Toyota Motor - Q3 2026

Transcript

Yuta Tomikawa (Announcer and Moderator)

I am Yuta Tomikawa of Toyota Times, and we are having this important notice on short notice on Toyota Times. For this notice to information session, we have made it so that it will be a press conference as well, and thank you very much for this many media personnel to come to the venue, and also there are many connected remotely. Thank you very much. Just 1.5 hours ago, we have issued a press release, and at 8:26 P.M., April 1st executive changes have been announced. For the representative director and president, he will become the Vice Chairman, Chief Industry Officer, CIO, and Operating Officer, Kenta Kon. He will be assuming the position of president and CEO.

With this change, Sato-san here will be looking at the focusing on the whole car industry, and Kon-san, he will be focusing more on the company of TMC. This will be the new formation of the executive structure. Thank you very much for your understanding, and we would have these gentlemen to take a seat now to proceed. Later on, we would like to receive questions from the floor as well, but please allow me to start with the first questions. I'd like to ask Koji-san first, Sato-san first. Why is it that Toyota decided to change to this new executive structure? As a reason for your decision, can you explain?

Koji Sato (Outgoing CEO)

Yes, thank you. Well, I'd like to say first that it was a short notice, but thank you so much for attending our Toyota Times live interview today and also many connected remotely. I appreciate this very much. So Tomikawa-san first asked about what is the purpose and why we have made this decision for the executive change. I'd like to provide my explanation. For the purpose of this organizational change, it is to enable Toyota to fully address the management changes that it is now facing. So it is what we think of as a formation change. For the various challenges that we have, the first management challenge we're facing is the need to enhance the company's earning power to support our future.

Toyota, in the past two years, we have been working on the foundation strengthening efforts. And from there, the environment surrounding us has pushed us to do a gear change, a gear change toward improving productivity and also to create ever better, more affordable vehicles. We find ourselves to have shifted into this phase.

So that is the first management challenge and that we would also like to deal with this formation change. Also, now the next challenge is to accelerate our industry collaboration. In order to maintain the international competitiveness for the car industry going forward, the whole industry should be united to advance concrete collaboration initiatives and identify the pathways for Japan to remain competitive. In order to evolve vehicles in tandem with the social infrastructure, collaboration with partners beyond our industry is becoming key. In other words, for Toyota, more than before, the role that Toyota should play within the industry is becoming larger and more important than ever. Against this backdrop, the executive appointment meeting of Toyota has provided a proposal, and that proposal has been a trigger to examine the optimal organization structure for Toyota in light of the current management challenges we're facing.

Based on this kind of discussions and deliberations, we determined that a change in the management team's formation is necessary for the future of Toyota and also for the industry. With that, consequently, we have held the board of directors meeting and the board approved these role changes today. Kenta Kon, he will become the President and CEO and have a focus internally and drive the initiatives to enhance our company's earning power. That will be his role. For Kon-san, current CFO, he possesses strong expertise in accounting and finance. Most recently, as many of you know, he is the CFO of Woven by Toyota, and he has the perspective to look at TMC from the outside and has been leading cross-functional reforms across the organization.

We believe that in advancing the earning power initiatives, he will be able to leverage his strengths to provide the strong leadership that we will need to advance our initiatives. For myself, I will become the Vice Chairman and also the Chief Industry Officer, CIO, and I will focus my efforts on the broader industry, including the Japan Automobile Manufacturers Association and Keidanren. I intend to be able to accelerate the pace of the collaboration. I intend to be more active than ever on the ground, on the front lines connecting Toyota with the industry. For Toyota and at Toyota, what we believe is that we should work based on our roles and not our titles. This has been always the core of our communication.

Since I became president, what was always on my mind is to maintain the speed of management and also to continue to take action. This is the team management philosophy that our team, our Toyota executive team, has always been valuing. We want to contribute to revitalize further the automotive industry and also Japan. Under this new formation, we want to fully carry out our respective roles. We sincerely ask for your continued understanding and support. Thank you.

Yuta Tomikawa (Announcer and Moderator)

Thank you. So, of course. New structure, you explained, the new formation. From this executive appointment meeting, when you received the proposal, what was your impression?

Koji Sato (Outgoing CEO)

Well, honestly speaking, because I'm a human being, at that moment, I actually had a lot of thinking in myself. Because at JAMA, there was a discussion of selection of chairman, and that discussion started in autumn, and I was discussing with many top management. Because of several reasons, they have asked that Toyota could take the lead in JAMA. This activity at JAMA and also the job of taking responsibility at Toyota, I was wondering if I could do both at the full scope. I was actually asking myself. But it is quite difficult also to speak up about this struggling point. Then there was this proposal from the executive appointment meeting.

I was wondering if I could serve both of those roles in this formation. I think this proposal was quite effective in terms of governance because from the third party's view, this position is quite overloaded. Because of the proposal from this appointment meeting, I became very objective and started to think that this is something that I should consider.

Yuta Tomikawa (Announcer and Moderator)

Oh, I see. So the vice president of Keidanren and vice chairman of JAMA and also some of your works for the central government, you were quite busy. You also were thinking you wanted to continue your role of president.

Koji Sato (Outgoing CEO)

Of course. Because I've been working at Genba all along and I love cars. Of course, I always have been asking myself what the role should be to become a president because car making is something that you can stake your life for. Of course, some part of me really had this attachment to this.

Yuta Tomikawa (Announcer and Moderator)

So that was a conflict and struggling point. So Akio-san served as a president for 14 years and your term was 3 years. Is it too short?

Koji Sato (Outgoing CEO)

Well, I knew you were going to ask this question. Well, honestly speaking, I think it is short. However, there are two points I wanted to have in my mind. First of all, it's still three years, but it's already three years. When you think of the speed of the auto industry, it is not that lukewarm. In other words, the time frame in the past is completely different with this current three years. And then when I became the president, Chairman Akio, when he asked me to become president, car making in 14 years of his presidency is still not complete. And then he wanted me to work together with him to complete this work for the finale. And that was the starting point.

And so, Chairman Toyoda, at the end of January, when he asked me to take some time for discussion, he said that he wanted to serve so that he can contribute to make Japan better. He sincerely talked about this, and that is the same Mr. Akio Toyoda who said that we want to make Japan better. And so with his words, it really accelerated my decision. And another point is that, of course, the first player would always win. What I mean is that as a top management, I should not be the I in the sentence. If I become the subject, then I would not be able to make the crystal clear solution because I want to do this and I want to do that. So I didn't want to be the subject in a sentence. It's not I, it's we.

So when you think of that, there was a selection of chairman at JAMA, and then if there are things that have to be done at this timing, although the three years was so short, but that is not the reason for anything.

Yuta Tomikawa (Announcer and Moderator)

So I thought you did something bad because it was so short, three years, and I'm sure some of the attendees of this press conference are thinking about the same.

Koji Sato (Outgoing CEO)

Yes. So honestly speaking, some of my friends text me and ask me if I did something bad. What did you do? So to avoid any misunderstanding, there is no wrongdoing. I have to be clear about this. And like I said, there was a very positive forward-looking discussion at the company. So please understand this. And then to all my friends, I have to tell them not to send me a weird text.

Yuta Tomikawa (Announcer and Moderator)

Is that your final answer?

Koji Sato (Outgoing CEO)

There is no wrongdoing, nothing. So as was mentioned in the press release, it is not just this executive change in April 1st, but as of the shareholders meeting in June this year, there is going to be announcements and you are going to no longer be a board member. That is correct. There are two points to this. The first of which is that we are aware of the corporate governance code. The way corporate governance should be is that Toyota has been making efforts to improve the management and we want to be very much aware of that. BOD has to be participated, all board members, and then they discuss seriously about how Toyota can win. All the board members are always present at the BOD meeting.

Diversity of the BOD members and numbers of board members are the important points for us to consider at TMC. As I became the Vice Chairman, you know, the general public, they are very conscious of titles, but at Toyota, that is not the case. So in one sense, from the viewpoint of corporate governance, we want to stick to what Toyota believes and that is the one reason. Second of all, what we try to do in the future, if I have this role of board member at Toyota, it might not always be helpful to wear that badge or hat for my future role because at JAMA, there are very cross-industrial topics. Then in some cases, we do agree with the whole overall topic, but there are some oppositions amongst some companies.

And then when that happens, if I'm wearing the hat of Toyota, then it could sound like a pressure, peer pressure from Toyota. You know, I was struggling all along. You know, I tried to convince everyone to do something for industry, but if I am wearing a hat of Toyota, there remains to be seen how much understanding we can get from the peers. So I wanted to go back to scratch. And I wanted to be the person who can connect all these passions and intentions of all the companies in the industries. Otherwise, it would not be possible to do a crossing industry or the reform that has to be done in the industry. So that is another reason.

Yuta Tomikawa (Announcer and Moderator)

So Kon-san, thank you for waiting. This time, the role change. When and from who you were informed about this?

Kenta Kon (Incoming CEO)

Yes. It was in the middle of January. Just like Sato-san said, there was an executive appointment meeting. Members talked to me about this concept.

Yuta Tomikawa (Announcer and Moderator)

So what was your first impression about it?

Kenta Kon (Incoming CEO)

Well, I'm sorry for the executives, but I was so surprised. And I think I'm not very well to this story, but I don't really remember what I heard at that time. And as Sato-san said, the purpose and intention of this role change was explained by the executives who were in the same meeting to inform me. But I was like, "So you were very surprised? You didn't think it would be you?" Yes, that is true. Who did you think it would be? I wasn't thinking about it so much because it was only three years. That is correct.

Yuta Tomikawa (Announcer and Moderator)

Kon-san, you used to be a vice president. When you were executive vice president, did you think that you would be the president afterwards?

Kenta Kon (Incoming CEO)

No, no. I wasn't thinking that either. Then it's really like a big shock to you, like the world collapsed. Yes, you can say that. So probably it was difficult for you to kind of hide in your motivation for your new role.

Koji Sato (Outgoing CEO)

Yes, I think so too.

Kenta Kon (Incoming CEO)

At this point of time today, it's not that I am foreseeing many things going forward and clearly thinking what are my plans to move forward. My honest feeling is that nothing is clear at this crystal clear at this point of time. And for what Sato-san has mentioned before me, it is also new things that I've learned today as I was listening to Sato-san.

Also with Chairman Sato-san and the other operating officers, I will continue to communicate with them and talk with them about and consult with them what kind of direction we should move forward after April and what would be the formation of the management team. Now it's like Sato-san is going to be the captain of the national team, Japan national team. But for our club team, Toyota, we will be able to look at a larger scope and cover a larger scope. And that will also be something for to consider as I take on this position of captain for the club team.

Yuta Tomikawa (Announcer and Moderator)

And your Woven by Toyota experience, do you think it will be helping you with your new role?

Kenta Kon (Incoming CEO)

Yes, I think so. So as of now, I am in Woven by Toyota. I belong to Woven by Toyota.

This organization, we have relatively younger members and this is a software development company. We have a different culture, like an agile development culture and the way of thinking is slightly different to TMC. Another thing is that this is also something Toyota should be focused on. What we do at Woven by Toyota is that it is a company that we thoroughly have put importance on information sharing. The moment we talk about something, we try to go through many methods so that it will be shared with as much people as possible. Agile development requires that kind of a thorough information sharing. That's also one thing. It is close in distance probably to Toyota Motor Corporation, but we still have a distance. We're not at the same spot. I was in this company that was a little distance from TMC.

And so this experience of looking at Toyota from that position outside of Toyota, a little distance from Toyota, was very valuable for me. I was able to understand things I've never understood when I was inside of TMC. So there were things that I was impressed moving out of Toyota and seeing from the outside perspective. Also things that I should change. This thing is not really acceptable.

Yuta Tomikawa (Announcer and Moderator)

I wanted to point, think that what was the negative point that you recognized?

Kenta Kon (Incoming CEO)

Well, there's quite a lot actually what I recognize that's not a good thing. Well, as much as you can say, if you can share some of the things you recognize on the negative side, well, I think that at Toyota, people are really working very hard and with a strong mission. Each and every individual is working with a strong mission.

And also there's a lot of accumulation of the past experiences that we've had and the history. But on the other hand, if we try to do something new, we tend to be bound by the past precedents and also the past formula, try to be in line with how the things happened in the past. I think that's a tendency that TMC has. And of course, if we want to make improvements for the current business, it's a very important thing, an important perspective. But if it's a new challenge, something new that we're trying to do, we need to take a different perspective and different approach. That's what I thought from an outside perspective.

Yuta Tomikawa (Announcer and Moderator)

And so as president of TMC, how do you feel of that negative point out by Kon-san?

Koji Sato (Outgoing CEO)

Well, I agree to what he said because I think there's many things that you can only notice when you're outside the company, outside the organization. Like sometimes we can tend to be bossy, we may act bossy. I think he was trying to be very polite. But our company is a company that has a strong functional organization. We have strong functional capabilities and everyone is working very hard and they have no ill intents. But sometimes we're not very good in having collaboration cross-functionally. And like Kon-san has said, this Woven by Toyota is focused on agile development. And from their perspective, from that environment, probably we are more kind of working in a standard way and being siloed. And so having this objective perspective and having that feeling that we need to change Toyota, that is very important to move us forward.

Chairman Toyoda always says that since I'm from the development center R&D team, he says that you've always been nurtured in the ivory tower. So Kon-san will have a different perspective and that is going to be very helpful for Toyota going forward.

Yuta Tomikawa (Announcer and Moderator)

And also Sato-san, for you, you've been visiting the Genba very much, especially after Toyota experienced the certification issue. And is there anything that you wanted to succeed passed down to Kon-san relative to the Genba activities?

Koji Sato (Outgoing CEO)

Well, for the first year that you became president, well, my first year as president, I had tried to come up with concrete initiatives so that Toyota can transform into a mobility company. But at that time, we had the certification issue come out. And the advice I got from Chairman Toyoda was very simple in just one word. In these times, go to the Genba, Sato.

That was what he said. Very simple and very short. And I thought that because I was always at the genba doing development as an engineer, I thought I knew about the genba. But once I followed his advice and went to the genba, I found out that I had no idea about the genba. For Toyota, in all plants, genbas, all the development genbas, everyone is working very, very hard. And there are these many, many invisible heroes at Toyota making achievements and giving out results. And I didn't know about all of these efforts in Toyota where everyone was devoting all that they had and thought that I knew about Toyota's genba. So then what I thought is that if I can help to create an environment so that they can do something everyone wants to do, that probably that's my role.

It's going to be a little emotional, but in Shimoyama, there's a test course for Toyota. And my juniors at Shimoyama said that, "Sato-san, please come and drive our car." So they invite me, so I'll go. And I drove a car, tested cars for a full day. So the people, the guys who's doing engaged and development projects, they really have shining bright eyes and they're fully having a lot of passion about developing cars. And when I became president, the message that I gave out was that I want to be a president that continues to make cars.

What I felt when I went to Shimoyama and met these young members who have these shiny eyes and enjoying and having so much passion for developing cars, I thought that what I want to do is to create that environment so that these people, these employees will be able to do fully on what they want to do. When I think about helping others as an engineer, it's not for me to go in as one engineer and work together. I think my role is to create an environment for them to be able to do what they want to do. Toyota, we're in this new position that we can't just think about ourselves. We have to think about the whole industry, about the country, the economic situation, the trade situation. All of this is all intertwined with what Toyota is doing.

So, thinking about that, at the beginning of this year, Chairman Toyota did the calligraphy, the new year calligraphy, and he wrote the word ba, which that kanji character ba, which means space. So I thought that that ba or this space of Toyota is expanding and is changing. And it was a trigger for me to think about what is the ba that I should be in. And that connected into the decision that I made for this executive change. So you saw that those people, those he's and she's that were devoted and making cars and very passionate. So you thought that you should be able to help them and create that ba, create that space for them to excel.

Yuta Tomikawa (Announcer and Moderator)

So we talked a little bit about car making. And Akio-san was an old man who loves to drive cars. You were the guy that liked to make cars. If we go in that style, then Kon-san, what kind of guy are you?

Kenta Kon (Incoming CEO)

Well, I also do love cars. But right now, I'm in charge of finance and accounting. And so what I always think about is in order I always think about money in creating a financial foundation so that we can make good cars and also profit. Money and profit and numbers is what I am focused on.

Yuta Tomikawa (Announcer and Moderator)

So you're a guy who likes money and numbers.

Kenta Kon (Incoming CEO)

Yes, I guess I'll say that I'm a guy who loves numbers. I'm a guy that loves money. Well, but even if we say money, it's not that you want to keep that money for yourself.

Yuta Tomikawa (Announcer and Moderator)

You're not the greedy type.

Kenta Kon (Incoming CEO)

Well, yes, that's what I think. I'm not that greedy type that I think. But this time when I heard about this appointment proposal from the executive appointment meeting people, I met with Chairman Toyoda and he mentioned the name of Taizo Ishida. So he was the big treasury keeper, the safe keeper of Kiichiro. Yes, he was the great banto or the consigliere in a certain sense to Kiichiro Toyoda. And Taizo Ishida, he was a person who was very much fixed on the financials and he would not use any wasteful penny. However, for the dreams that Kiichiro had, he would make courageous and bold decisions and make those big investments for Kiichiro's dream. And at Toyota, I believe that kind of way of thinking about money has not changed at Toyota. So I did say that I like and love money.

What I'm thinking of when I say I like money is I want to use money for the future of Toyota. Also that money at Toyota is not something that we generated just only by Toyota. So we should use that money that we have for others as well, for others in the industry, others in the country. We are in a strong position to be able to do that, to use money for others. So that kind of a profit structure, that kind of a financial situation is something that we should always have attention on. I believe that is why Chairman Toyoda has raised the name of Taizo Ishida and I want to make my efforts in that way too.

Yuta Tomikawa (Announcer and Moderator)

In the press release, Toyota's one of the important themes is to improve the break-even volume. And then in your New Year's remark, Koji-san, you want this year to be an intentional pause year. So now you are in the execution stage, which would emphasize production. That means rather than increasing the production volume, when you talk about productivity, you want to pay attention more to the quality aspect.

Koji Sato (Outgoing CEO)

I think both, because each unit of cars, especially we are asking customers to wait for delivery of cars that they've ordered and there are so many customers of such and there are some constraints to production. Therefore, we want as many cars to be produced as possible and then deliver them to customers as fast as possible. And that is an important mission for us. On the other hand, as you mentioned, Tomikawa-san, quality. When it comes to Toyota's revenue, we don't have any numerical target for our revenue.

No matter how the environment is harsh, we want to be a company who can incur revenue and we don't stop our business. We don't have to give up on some things to come up with revenues. I think that is the revenue stream and the structure that our stakeholders are requesting for. In order to maintain that, we want to reduce the break-even volume points. In other words, even in a bad time, we want to hang in. That is the kind of structure that we want to create as a company.

Kenta Kon (Incoming CEO)

Yes, unless you have earning power, unless we have earning power, we cannot do what we want to do. Earning power is important in order for us to achieve what we should do.

Yuta Tomikawa (Announcer and Moderator)

Kon-san, you are very humble and you are not trying to show your aspect of loving cars. I have to say this. Kon-san and I had this minivan discussion before. Kon-san loves minivans.

Koji Sato (Outgoing CEO)

Minivans?

Yuta Tomikawa (Announcer and Moderator)

Yeah, he was so humble that he is not talking about it. But once he starts talking about minivans, then he would talk about the. So Noah and Voxy, I think he loves those models. Minivans only, yes. Minivan limited. So is this not good?

Kenta Kon (Incoming CEO)

No, no, it's okay.

Yuta Tomikawa (Announcer and Moderator)

So at the rally challenge, you were also participating, Kon-san. And I actually was interviewing and then I asked you to compete. But so rally and driving race, would you continue participating to these?

Kenta Kon (Incoming CEO)

Well, just like before, I want to continue to drive cars. That's my intention. Well, you make me feel better. [Foreign language] So he is so good that I can't even compete against him. I'm going to pass the microphone to the audience soon.

Yuta Tomikawa (Announcer and Moderator)

But so Koji-san, did you talk with Akio-san about this role change?

Koji Sato (Outgoing CEO)

Yes, as I mentioned a little bit before, in January, I did discuss with Chairman Toyoda and we were saying that when we're trying to make Japan better, we do want to serve some roles. So it's a very simple thing. But he's thinking and chairman's passion was so simple and that was a strong message to me. In other words, he won't talk about the details of the formation change. You might think that he would give you detailed instruction, but not at all. It's much smaller than or fewer than before. But rather, he would give you this mainstream because we want to be instrumental in making Japan better.

Yuta Tomikawa (Announcer and Moderator)

And then we've been talking about this industrial report, industrial contribution. So this HR formation, is he involved at all?

Koji Sato (Outgoing CEO)

Well, like I said, no, he's not involved. I'm sure he has opinions, but he was not involved in decision making. At Toyota, we have the executive appointment meeting and the members of this meeting will discuss voluntarily. They have the authority to decide on or discuss and decide on this HR formation. So we have been reviewing this company structure and then we became a company to have the committee with the auditors. And then now we have members for this executive appointment meeting and that's where we start our activities from. From that timing, we started discussion of the to-be picture. For example, in risk management, when there is something wrong with the existing CEO, how do we maintain the business and what should be the preparation that we have for successors? So that discussion started back then.

On this role change, when the decision was made at the end of last year that I would become the Chairman of JAMA, and at that time, we started to discuss the details of this formation change. Then they got me involved in discussion and I made this decision. Ultimately, we all decided at BOD that we are going to propose this to the general shareholders meeting. As Kon-san was saying, what is Akio-san's impression?

Well, as Kon-san was saying that in each timing, there is an appropriate formation. That kind of flexible management is always called for. From the viewpoint of Chairman Toyota, I think he is 69 years old and he's going to turn 70 this year. As he continues as the chairman, from now on, he says that there are three points that he wants to focus on.

One of them is HR development. Under his leadership, learn the execution of management so that we can have a more rich pool of human resources who are involved in the management. And that's going to be quite important. This formation change will make Toyota stronger. And if Toyota can continue to be strong, then that would be instrumental in making the industry stronger. So that is the kind of thinking I think he has against or at the backdrop of this HR change.

Yuta Tomikawa (Announcer and Moderator)

So you mentioned about three focuses. We are going to distribute this in Toyota Times podcast by the end of this month. So now we'd like to take questions and comments from the audience. And please raise your hand. And when I call you, please let me know your company and also your name as well. Since we have limited time, we'd like to limit one question each. If there is a little more time, I think we can come back and receive more questions. If you have any questions, please raise your hand. The person in the front, please. I think you were the fastest to raise your hand.

Speaker 4

I'm Nikkei Cross Tech. Takao Tsuchioka is my name. I want to ask about the direction of engineering development. If it is irrelevant, I'm sorry. But the L2 and autonomous driving technology, Tesla and the Chinese players have been accelerating their development effort. For this kind of a trend, Toyota, what is the current situation of the capabilities? What will be your future policy to promote the development? Well, I want to understand how Kon-san views this topic.

Kenta Kon (Incoming CEO)

Thank you very much for your question. Well, regarding autonomous driving, if I can expand the scope, it will be including Toyota's SDVs. Is Toyota engaged in developing SDVs? When we think about this question, a little while ago, actually there was their core direction that Chairman Toyoda showed to us. That was the target to achieve zero traffic accidents. It's not going to be an easy path to achieve that. But I believe that we are steadily moving along this path toward the target. For companies like Tesla and other companies, they have been quite quick on working on an AI-based, ML-based type of autonomous system. There are early entrants in this area. If the question is, is Toyota advanced in their level? But that's not true. There are many things that we can learn from these early players.

But for Toyota, we have this 10 million of sales annually and also the 150 million UIOs. It means that there is a huge source of data that we can rely on. And therefore, we will be able to have good speed in catching up. I think that will be a way to exert our strength. And also there are the TSS, for example, that is something easy for the customers to accept and that can secure the safety for customers. So those will be something that will be quite close to customers. And then there will be the systems more for the future, a complete autonomous system. We're working on all these ends.

Speaker 4

So when Kon-san, the reason why you were selected as a president, is it because there is an intention of Toyota to accelerate the technology development, including the autonomous driving system developments? Is there that kind of meaning behind your selection?

Kenta Kon (Incoming CEO)

Well, if you can comprehend in that way, I would be grateful if you interpret in that way. But for me, my understanding is that my main role is that for those kinds of technical development, for those who will be leading those efforts, it will be other engineering members. There's many engineers, talented engineers in our company. So we have those leaders.

For my part, my role is to create a good environment so that we can invest in those areas and also create an environment so that those engineers can try many options, not just to limit ourselves on one path, but to create an environment where we are able to test the various options and to be in a state where we can be durable in that kind of situation too, meaning that we have a good profit structure. So establishing this good profit structure, this foundation so that people can take courageous challenges will be my role.

Yuta Tomikawa (Announcer and Moderator)

Any other questions, please? Yes. This person in the front row.

Taruno Akira (Equity Research Analyst)

This is Taruno from NHK. I have a question to Kon-san. So at the background of this presidency change, you talked about how you want to improve the break-even volume. At Toyota, in the past 10 years, this number has been improving, I think. What kind of challenges and issues do you have? As a president, how are you going to lead the solution for this problem or for this challenge?

Kenta Kon (Incoming CEO)

We recognize the challenge and we made the announcement of the fiscal numbers. Break-even numbers in the past one or two years have been increasing a little. There are some external reasons and also the price level is another factor. No matter how bad it becomes, no matter how tough the environment, we want to have a structure in place so that we can hang in there. That is something that we are all aware. There are many factors, like Sato-san said.

Without having the overall picture, I think we were too conscious of the benefits of each function rather than having a big picture. So in that sense, we want to have more cross-functional awareness. And I think people are more conscious of this more than before. And as we made the interim report, we have this theme of intentional pause. And Sato-san also talked about it. So we want to have more of a company-wide approach for this.

Yuta Tomikawa (Announcer and Moderator)

So going to the next person. Anyone who have any questions? The person in the back in the business suit.

Speaker 11

I'm Nagai from TV Tokyo. I have a question to President Sato. Earlier, you mentioned that it was a short three years. But in the past three years as president, what were the things that you were able to accomplish? On the other hand, in this short term of three years, there probably were things that you were not able to accomplish. Probably there's things that you want to succeed to. Kon-san, can you talk a little bit about those?

Koji Sato (Outgoing CEO)

Thank you for your question. Well, I don't think that there are any things that I need to do on a personal level. Like I said, the subject should not be "I," but I should always be thinking from a "we" perspective. We are now targeting to transform into a mobility company. At the beginning, at our starting line, we did say that we want to become a mobility company. But what to do was very unclear. That was our starting line. And that was a starting line for the new management team. But in the past three years, we've tried to first take action.

That was the consciousness that we had. My feeling is that because we continue to take action, little by little, those concrete measures that we need to do, the initiatives, have become more clear. When we know what kind of action we need to take more clearer, then we know the challenges. Then if we know the challenges, we're able to make the changes necessary to overcome those challenges. I guess this initial torque to start and move toward a mobility company was probably ignited by the efforts in the past three years. What will I want to succeed and pass on to Kon-san for him to continue on? That is, it will be all summarized in this word, "Let's make ever better cars." Taking this word and thinking about it with the whole company and seriously considering how we can achieve that.

Because at the end, we're a car company, meaning that we have to have products that are attractive so that our customers would want to select our products. That is the center of our business. Currently, Toyota vehicles are being chosen and are being loved. It is because of the past efforts. It's not the efforts of the 1,-2 years that have paid off. Because if you think about the car business lead time, the cars that you see in the market, it's those models that I was working as an engineer in the company 10 years ago. Those are finally bearing fruit right now in the market. If we want to think 10 years in the future from here, then we want to make our efforts and sow the seeds now so that a decade later, people will say that Toyota has ever better cars.

And that means that Toyota's most important part, that we continue to pursue ever better cars and sow the seeds for the future, is very important. But I don't have to say this to Kon-san because I think he is well aware of this point and he'll continue on.

Yuta Tomikawa (Announcer and Moderator)

Thank you very much. Any other questions, please? Okay. The second person from here, the person in the center.

Speaker 8

My name is Fukui from Nikkan Jidosha Newspaper. I have a question to Kon-san. So under the presidency of Sato, I think the team management and also evolution and inheritance was the theme. I do understand that some of the things are not too clear yet. But because of your financial background, including the next management structure, what will be your management policy that you want to focus on? So team management is something that you mentioned and this will stay the same?

Kenta Kon (Incoming CEO)

Executive members, we have the presidents and divisional chief officers. All these executive members are there at Toyota. We don't have one superman. We are working to make Toyota and Japan better altogether. That kind of style is going to stay the same. As Sato-san just said, making ever better cars, that theme or the mission will stay also the same. There is no person at Toyota who will not be involved in this mission. So we will all work together, thinking hard how we can make ever better cars and how we can transform into a mobility company. How can we provide better mobility to society? We will all think together and then each one of us take action respectively. I think that is the gist of our team management and we will stick to that.

Yuta Tomikawa (Announcer and Moderator)

Thank you. Let's go on to the next person. The woman there.

Speaker 10

I'm Sato from TV Asahi. Thank you for the opportunity. So it was suddenly you decided to hold this press conference and you had no initial plan. But what is the reason why at the last minute you decided to hold this kind of a conference setting?

Koji Sato (Outgoing CEO)

Well, we need to do a timely disclosure regarding this content that we have decided. And today, this matter has been resolved at our BOD meeting. Therefore, immediately after this resolution has been made today, the timely disclosure was made. And therefore, we created this opportunity to provide an explanation from ourselves.

I think that just by issuing a press release, there will be thoughts of us and the background behind this decision that will not be understood fully. We wanted to have an opportunity to convey our thoughts as well. That is why we used the setting of Toyota Times to hold this kind of opportunity. Also, apart from just having a one-sided communication, we wanted to put importance on an open-style communication. That is how we came up with the setup. Thank you.

Yuta Tomikawa (Announcer and Moderator)

Okay. Next. This gentleman in the center?

Speaker 5

So you talked about HR development is one of the most important points for Toyota. I have a question to both of you. Recently, I think you have been working to recover the uniqueness of Toyota. You want to, I think, continue this Toyota uniqueness so that it would not become like a regular company. And what's your impression on this theme for Sato-san looking back to your tenure and also Kon-san for your presidency from April 1st onwards?

Koji Sato (Outgoing CEO)

Well, I will not pretend that I know everything. Because this is a question that I've been asking myself all along. I've always asked what the unique point about Toyota. I don't have the correct answer. But for someone other than myself, for the smiles of customers, as long as we have such colleagues at Toyota, I think it is important to have that kind of thinking at Toyota. And we have a Toyota precept. And then we have this thinking of always being faithful to your duties and thereby contributing to the company and to overall good. So that means we have to execute and then contribute to society. And that is how we can have a meaning in our work.

That is always in my mind. And that should be in our mind to look back to what you're doing. Because when you are trying very hard, the subject of the sentence tends to become yourself. And you become self-centered. And then you might digress from what Toyota should do. And I interpret that as to be a warning.

Kenta Kon (Incoming CEO)

I quite agree with what Sato-san said. And that's how we started. And that is the weaving machine at the room that we started to work at the TICO. So this passion at the founding time has to be executed. So I don't have any correct answer. I think that is one of the big themes. And another point which was also mentioned before is that the chairman used the word "genba" or "place" or "space." And I think this is also correct.

A bar or the sales front, we have to keep the focus on those words or places. Outside of those bars, outside of those places, we don't make decisions or prioritize things. Anything that happens at those places or bars, we have to pay attention and take actions. I think that's the uniqueness of Toyota. That is what I think right now. That's the mission I was given. I will try to create such a bar for everyone else. That's the focus for me. Thank you.

Yuta Tomikawa (Announcer and Moderator)

Maybe we can have one or two more from the floor and then go to the online members. Can't see very well from here. The person on that side. Please go ahead.

Speaker 9

I'm Yao from Nikkei newspapers. I also want to ask Kon-san a question. So most recently, for the TOB of TICO project is continuing. You are Toyota Fudosan board member as well. Now you're going to become a representative director of TMC. So for this point, will there be any concerns of the conflict of interest? Also going forward, for Toyota Fudosan's board member position, what is going to be done? Is there going to be a change in your role? That will be my question.

Kenta Kon (Incoming CEO)

First of all, for TICO's TOB, I have not participated in any of the decision-making at Toyota Motor Corporation. There is an information blockade between TMC and myself. So as an offerer, as an acquirer from Toyota Fudosan, I am participating in this transaction. Even with this role change that we announced today, we are going to have good management of the conflict of interest for this TICO transaction. This will not change.

Therefore, in the position of Toyota Fudosan, we are now in the period of TOB as an offerer. And for this transaction, I will continue to be participating from the board member position of Toyota Fudosan. Thank you.

Yuta Tomikawa (Announcer and Moderator)

Okay. We now like to take questions from the online participants. Mr. Hashimoto of the external affairs will handle this Q&A. So if you have any questions for those remote participants, please push the raising your hand button and then I will call on you. Okay. We'll be switching the screen. So when you see yourself on the screen, please start your question.

Speaker 6

Can I ask a question about the idea of maybe changing the focus of the top management at Toyota? We might think of Sato-san as a car guy, engineer focused on ever better cars. And we might think of Kon-san as a money numbers person focused on future profits. What does this change of leadership say about the focus of Toyota's priorities for this new world of the automotive industry with all the change coming in from China, from autonomous driving, from software and AI? Is Fun to Drive being, I guess, maybe taking a backseat to things like profitability, numbers, and the need for new kinds of technologies?

[Foreign language]

Kenta Kon (Incoming CEO)

For the ever better car making and also the contribution to the industry, happiness for all, and for these kinds of purposes and targets that Toyota has, even though the leadership and formation will change, those will not change. I think rather it will be that those purposes and targets will be further strongly promoted. I think it's a formation that we will be able to enhance the efforts to achieve those purposes.

So I did say that I'm a person that will be focused on money and numbers. But that means that vision that we have, the target purpose that we have, Toyota will be able to fully focus on those purposes. It doesn't mean that we just focus on a narrow-minded money side. That will not be our assessment. We don't assess things just by money or numbers. That's not what I meant. It's about being prepared for creating the future so that the money can be invested for the future for our stakeholders. So the way we use money should be something that we feel the warmth of humans, the body temperature of humans. That is how I want to handle the money at Toyota with the human warmth. And that is how I've thought of money from the past. And that will not change going into the future.

Koji Sato (Outgoing CEO)

Thank you very much, Han-san. And I'd also like to add a little bit of comment myself too. For me, I think it's the opposite of you said. I think the focus of Fun to Drive is going to be more and more enhanced. And the reason why I say that is because, for example, if it is myself, and if you think about the many engineers, when we think about Fun to Drive, from our perspective, we think Fun to Drive is more kind of equivalent to engineering. But like what Kon-san has said earlier, Fun to Drive and ever better car making, there will not be anyone who is unrelated to Fun to Drive and ever better car making at Toyota. I think that was a very important point from Kon-san.

Because from many angles, there will be many ways on people to get involved in making ever better cars. And if we have the leader, Kon-san is the leader, there will be more people that will be looking in the same direction. Maybe some people will have thinking that if you're in accounting and finance, HR division, all of these works are always definitely been related to the ever better car making. And that is what the communication message will be from a leader like Kon-san. And I think that will light the passion inside of many, many people outside of the engineer community. So I think that our endeavor for ever better car making and Fun to Drive will be even more boosted. That's how I feel.

Yuta Tomikawa (Announcer and Moderator)

Thank you. We are going to switch the screen. So when yourself appear on the screen, please start your question.

Speaker 7

Hi, this is Taniga from Car Watch. Can you hear me? What is the first point that you are going to start and more focused on? If you know your focus, please let us know. Another question is that in the middle of January, you were informed about it. In the beginning of January, you mentioned that you want to be a referee in between Akio Toyoda and Mr. Nakajima. But who is going to take this role now? So do you want me to show the video of this referee? We can start from there.

Koji Sato (Outgoing CEO)

Okay. Let's start from the second question. [Foreign language] GR members made this, but it's processed with AI. I look like such an evil person. [Foreign language] Kon-san. Yeah. Kon-san is going to do this. Please. Would you? [Foreign language] Yeah. We changed the facial expression. Yeah. I like this better. [Foreign language] Okay.

It is not to show that we have a conflict inside TMC. This passion of making ever better cars, I think, is multidirectional. We're not fixing the approach of making cars to one. You know, each one has its own passion. And that's what's being shown here. So Sato, trying to create this environment. I am actually watching this conflict with happiness, with fun.

Speaker 7

I like this. And I hope that we can change this person to Kon-san. And then distribute this.

Yuta Tomikawa (Announcer and Moderator)

And on your first question, actually, we couldn't hear the first part.

Speaker 7

As the chairman of Keidanren, sorry, JAMA and also vice president of Keidanren, what will be your first thing to start? What is the biggest challenge that you think is in front of you?

Koji Sato (Outgoing CEO)

Thank you for that question. Yes. In case of JAMA, there are seven challenges that are in front of us. How seriously can we tackle this? When they selected the chairman, we had a huge discussion with the top management of the member companies. I think we have a common understanding. Unless we go through changes in the industry, then this auto industry that Japan has always been cherished as the critical industry will no longer serve its role. The sense of crisis actually is common. Those competition amongst the companies, the industry, we have to look at it from the big picture and then take specific actions. That is the kind of determination we have to have. I think that's the consensus. I'm not going to mention specific names. But Toyota and Honda, the era is not the time.

It is not the time to do things differently among two OEMs. I shouldn't just mention Honda. I should just mention all the OEMs, Mazda and Nissan. That's my understanding. So the social implementation is the goal. And then we are going to come up with the team to execute them. And how to implement them. And what are the choke points if it's not implemented? What kind of things that we need to overcome to tackle them? We will be very specific and unlike before, where we had this regular meeting and discussion and then set direction. Unless we take actions, we won't be able to draw this blueprint. So my work, I think, is to draw a specific picture. Thank you.

Yuta Tomikawa (Announcer and Moderator)

Thank you. I think we've passed the one-hour time. So I'll just check on what kind of comments that we see on our social media. There are some questions. We can end with these social media comments. The president, even if the structure changes, I hope that if and if it changes, the ever better car making, if it continues, it's okay. I think this is okay. Sato-san, I was waiting for the next MR2 coming out, next generation MR2 coming out. Accounting and finance background. Toyota will only be thinking about money and more of those initiatives. It's not going to be continued. No, this part, we don't have to worry. Kon-san, you have a good voice, very good way of speaking, good president. You're already receiving commandments. Now, the cost management, cost control, is going to become more tough. Will it?

Kenta Kon (Incoming CEO)

I think so. So if you need to be careful, Taizo Ishida was a person that will not waste money but use where it's important. I guess that's going to be our policy.

Yuta Tomikawa (Announcer and Moderator)

The final question. I want the MC to ask how the Celica is going to turn out. This is a question from the car fan. So maybe we can ask Sato-san, Koji-san first, then or we can ask Kon-san. What is your expectation, Kon-san? What will happen? Kon-san, about the Celica?

Kenta Kon (Incoming CEO)

Well, I understand that this car has strong expectations. And I am the generation who enjoyed watching the movie Take Me to Skiing. And there, the Celica GT-Four, GR-FOUR, that came out has always been a car that I a model that I admired. I'm in that generation. Sato-san, Nakajima-san doesn't really say this real thing like we're going to do or we're going to stop.

They never let me know the true situation. So I assume that development is progressing. That's my assumption for now. So I have to confess, I don't know the details about this development project. Well, I guess these kinds of good car making, ever better car making, will continue. Right. When a good car, an ever better car is being developed, it's not about responding to the instructions from a company and be given specific instructions. We don't develop ever better cars in that way. It's about passion. As long as there is passion and that fire of passion in this company, I don't think we have to be worried.

Yuta Tomikawa (Announcer and Moderator)

So I was asking from a perspective from an MC. But now here, my question is from a perspective of one independent employee of Toyota. So the future of Toyota is, can we be assured that it's okay? So one each.

Koji Sato (Outgoing CEO)

Well, in today's conference, press conference, I think we were able, I hope, to show the real atmosphere or the real kind of relations that we have at Toyota. At Toyota, the management team, even if we change the formation, we are a company that can continue to be steadily grounded on our core and focused on our core. So this is a kind of company that we are now. I hope that you will continue to have high expectations to us. We'll make our full effort to be able to respond to your expectations. We're okay. Kon-san, so please listen to the employee's voice. Is Toyota okay going forward?

Kenta Kon (Incoming CEO)

Yes, we are okay. From another perspective, from stakeholders, I would like to be stakeholders, have stakeholders be confident to say that Toyota is okay. It doesn't have to be now. But even if it's a little while later, I would want to make my effort so that all stakeholders will say that Toyota is okay.

Yuta Tomikawa (Announcer and Moderator)

Thank you very much. I'm sure that there's many, many more questions that you wanted to ask. But with this, I'd like to end the Q&A session. So please rise, and thank you very much, everyone. We will end our press conference here. And after this, we are going to go into the photo session. Everyone, please be assured you'll be able to take a photo after this. Both of them will go behind the screen for a while. But we'll come back so that we will have a photo session. And please focus at the blonde cameraman. [Foreign language]

Koji Sato (Outgoing CEO)

Should we have some kind of a pose? And maybe we can have that sunglasses again and do a fighting pose. Kon-san, are you a little nervous? You look nervous. You're kind of showing that you're not used to this kind of a setting. It's quite visible. And please continue to look at the front.

Yuta Tomikawa (Announcer and Moderator)

And cameramen, if you think that the smile is not enough, please make sure to raise your voice. And please look at the left side. I'm sorry, the other side. [Foreign language] Those on the left side.[Foreign language] And if you have a special request, please raise your hand. [Foreign language] Back person. [Foreign language] And we'll hold on. We still can look at the right side. [Foreign language] Very good. Then to the front again.

Koji Sato (Outgoing CEO)

Kon-san, [Foreign language] Kon-san, you look a little tired now. You have to hang in there. Smile, please. [Foreign language] Akio-san is very good in making a constant smile.

Yuta Tomikawa (Announcer and Moderator)

The official cameraman, what's finally in the middle, please. So nice smile to end. And maybe about 10 more seconds. [Foreign language]

Kenta Kon (Incoming CEO)

No, the fighting pose?

Koji Sato (Outgoing CEO)

No, that's going to be a company feud. So no, that was Tokyo Auto Salon. It's not for here. So maybe a fist in the air? So it's like, yes, both of us are going to make our efforts. So adjust the pose a bit.

[Foreign language] And we'll go to the movies. [Foreign language] Still cameraman, can you sit down for a moment? And put some space for the movie cameras. Still camera people, please sit down.[Foreign language] Now it's going to be more difficult. It's going to be movies. You shouldn't just stay. [Foreign language] Let's do first a normal standing pose. And then maybe shake hands. [Foreign language] Looks good. [Foreign language] Stay.

Yuta Tomikawa (Announcer and Moderator)

Have your hand shaked. And then let's look to the left-hand side to the end. And the right-hand side.

Kenta Kon (Incoming CEO)

Maybe should we re-handshake?

Koji Sato (Outgoing CEO)

[Foreign language] And maybe do that little pose that you practiced earlier.

Yuta Tomikawa (Announcer and Moderator)

So in the front. Thank you. And left side. To the back. [Foreign language] You look good. Keep that smile on and go to the right-hand side. Kon-san, your hand holding the back of Kon-san. Very gentle. Sato-san's hand very gently supporting Kon-san. I like how you this. How you both are standing looking from the back. I think we're ready. Is that okay? Thank you. So this photo session has ended. Thank you, everyone. はい。ではお二人お戻りください。 May we have you.

Koji Sato (Outgoing CEO)

We'll go off stage.

Kenta Kon (Incoming CEO)

Thank you very much.

Yuta Tomikawa (Announcer and Moderator)

So this will be the end of our distribution from Toyota Times. Thank you, everyone. We'll end here.