Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value Creation Process
The Toyo Tire Group believes in the importance of organizing and disclosing our corporate philosophy, businessmodel, governance, and business risks and opportunities to help promote a clearer understanding of the type ofcompany we want to be in the future. As part of our value creation process, we have verbalized our six capitals,
and defined the outputs generated through the utilization of these capitals and the outcomes that might impact
stakeholders.

Inputs (FY2023)
Financial capital●

Total assets:

645,480M yen

Our Mission
To create excitement and surprise with
our products that exceed customer
expectations and enriches society.

Business processes

Global production
framework /supply chain

Outputs

Customer baseand marketingby market

Medium-Term’21 Plan
Financial
indicators●

Consolidated operating income: 60.0B yen ／Consolidated operating income margin: 14% or higher●

Percentage of sales from priority products: over 55%

Outcomes●

ROE over Medium-Term ’21 Plan:
12% or higher●

Shareholder returns:
Maintain a dividend payout ratio of 30% or higher

12,729M yen

A highly efficient and accurate tiredevelopment platform

m ent

Pr

od

R&D

Human capital

Technologicalprowess

Diverse human resources that cangenerate high added value●u reDesignability

Number of consolidated employees:

11,267(In Japan 5,606; Outside Japan 5,661)

Social andrelationship capitalPartnerships for value creation●

Consolidated subsidiaries:

14

37 firms

incountries
Firm customer base (distributors)● Universities and other external
research organizations●

Natural capital
Total energy consumption:
7,686.9 thousand GJ● Total volume of raw materials:
549.0 thousand t● Total water discharges:
3,247.6 thousand kl●

17

TOYO TIRE Integrated Report 2024

Enhancing sources of growth
Human resource
base

Financial base

Digitaltransformation
platform

Uniqueproducts
andservices

Medium- to long-term materiality indicators●

R&D expenditure:

oc

pr

●

nd

A technological base that encourages
differentiation through a combination ofbasic performance and design features

h a sin g aIntellectual capital

Coordinatedfunctions[strengths]l a n n in g

34,102M yen
14

Number of production sites:(Japan: 5, International: 9)

tp

Capital expenditure:uc●

P u rc●pply logistics
Su

les
Sa

Production processes that respondflexibly to changing market needs
and demand and supply conditions

Produ
cti
on

Manufactured capitalHumantalentR&D

Decarbonization

Differentiated SUV and CUV products that combine
environmental performance and sophistication●

Innovation to address the shift to electric SUVs andpickup vehicles●

Customer endorsement
Rank 5th on sales share in North America(Medium-Term ’21 Plan challenge)●

Introduction and revision of flexible human resources
systems that adapt to the times

Mobility with reduced impact
on the environment●

Creating diverse learning opportunities●

Actions to improve engagement

Contribution to a carbon-neutral
society by consider the whole life
cycle of products when planning anddeveloping them●

Ratio of sustainable raw materials used in products
2030: 40%●

Scope 1, 2 emissions
2030: 46% reduction vs. 2019 levels,
2050: carbon neutral●

Scope 3 emissions
2030: 20% per tire vs. 2019 levels

A society ofsustainablemobility

The enjoymentof mobility
for all▶Story 1 (See P.36)

The ultimate enjoyment,
excitement, and surprise ofdriving
Satisfied with the quality of life thatmobility brings, the ultimate joy of
connecting society through mobility▶Story 2 (See P.38)

Supplychain

Promoting sustainability (Materiality)
QualityCompany-wide risk management●●

Expanded number of sustainable suppliers
2025: 100% implementation of risk assessments forprimary suppliers●

Established process assurance system●

Traceable individual management to end of market●

Improved user safety awareness

Safety, peace of mind, andcomfortInbuilt safety performance that adapts
to social and mobility changes▶Story 3 (See P.40)

Corporate governanceOur philosophy
TOYO TIRE Integrated Report 2024

18

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Our Strengths
During the Medium-Term ’21 Plan, we have been working to bolster our ability to promptly and ﬂexibly respond tochanges through global collaboration.

Strong customer base built on advantages gained by
not operating dealerships

Sales
Production Optimal global production and supply system

The Toyo Tire Group does not operate any directly managed dealerships in order to sell our tires, making
dealers our closest customers. We believe it is important not only to understand the actual need for the
products that dealers want to deliver to consumers, but also to elicit and respond to the latent needs ofdealers in terms of what kind of value-added proposals and services they expect from us. Our strengthlies in our ability to accurately link our customers’ needs, which vary widely from market to market, withwhat we can offer, and in our ability to collaborate between small and agile functional organizations, andquickly adapt to information that comes directly from the market. Our North America business strategy
has become an iconic business model for the Group’s tire business.
Our sales function is thoroughly aware of the need to correctly understand Toyo Tire’s position within
the industry as well as our strengths and weaknesses in order to implement productand channel strategies.

Simulation technology(T-MODE)We incorporate design support technology that uses AI into our tire and driving simulations to simulate
aerodynamics and snow traction and accurately analyze tire patterns behavior in detail.

Design support technology(T-MODE)●

Japan-R&D

●

cu

re m

uc

tp

la n nin g

Coordinatedfunctions[strengths]

ent

R&D

P ro

d

Product planning is one of the functions that plays a role in guiding company-wide value
creation. Product planning takes the lead in discussions that overlap between production,
sales, and R&D, and takes on issues requiring collaboration, that tend to be overlooked
due to the specialized and independent nature of each function.
Rather than simply focusing on changes in mobility, market trends and interests, we
strive to create and realize plans to make mobility more fun and interesting while ensuring
the basic performance required of tires. This product planning stance has resulted in our
unique, differentiated products. In particular, our strength lies in our ability to communicate
Kiyohito Hasumi
Corporate Officer and Vicewith sales companies across the world on a daily basis. Such communication enables us
President of Business Headquarters
to identify future trends and come up with product ideas, which we combine with thebasic technology that our R&D function updates in anticipation of trends in the automotive industry and the level of
performance and functionality required of tires, to create actual products.
We believe that products created bearing in mind the various situations in which customers use tires can be sold notjust as consumable items, but as luxury items that help achieve the enjoyment of mobility for all.

North America
business model●

High-performance
products backed bytechnology●●

TOYO TIRE Integrated Report 2024●

NA-R&D●

Marketing
Development of customer-oriented
products

Cooperates with the marketing department in North America,
our core market, to develop customer-oriented products that
respond to preferences●

Europe-R&D●

Advanced materials /next-generation mobility survey
Development of high-performancetechnologies

Focuses on surveys and research for the utilization of
cutting-edge materials to facilitate the developmentof next-generation mobility technologies such as EVs.

Sales channels based on strong relationships of trustwith dealers
Pricing closely adjusted to customer needs

ProductionSales

We centrally manage various data as common assets, and add value by correlating data, and we use machinelearning to enable the acquisition of tire characteristic values in real time.

All R&D functions
Development of high-performancetechnologies (research, development,
evaluation, utilization of big data and AI)

Corporate Officer and Vice
President of Sales Headquarters

Product planning to achieve the enjoyment ofmobility for all

Customers

Marketing(Dealers)

Responsible for all R&D functions and updates
various platform technologies.

19

ro

les
Sa

We strive to develop the ideal rubber material by predicting, creating functions, precisely controlling, andobserving and discovering the properties of the various materials used in tire rubber at the nano-level(1 nano = one billionth of a meter).

pply logistic
Su
s

dp

The automotive industry is currently undergoing major transformations and tiredevelopment is also expected to quickly provide quantitative performance and functions
to support the evolution of mobility. We are developing high-performance, high-quality
products by linking our Nano Balance Technology, a proprietary platform technology forrubber materials, and T-MODE, a tire design platform technology, and we are constantly
Technological
updating such proprietary technology. Our R&D functions in Japan, the U.S. and Europe
prowesseach play a different role in our research and we are combining their results andDesignability
collaborating with sales and production departments to develop highly functional andSatoru Moriya
Corporate Officer and Vicedifferentiated products that meet the needs of each market.
President of R&D Headquarters
The use of artificial intelligence (AI) is becoming indispensable in the development oftechnology, such as T-MODE. We believe that it is essential for engineers to be able to explain the principles behind their designs andprovide evidence to support their convictions, without over-relying on AI. We are working to train and improve the skills of ourengineers so that they can use AI to expand their cognitive skills and capacity.

Material design technology(Nano Balance Technology)

Product planningnc h a sin g a n

R&D

Tatsuo Mitsuhata

Customer baseand marketingby market

P ur

Proprietary technology and tripolar R&D collaboration
between Japan, the U.S. and Europe

Produ
cti
o

We are promoting local production for local consumption in markets where our production bases arelocated, while working to optimize the product mix and level production at each of our plants in order toincrease our flexibility to respond to diversifying customer needs and changes in supply and demand.
These efforts enable us to deliver products to our customers in a timely manner. For example, large-diameter
tires for SUVs and pickup trucks, an area in which we excel, enjoy tremendous support in the North
American market. In order to meet such demand, we are gradually increasing the production capacity at
Masami Miyamori
our U.S. plant and we have also updated facilities at our Japanese plants and set aside capacity at our
Corporate Officer and Vice
Serbia Factory, which opened in 2022, to fulfill supplies to North America.
President of Production
Headquarters
Our strength also lies in the talent that enables us to respond flexibly to production. We are fostering
talent based on the characteristics of each plant and the local conditions. At the same time, the size of the working
Global production
population in Japan is declining and we need to ensure skill and know-how succession, an issue we are addressing
framework /by leveling operations and eliminating dependency on individual efforts or skills in coordination with enterprise
supply chain
resource planning (ERP) and through the introduction of new production systems. These initiatives are undertaken inline with our company-wide efforts toward data-driven management. We believe that leveling operations will also leadto greater diversity at production bases.

(Consumers)

R&D

●

●

Development to respond tomarket needs
Technical feedback from
off-road racing●●

Identification of market needs
Recognition (prestige)
through participation in
off-road races●●

Customer support(fans)
Niche market position

TOYO TIRE Integrated Report 2024

20

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

External Environment and Risks & Opportunities
We are aware of the risks and opportunities posed by the external macro environment in which the Medium-Term’21 Plan was formulated and is being implemented, as well as the changes in the mobility field that are expected
to occur by around 2030. We will work to create value along the entire value chain through our operations,products and services based on this awareness.

Mindset: Home bound,budget-minded, avoiding
person-to-person contact● Behavior: EC/cashless purchases,changes in requested services●

Shift to environmentallycompliant/electricvehiclesAccelerating
decarbonization(transition plan)

Increasing in geopoliticalrisks
Decoupling trend continued,
including competition for leadership
between the U.S. and China● Economic disparities widening due
to COVID-19 also aggravate
populism●

Environment

Increased use ofdriverless transport andalternative transport
services

Measures to prevent
plastic pollution

Products and services

Opportunities to increase demand throughtechnological innovation and uniquenessin our EV response

Products that focus on reducing CO2
emissions and circulating resources
during their lifecycle(passenger/commercial vehicles)

Opportunities to increase demand throughtechnological innovation and uniquenessin our environmental response
Opportunities to increase demand for EVs
for commercial use following thecompulsory shift to non-fossil energy inthe logistics industry in Japan

Prioritization of employee/customer
satisfaction increased● Accelerated trend to align public
interest with economic interests
through customer-producer
collaboration●

Evolution and accelerated
introduction of laborsaving
technology
Digital investment accelerated tomake up for slow growth in worker
headcount● Advanced roles for humans as
quality/quantity of data increased●

21

TOYO TIRE Integrated Report 2024

Greater use of IT(mobility-related data
linking)

Sensing, tire wear diagnoses

Operations

Transition to a circular
economyGrowing interest innatural capital(including increased
monitoring of
deforestation)

Society

Further diversification
to meet individual
needs and convenience

Highly durable (wear resistant)/
maintenance-free tires, airless tires

Opportunities for maintenance-free
support and opportunities in the solutions
business

Risks
Aligning of social &environmental interests witheconomic interests
accelerated

EV-specific/compatible tires

Growing interest in
human capital
Escalating demand toaddress human rights
issuesRisks associated with climate-related
measures

Strengthen
platforms

consumer behavior in the
post-COVID-19 era

Sustainability trends

Opportunities

Human capital management,
health management
Develop technologies to promoteresource circulation and recycling

Risk of not being able to secure a stable
human resource base

Improve energy efficiency andexpand use of renewable energy

Risks associated with environment- andhuman rights-related measures in ouroperations and supply chain

Responsible raw material
procurement and traceability

Risks of failing to ensure quality, including
environmental compliance, throughout thevalue chain
Risks associated with the growing
demand for safety

Risk management

Awareness of the external macro environment(before 2025)
Predicted changes in
the mobility field
Significant changes in(before 2030)

Supplier engagement
Strengthen quality throughout thevalue chain (process assurance,tire safety awareness, individual
management systems in themarket)TOYO TIRE Integrated Report 2024

22

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Toyo Tire Materiality
We have established our Group material issues, which were decided upon by the Sustainability Committee in June
2021 and then approved by the Executive Committee in July. Along with strategically investing our internal
resources into initiatives related to the material issues, we also use this opportunity to foster a corporate culture
where each employee addresses sustainability issues by connecting materiality to their own duties, as well as
strengthen materiality-focused stakeholder engagement.

Process of identifying material issues
Following the statement in our Medium-Term ’21 Plan that weare going to integrate sustainability into corporate
management, we established a steering committee
comprising the president and the vice presidents of eachheadquarters to start developing sustainability-related policies
and identifying material issues. The work was transferred to
the Sustainability Committee in April 2021, with further
discussions taking place over four months. In the meantime, a
total of 40 division general managers and general managers,
who would be at the heart of the teams handling the task ofdriving and promoting sustainability, also had their own
discussions on the same themes, and the outcome of their
discussions was fed back to the Committee’s discussions.

1

2

Determine the Toyo Tire approachto sustainability

Investigate how sustainability
impacts business opportunities
and social value● Extract key themes to address — based on specificproducts and services, target customers and futuresocial change — in order to realize the Toyo Tire
corporate philosophy● Determine the value created in society throughtheme initiatives and evaluate their priority

3

Material issues

Ⅰ Value creation

DomainUnique value provided tocustomers and society
through our products
and services

1

Help create a society ofsustainable mobility

We will contribute to a society of mobility that achieves
net-zero environmental impact and zero accidents whileproviding efficient transportation by offering uniqueproducts and services.

2

Support the enjoyment ofmobility for all

We see it important to offer creative added value that
supports the diversity of sustainable mobility by meetingthe varied expectations people have for their own
mobility through our unique products and services.

Ⅱ Foundation for value creation

DomainThe base forvalue creation3

Support diverse talent withmotivating challenges and job
satisfaction

We will secure a foundation for diverse talent who
support our company’s business management andcreate high added value in these rapidly changing anduncertain economic and social times.

4

Continue innovatingnext-generation mobility
technology

Domain

Ⅲ Risk management

Responsible businesspractices that protect
the means of value
creation

5

Pursue decarbonization in all
corporate activities

We aim to reduce our environmental impact through our
products and services and decarbonize our entire
manufacturing process and supply chain while leveraging
these measures to increase our cost competitiveness.

6

Promote supply chain
sustainability

We understand that the sustainability of the Company’s
operations, as well as the genuine enjoyment of mobility
we endeavor to provide, depend on a healthy supply
chain. We are therefore committed to addressing
environmental and social issues in the supply chain.

We believe it is vital to engage in technological innovationthat supports the evolution in mobility being demanded inthis new era and make continuous advancements thatmeet the needs of society.

7

Key achievements of fiscal 2023:

Key achievements of fiscal 2023:

Key achievements of fiscal 2023:

Product development based on plan to upgrade fuelefficiency at each model change● Development of differentiated products based on
strategy of unique approach to EVs● Development of truck and bus tires that addressenvironmental and social issues in logistics industry●

Second employee opinion survey and action to
improve organizational culture● Training to empower women and unconscious bias
training to promote diversity and inclusion● Percentage of sustainable raw materials used in
products: 26% (by weight in products produced at theend of 2023)● Industry-academia collaboration (joint research) in andoutside Japan on sustainable raw materials●

Investigate sustainability andbusiness risk

Ensure the fundamentals of
manufacturing: quality and safety

Quality and safety are fundamental to any product orservice. The value our products and services offer will
mean little to society if their quality or safety is in doubt,
as the lessons from our past have taught us. Quality andsafety are therefore our top priority in all of ouroperations.

● Confirm risks in the tire and auto parts industry thathave been identified by international groups, ESG
rating organizations and other bodies, and risks weare aware of through our corporate activities● Determine their potential to hinder achievement ofour corporate philosophy and social value creation,and the status of existing Group efforts, andevaluate their priority

4

23

Identify material issues based on
the results of steps 2 and 3

TOYO TIRE Integrated Report 2024●

CO2 emissions reduction achieved (against 2019):
Scope 1, 2: 35.6%, Scope 3: 1.5%
● Percentage of electricity from renewable sources usedat production sites: 71.1%● Trial of internal carbon pricing (ICP) program (forinvestment decision-making)* Officially introduced in January 2024
● Human rights risk assessment carried out acrossvalue chain.
● Percentage of suppliers assessed for environmental
and social risks: 70% of total transaction amount of
raw materials for tires* 100% of primary suppliers of natural rubber

TOYO TIRE Integrated Report 202424