CATEGORY II BUSINESSBusiness Summary
Business in Category II is composed of 3 business
units: Car air-conditioning compressors, Logistics &Forklifts (material handling systems and industrialequipment, referred to together as “L & F”) andTextile machinery. We are involved in the wholeprocess from product planning, development, anddesign to production (and even, in the case of Textile
machinery, for after-sales services). Sales from thesebusiness units account for approximately 45% of ourconsolidated sales. This business is a mainstay of theCompany, together with Category I Business.
Car air-conditioning compressors
business unit
The Car air-conditioning compressors business unit
plans, develops, designs and manufacturescompressors for the heart of car air-conditioner. (Thisbusiness unit is included in the Automobiles segmentin the “Business segments” in the Financial Section.
However, it is considered a Category II Business inthe sense that we are in a position to take theinitiative in business strategy.) Our customers include
TMC, our largest customer, and other major car
manufacturers in the world. With our market sharereaching 28%, we are the No.1 supplier of car airconditioning compressors in the world. We currently
supply mainly 4 types: swash plate fixed displacement
type, one-way swash plate variable displacement type,vane type and scroll type. In addition we supply avariety of modified types to meet the needs of eachcar manufacturer. Our Kariya plant (in Kariya City,Aichi Prefecture) is responsible for productdevelopment and design while both our Kariya plantand our subsidiary in Michigan, U.S.A. are responsiblefor manufacturing them. We established a subsidiarynear Dresden, Germany for manufacturing car airconditioning compressors, as the demand for them is
expected to rise in the European market, which has
seen a substantial increase in cars with airconditioners. From April 2000 this plant will start
production of one-way swash plate variabledisplacement compressors, which aredesigned to reduce the burden on
the engine, thus helping toreduce the impact on theenvironment. Thecompressors are suppliedto Denso Corporation,
who sells car airconditioning systems
incorporating them.
7SBU16 Compressor

Logistics & Forklifts business unit
This business unit is composed of the Logistics(material handling systems) and the Forklifts(industrial equipment) departments. The Logistics
department supplies automatic guided vehicles, andautomated storage and retrieval systems as complete
systems in accordance with customers’
requirements. The Forklifts
department manufacturesand supplies forklifts, bothengine and batterypowered types, ranging
from small load capacity“Mobile Sorter”(0.5 tons) to extra large(over 40 tons). They also
manufacture a wide variety
of industrial vehicles such as
shovel loaders, cherry
pickers and towing tractors.
Our Takahama plant (inTakahama City, Aichi
Prefecture) is responsiblefor development anddesign of theproducts of the L
Engine-Powered Forklift& F business unit, and“GENEO” (“7 Series”)
their production facilities are locatedin our Takahama plant, our subsidiary inIndiana,U.S.A., and also our subsidiary in Ancenis,
France. TMC is responsible for sales and services ofthese products. Our domestic market share of forklifts
is about 38%, the largest in Japan. In the global
market, we compete with Linde AG (Germany) andNACCO Group (U.S.A.) for the top position. In 1998
the global market share of TOYOTA forklifts wasabout 14%.
Textile machinery business unit
The Textile machinery business unit began with ourfounder Sakichi Toyoda, who invented automaticlooms. Our group produces a wide range of textile
machinery, including looms, spinning machines andrelated devices. More than 90% of the products areexported, mainly to Southeast Asian countries, Chinaand Korea. We manufacture air jet looms, andmaintain the largest share for this product in the
global market. Also, we have entered the water jetloom business, having bought the business rightsfrom Nissan Texsys Co., Ltd. in April 1999.
Business Performance for Fiscal 1999 andFuture Business Plans
Car air-conditioning compressor
business unit
During the fiscal year 1999, ended March 1999, thedomestic unit sales in total grew little compared withthe previous year level due to sluggish car sales
nation-wide. However, the unit sales for compact andsmall cars increased thanks to the effect of aggressive
research and development of new products andexpanded sales and marketing activities. In theEuropean market, unit sales for German cars such as
Mercedes-Benz, BMW and Audi grew strongly withthe rise in ratio of cars with air-conditioners. In North
America, the strong local economy has contributed to
the volume growth of car air-conditioning
compressors for cars manufactured by Chrysler, ourmajor customer, and an increase in the number ofJapanese cars such as TOYOTA and Honda also
helped boost growth. As a result, the total global unit
sales for fiscal 1999 increased to 9,785 thousand, up
777 thousand from 9,008 thousand for the previousyear. Our future plan is to further improve customer
satisfaction and to expand global sales throughaggressive R & D activities with an ultimate goal of
attaining a global market share of more than 30%; weplan to expand our sales and marketing efforts in theSouthern European market as well as maintaining ourexisting customer base. Our goal is to achieve a larger
market share in Europe where further market
expansion is expected. In North America, we plan toexpand our sales and marketing efforts to include
customers with whom we have had few transactions,

MITSUBISHI
244
DAIHATSU
457

FIXEDDISPLACEMENT TYPEVARIABLEDISPLACEMENT TYPE

(thousand units)(thousand units)

OTHERS1,166

HONDA
946

LW600 Water Jet Loom

TOTAL
7,572

CHRYSLER
1,762

OTHERS
391
TOYOTA
2,997

AUDI
362

TOTAL
2,213

MercedesBenz
1,032

BMW
428

T O Y O D A
1 9 9 911

in addition to our existing major customers. In Japan,
where demand for cars remains stagnant, we willcontinue our efforts to increase our market share byconcentrating on developing and offering newproducts for light and compact cars that we expect wewill continue to play a central role in the car sales.
We will also develop environment friendly products,and focus on the variable displacement type, thereby
reducing the burden on the engine. As ever, ourbaseline is high performance, high quality products
and lower costs to meet our customer needs.
Logistics & Forklifts business unit
In fiscal 1999, the Logistics department suffered adecline in orders, as it was adversely affected bysubdued capital investment activities in the domestic
market, this department’s customer base. However,sales increased to ¥8,374 million, up ¥1,560 million
from the previous year level, largely helped by theoutstanding backlog carried forward from theprevious year, and by sales of clean carrier system toST-LCD, joint venture with Sony Corporation. Sales for
the Forklifts department stood at ¥142,996 million,down ¥10,307 million from the previous year. Thiswas due mainly to weakened demand in the both
Asian and domestic markets, our main customer base.
However, sales in both North America and Europe
have positively increased thanks to our steadily
increasing market share. The current toughcircumstances are expected to continue during thefiscal year 2000 ending March 2000. A quick recovery
in the both Asian and domestic markets is unlikely,and even in North America, where a steady growthhas been witnessed, there are signs of a slowdown.
To deal with this, we will work hard to introduce
more new products, reduce costs, and moreaggressively promote sales. Our future plan for theLogistics department is to engage in a more active
development of new products that will meet thecustomer needs, which are becoming increasingly
diversified, and to expand our market share. In termsof the product line we plan to increase the sales ofequipment for clean rooms, which have beenlaunched very recently, as well as high-speed
automatic guided vehicles. The Forklifts department isaiming to get a 25% share in the global forklift market
by 2005. In order to achieve this goal we willconcentrate our efforts on new product development.
For this purpose, first we will introduce the “GENEO”*(already in the domestic market since September
1998) to both the European and North American
markets as the “7 Series” by the end of fiscal 2000.
Secondly we will develop and introduce the new typeof battery-powered (counter-type) forklifts in addition

12T O Y O D A
1 9 9 9to the indoor-type forklifts, for which our market
share is still small.
* GENEO: The next generation engine-powered forklifts with load capacity from
1.0 to 5.0 tons dramatically improved in the operability and safety by using
System of Active Safety, one of the most advanced technologies in the world.

Textile machinery business unit
In fiscal 1999, sales of the Textile machinery
business unit dropped by 29.9% to ¥18,947 million
from the previous year. This business unit wasnegatively affected by the sluggish economy inSoutheast Asia, our major revenue source, since thecurrency crisis in 1997. This unfavorable trend islikely to continue into the fiscal year 2000 ending
March 2000. To deal with this condition we havecontinued our efforts in sales and marketing activities
in other markets, and have made efforts in cost
reduction. We foresee that since the textile machineryindustry has reached maturity and consists of anumber of competitors worldwide, the competition
still remains fierce and extraordinary growth of ourbusiness is not likely. However, as we do not believein the eventual decline of this industry, but rather
expect a stable demand over the long run, we believethat we are able to expand our market share andimprove profitability as long as we continue offering
the products with higher cost-performance. With thesecircumstances in mind, we plan to set out a full lineup of products by combining water jet looms acquired
the business rights from Nissan Texsys Co., Ltd. inApril 1999 with our air jet looms that uses highlysophisticated technology, and by developing andproducing rapier looms, and thus aim to secure thetop position in the global loom market. We also aim
to improve profitability. Furthermore, in the spinningmachines business we will make efforts to maintainthe current stable position in the market bystrengthening the advantages in the performance andquality of our existing products.