Record Date
The close of business on March 31 is the record date for Toyota’s year-end dividends, if paid. A holder ofcommon shares or Model AA Class Shares constituting one or more whole units who is recorded or registered asa holder on Toyota’s register at the close of business as of March 31 is also entitled to exercise shareholders’voting rights at the ordinary general shareholders’ meeting with respect to the business year ending on March 31.
The close of business on September 30 of each year is the record date for interim dividends, if paid. In addition,
Toyota may set a record date for determining the shareholders entitled to other rights and for other purposes bygiving at least two weeks’ prior public notice.
The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges two business day prior
to a record date (or if the record date is not a business day, three business days prior thereto), for the purpose ofdividends or rights offerings. However, in connection with the scheduled shortening of the settlement period ofshares listed on any Japanese stock exchange, the ex-dividend date and ex-rights date is expected to become thepreceding business day before the record date (or if the record date is not a business day, two business days prior
thereto) if the record date is on or after July 18, 2019 (provided, however, such transition date is subject tochange).
Acquisition or Disposition of Shares or ADS
Under the Foreign Exchange and Foreign Trade Law and the cabinet orders and ministerial ordinances
thereunder, all aspects of regulations on foreign exchange and foreign trade transactions are, with minor
exceptions (which are not generally applicable to the purchase and sale of Toyota’s shares), only subject to posttransaction reporting requirements. Acquisitions and dispositions of shares of common stock or ADS by
non-residents of Japan (including foreign corporations not resident in Japan) are generally not subject to thisreporting requirement. However, the Minister of Finance has the power to impose a licensing requirement fortransactions in limited circumstances.
Report of Substantial Shareholdings
The Financial Instruments and Exchange Law of Japan and regulations under the Law require any person
who has become a holder (together with its related persons) of more than 5% of the total issued shares of acompany listed on any Japanese stock exchange (including ADSs representing such shares) to file with the
Director of a competent Local Finance Bureau, within five business days, a report concerning thoseshareholdings. A similar report must also be filed to reflect any change of 1% or more in any shareholding or any
change in material matters set out in reports previously filed. Any such report shall be filed with the Director of acompetent Local Finance Bureau through the Electronic Disclosure for Investor’s Network system. For thispurpose, shares issuable to a shareholder upon exercise of stock acquisition rights are taken into account indetermining both the number of shares held by that stock acquisition rights holder and the company’s total issued
shares.

DESCRIPTION OF THE AMERICAN DEPOSITARY SHARESAn American Depositary Receipt, or ADR, is a negotiable certificate delivered by a United States bank ortrust company acting as depositary. In the same way that a share certificate of a U.S. issuer would evidence
shares, an ADR evidences American Depositary Shares, which are also referred to as ADSs. Each ADS
represents an ownership interest in two shares of Toyota’s common stock, which shares are held in Japan on
deposit by the depositary or its agent for the benefit of holders of ADRs.
The terms of the ADRs are contained in the deposit agreement dated as of September 27, 1999 among
Toyota, The Bank of New York Mellon, as depositary, and the owners and beneficial owners of ADRs issued
thereunder. The principal executive office of the depositary is located at 240 Greenwich Street, New York, NewYork 10286. The following is a summary of the material provisions of the deposit agreement and, thus, it does
not contain all information that may be relevant to holders of ADRs. Investors should read the entire deposit
agreement (including the form of ADR) for complete information. Toyota has filed a copy of the deposit
agreement as an exhibit to Toyota’s annual report on Form 20-F, which can be accessed on the SEC’s website(http://www.sec.gov).
The depositary will deliver ADRs based on the deposit of common shares with Sumitomo Mitsui Banking
Corporation as custodian under the deposit agreement. Deposited common shares will be represented by ADSs. If
a holder’s ownership interest is held through a broker, dealer or other third party, that broker, dealer or third party
will provide documentation showing the holder’s beneficial interest in the ADSs. Only persons in whose names
ADRs are registered on the books of the depositary will be treated as holders of ADRs by the depositary and by
Toyota. In this “Description of the American Depositary Shares,” the term “holders” shall refer only to persons
in whose name ADRs are registered on the books of the depositary. The depositary owes no duties to anyone
other than Toyota and holders of ADSs.
Deposit of Common Shares and Issuance of ADRs
Common shares deposited with the custodian must be accompanied by documents specified in the deposit
agreement, including instruments showing that those common shares have been properly transferred to theperson on whose behalf the deposit is being made. The custodian will hold all deposited common shares for theaccount of the depositary. Holders thus have no direct ownership interest in the common shares and only havethose rights as are contained in the deposit agreement. The custodian will also hold any additional securities,
property and cash received on or in substitution for the deposited common shares. The deposited common shares
and any additional items are referred to as deposited securities.
Upon each deposit of common shares, receipt of related delivery documentation and compliance with theother provisions of the deposit agreement, including the payment of the fees and charges of the depositary, thedepositary will execute and deliver an ADR or ADRs in the name of the person entitled thereto evidencing thenumber of ADSs to which that person is entitled. ADRs will be delivered at the depositary’s Corporate Trust
Office.
Surrender of ADRs and Delivery of Deposited Securities
Holders are entitled to receive the deposited securities underlying the ADSs upon surrender of ADRs to thedepositary with delivery instructions for the deposited securities. In addition, holders must pay all fees, taxes andgovernmental charges that may apply. Deposited securities are normally delivered at the custodian’s office unlessthe holder requests, at his own risk and expense, that they be delivered to another place. The depositary may only
restrict the withdrawal of deposited securities in connection with:•temporary delays caused by closing transfer books of the depositary or Toyota’s transfer books or thedeposit of common shares in connection with voting at a shareholders’ meeting, or the payment ofdividends,•

the payment of fees, taxes and similar charges,•

compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs, or•compliance with any Japanese law relating to the unit share system.

Effect of the Unit Share System
As a result of the unit share system, ADR holders will only be permitted to surrender ADRs and withdraw
underlying common shares constituting an integral number of a whole unit. If a holder surrenders an ADR
representing common shares that do not constitute an integral number of whole units, the depositary will deliverto that holder only those common shares that constitute a whole unit. The depositary will then issue to the holder
a new ADR representing the remaining common shares. Holders of an ADR that represents less than a whole unit
of underlying common shares will be unable to withdraw the underlying common shares. As a result, those
holders will be unable to require Toyota to purchase their common shares to the extent those common sharesconstitute less than one whole unit.
Dividends and Other Distributions on Deposited Securities
Toyota may make various types of distributions with respect to its securities. Except as stated below, to theextent the depositary is legally permitted it will deliver those distributions to holders in proportion to theirinterests in the following manner:
Cash
The depositary shall convert cash dividends or other distributions from foreign currency to U.S. dollars if
this is permissible and can be done on a reasonable basis. The depositary will hold the foreign currency it cannot
convert for the account of the ADR holders who have not been paid. The depositary will not invest the foreign
currency and it will not be liable for interest. The depositary will endeavor to distribute cash in a practicablemanner, and may deduct any taxes required to be withheld, its fees, any expenses of converting foreign currency
and transferring funds to the United States, and other expenses and adjustments.
Common Shares
In the case of a distribution in common shares, the depositary may execute and deliver additional ADRs toevidence the number of ADSs representing those common shares. Only whole ADSs will be issued. Any
common shares which would result in fractional ADSs will be sold and the net proceeds will be distributed to theholders entitled thereto. If the depositary does not distribute additional ADRs, the existing ADRs will also
represent the new common shares.
RightsIn the case of a distribution of rights to subscribe for additional common shares or other rights, if Toyota
provides satisfactory evidence that the depositary may lawfully distribute those rights, the depositary may
arrange for holders to instruct the depositary as to the exercise of those rights. However, if Toyota does not
furnish that evidence, the depositary may:•sell those rights if practicable and distribute the net proceeds as cash, or•allow those rights to lapse, whereupon holders of ADRs will receive nothing.

Toyota has no obligation to file a registration statement under the Securities Act to make any rights
available to holders. Any sale or lapse of rights may reduce the holders’ equity interest in Toyota.

Other Distributions
In the case of a distribution of securities or property other than those described above, the depositary may
either: distribute those securities or property in any manner it deems fair and equitable; or sell those securities orproperty and distribute any net proceeds as cash.
The depositary may choose any practicable method of distribution for any specific holder, including the
distribution of foreign currency, securities or property, or it may retain such items on behalf of the holder as
deposited securities.
There can be no assurance that the depositary will be able to convert any currency at a specified exchange
rate or sell any property, rights, common shares or other securities at a specified price, nor that any of thosetransactions can be completed within a specified time period.

Record Date
The depositary may fix a record date for determining the holders who shall be entitled to receive
distributions, exercise voting rights, receive notices, or act on other matters. This record date will be as near as
possible to the corresponding record date set by Toyota.

Voting of Deposited Securities
After receiving voting materials from Toyota and if Toyota requests, the depositary will notify the holdersof any shareholder meeting or solicitation of consents or proxies. This notice will describe how the holder may
instruct the depositary to exercise the voting rights for the common shares which underlie that holder’s ADRs. If
the depositary receives instructions on or before a date set by the depositary, the depositary will endeavor to votethe common shares in accordance with the holder’s instructions. If the depositary does not receive instructions
from a holder on or before the date established by the depositary for that purpose, the depositary will deem that
holder to have instructed the depositary to give a proxy to a person designated by Toyota to vote the number ofcommon shares underlying that holder’s ADRs. However, if Toyota informs the depositary that Toyota does notwish to have any proxy given or if substantial opposition to the proposal exists or if the proposal materially andadversely affects the rights of shareholders, a discretionary proxy will not be issued. Because there is no
guarantee that holders will receive voting materials in time to instruct the depositary to vote, it is possible that
holders or persons who hold their ADRs through brokers, dealers or other third parties will not have theopportunity to exercise their rights to vote. The depositary will not itself exercise any voting discretion.
Furthermore, neither the depositary nor its agents are responsible for any failure to carry out any voting
instructions, for the manner in which any vote is cast or for the effect of any vote.
In voting or exercising the right to vote, the depositary will, to the extent possible, aggregate the commonshares for which the same or similar instructions have been given so as to be able to vote the largest number ofwhole units as possible. As a result of this aggregation, holders of ADRs representing less than a whole unit ofcommon shares may or may not have their votes counted with respect to any particular matter voted upon.

Inspection of Transfer Books
The depositary will maintain books for the registration, transfer, combination and split-up of ADRs. Thesebooks will be available for inspection by the holders for the purpose of communicating with holders in theinterest of Toyota’s business or a matter related to the deposit agreement.

Changes Affecting Deposited Securities
If Toyota takes actions that affect the deposited securities, including (1) any split-up, consolidation or otherreclassification of deposited securities and (2) any recapitalization, reorganization, merger, consolidation or saleof all or substantially all Toyota’s assets, then the depositary may choose to:1.

amend the form of ADR,

2.

distribute the additional or amended ADRs,

3.

distribute cash, securities or other property it has received in connection with those actions,4.

sell any securities or property received and distribute the proceeds as cash, or5.

none of the above.

If the depositary does not choose any of 1 to 4 above, any of the cash, securities or other property it receives
shall constitute part of the deposited securities and each ADR will then represent a proportionate interest in thatproperty.
Amendment and Termination of Deposit Agreement
Toyota and the depositary may jointly amend the deposit agreement. The holders must be given at least
30 days’ notice of any amendment that imposes or increases any fees or charges (except for taxes and othercharges specifically payable by holders under the deposit agreement), or affects any substantial existing right ofholders. If a holder continues to hold ADRs after being so notified, that holder is deemed to agree to thisamendment. No amendment may take away any holder’s right to cancel ADRs and to receive the deposited
securities underlying the ADRs, except to comply with requirements of law.
If directed by Toyota, the depositary shall terminate the deposit agreement by giving the holders at least
90 days’ prior notice. The depositary may also terminate the deposit agreement by providing notice if it has
resigned and no successor has been appointed within 90 days after its resignation. After termination, thedepositary’s only responsibility will be to deliver deposited securities to holders who surrender their ADRs, andto hold or sell distributions received on deposited securities. At any time after the expiration of one year from thetermination date, the depositary may sell the deposited securities which remain and hold the net proceeds fromthose sales, without liability for interest, in trust for the holders who have not yet surrendered their ADRs. Aftermaking the sale, the depositary shall have no obligations except to account for those proceeds and other cash.
Liability of Holders for Taxes
Holders must also pay any tax or other governmental charge payable by the custodian or the depositary on
any ADR, deposited security or distribution. If a holder owes any tax or other governmental charge, thedepositary may (1) deduct the amount of taxes owed from any cash distributions, or (2) sell deposited securities
and deduct the amount owing from the net proceeds of that sale. In either case the holder remains liable for any
shortfall. If any tax or governmental charge is required to be withheld on any non-cash distribution, thedepositary may sell the distributed property or securities to pay those taxes and distribute any remaining net
proceeds to the holder entitled thereto.
Conditions to the Issuance of ADRs and Other Transactions
The depositary, the custodian or Toyota may refuse to:•deliver, register or transfer an ADR or ADRs,•

effect a split-up or combination of ADRs,•

deliver distributions on any ADRs, or•

permit the withdrawal of deposited securities (unless the deposit agreement provides otherwise)until the following conditions have been met:•

the holder has paid all taxes, governmental charges, and fees and expenses as required in the deposit
agreement,•

the holder has provided the depositary with any information it may deem necessary or proper, including
without limitation, proof of identity and the genuineness of any signature, and•the holder has complied with all regulations that the depositary may establish under the deposit
agreement.

The depositary may also suspend the issuance of ADRs, the deposit of common shares, the registration,transfer, split-up or combination of ADRs, or the withdrawal of deposited securities (unless the deposit
agreement provides otherwise), if the register for ADRs or any deposited securities is closed or if the depositaryor Toyota decides that this action is advisable.
Limitation on Liability
The deposit agreement expressly limits the obligations and liability of the depositary, Toyota and its andToyota’s respective agents. The depositary and Toyota will not be liable:•

if they are prevented or hindered in performing any obligations by circumstances beyond their control,
including, without limitation, requirements of law, the terms of the deposited securities and acts of God,•for exercising or failing to exercise discretion under the deposit agreement,•

if they perform their obligations without negligence or bad faith, or•for any action based on advice or information from legal counsel, accountants, any person presenting
common shares for deposit, any holder, or other qualified person.

The deposit agreement also provides that the depositary and Toyota have no obligation to become involvedin a lawsuit or other proceeding related to the ADRs or the deposit agreement on behalf of the owners of ADRs
or any other party unless Toyota or it has received an indemnity satisfactory to it. In addition, the deposit
agreement permits the depositary and Toyota to rely upon any documents they believe in good faith to begenuine and to have been signed or presented by the proper party.
Pre-released ADRs
The depositary may deliver ADRs not only against the deposit with the custodian of common shares (orrights to receive common shares from Toyota or any registrar, transfer agent, clearing agent or similar entity), butalso against the agreement by a qualified third party to deliver to the depositary the common shares within a
specified period of time. ADRs issued against this type of agreement are called “pre-released ADRs.”
Pre-released ADRs may be issued only if:•

the depositary has received collateral for the full market value of the pre-released ADRs,•

the pre-released ADRs are terminable by the depositary upon not more than five business days’ notice,and•each recipient of pre-released ADRs agrees in writing that he or she:•owns the underlying common shares,•

assigns all rights in those common shares to the depositary, and•will not transfer those common shares except to close out the pre-release.

Governing Law
The deposit agreement is governed by the laws of the State of New York except with respect to its
authorization and execution by Toyota, which are governed by the laws of Japan.

Exhibit 11.1
The Code of Ethics for Directors and Officers
Article 1. (Purpose)
This document comprises a code of ethics (the “Code”) for directors and officers (including presidents,
executive vice presidents and fellows who are appointed under Article 2 of the Regulations Concerning
Operating Officers; together with directors, collectively called the “Officers” ) of Toyota Motor Corporation (the“Company”) that sets forth the basic rules that, in addition to those outlined in “Guiding Principles at Toyota,”“Toyota Code of Conduct ” and other guidelines and internal regulations of the Company, each Officer shallcomply with in the performance of their professional management duties.
Article 2. (Objective)
This Code seeks to ensure honest and ethical conduct by all Officers, as well as their compliance withapplicable laws and regulations.
Article 3. (Scope of Application)
This Code shall be applicable to all Officers.
Article 4. (Disclosure of this Code of Ethics)
This Code shall be appropriately disclosed in accordance with applicable laws and regulations.
Article 5. (Honest and Ethical Conduct)
1.

Each Officer shall act honestly and ethically in the course of any business activity of the Company.

2.

No Officer may engage in or otherwise enter into any act or transaction that gives rise to an actual or
potential conflict of interest between such Officer and the Company without first reporting such matterto the Board of Directors and obtaining prior approval therefrom in accordance with the applicableprovisions of the Companies Act of Japan and the internal regulations of the Company. Such Officer
may not participate in the determination of the Board of Directors resolution relating to the granting ofsuch approval.

Article 6. (Ensuring Fairness and Accuracy of Financial Disclosure; Appropriate Disclosure)1.

The chairman of the board, president, accounting and financial officers and persons performing similarfunctions shall be responsible for ensuring that documents submitted to applicable governmental
authorities and other information made public by the Company with respect to the Company’s financial
position and financial statements are fair and readily comprehensible in content and the method ofpresentation, and that such documents and information are timely disclosed.

2.

The chairman of the board, president, accounting and financial officers and persons performing similarfunctions shall be responsible for establishing and maintaining disclosure controls and internal controls
for documents and information specified in the previous paragraph.

3.

In connection with the preparation of the Company’s financial statements, an Officer may not act in a
way that may cause a material misunderstanding to or otherwise materially mislead any employee or
independent public accountant involved in the preparation of such financial statements.

Article 7. (Compliance with Laws and Regulations)
The Officers shall comply with all applicable laws, rules and regulations, including those related to theprohibition of insider trading, in each of the countries and regions in which the Company operates.

Article 8. (Reporting of Unlawful Acts and Unethical Conduct)
1.

Each Officer shall promptly report to the Board of Directors, Representative Director, Disclosure
Committee, Sustainability Meeting, or other responsible division or person appointed by thesecommittees, in the event that such Officer or other Officers have acted in violation of the applicablelaws or ethics.

2.

Officers may contact the “Compliance Hotline” set up by the Company at an outside law firm with any
legal or ethical inquiries or to report any breach of applicable laws or ethics. Upon receiving suchreport or other such inquiry, the designated law firm shall conduct necessary investigations and provide
a report or recommendation to the Company while ensuring the anonymity of the person making such acontact. The Company shall then take appropriate measures based on such report or recommendation.

Article 9. (Accountability for Adherence to the Code)1.

Each Officer recognizes that legal compliance and ethical conduct form the basis for all corporate
activities, and is obligated to comply with this Code.

2.

The Company shall take appropriate disciplinary action in accordance with applicable laws and internal
regulations of the Company against any Officer who acts in violation of the Code.

3.

Officers who are subject to disciplinary action pursuant to the previous paragraph may not participate
in any meeting, relating to the determination of such disciplinary action, of the Board of Directors,
Disclosure Committee, Sustainability Meeting, or other investigative committees appointed thereby.

Article 10. (Exemption)
An exemption from the Code shall only be granted pursuant to a resolution of the Board of Directors, andany such exemption shall be appropriately disclosed in accordance with applicable laws.
Article 11. (Amendment)
1.

Any amendment of this Code shall only be effected by a resolution of the Board of Directors.

2.

The Sustainability Meeting shall be responsible for regularly evaluating the appropriateness of thisCode, and for making recommendations relating to any necessary amendments of the Code to theBoard of Directors.

Supplementary Provision
Article 1. (Effective Date)
This Code shall become effective on January 1, 2019.

Exhibit 12.1
CERTIFICATIONS
I, Akio Toyoda, certify that:1.

I have reviewed this annual report on Form 20-F of Toyota Motor Corporation (the “Company”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in thisreport fairly present in all material respects the financial condition, results of operations and cash flowsof the Company as of, and for, the periods presented in this report;

4.

The Company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) andinternal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the Company and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under our supervision, to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or isreasonably likely to materially affect, the Company’s internal control over financial reporting; and5.

The Company’s other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the Company’s auditors and the Audit & Supervisory Board(or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability torecord, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the Company’s internal control over financial reporting.

Date: June 21, 2019/S/

AKIO TOYODA

Akio Toyoda
President, Member of the Board of Directors
Toyota Motor Corporation

CERTIFICATIONS
I, Koji Kobayashi, certify that:1.

I have reviewed this annual report on Form 20-F of Toyota Motor Corporation (the “Company”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in thisreport fairly present in all material respects the financial condition, results of operations and cash flowsof the Company as of, and for, the periods presented in this report;

4.

The Company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) andinternal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the Company and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under our supervision, to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or isreasonably likely to materially affect, the Company’s internal control over financial reporting; and5.

The Company’s other certifying officer and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the Company’s auditors and the Audit & Supervisory Board(or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability torecord, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the Company’s internal control over financial reporting.

Date: June 21, 2019
/S/

KOJI KOBAYASHI

Koji Kobayashi
Executive Vice President, Member of the Board of Directors
Toyota Motor Corporation

Exhibit 13.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
each of the undersigned officers of Toyota Motor Corporation, a Japanese corporation (the “Company”), does
hereby certify that, to such officer’s knowledge:
1. The accompanying Annual Report of the Company on Form 20-F for the period ended March 31, 2019(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and2. Information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.

By:
Name:
Title:/s/

AKIO TOYODA

Akio Toyoda
President, Member of the Board of Directors

Date: June 21, 2019

By:

/s/

Name:
Title:

KOJI KOBAYASHI

Koji Kobayashi
Executive Vice President,
Member of the Board of Directors

Date: June 21, 2019
(A signed original of this written statement required by Section 906 has been provided to Toyota Motor
Corporation and will be retained by Toyota Motor Corporation and furnished to the U.S. Securities and Exchange
Commission or its staff upon request.)

Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form F-3(No. 333-225851) of Toyota Motor Corporation of our report dated June 21, 2019 relating to the financial
statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Aarata LLC
Nagoya, Japan
June 21, 2019