Toyota Motor - Q4 2019

Transcript

Speaker 7

[Foreign Language]

Now, ladies and gentlemen, let me introduce to you the people attending this second session. Akio Toyoda, President, good afternoon, he said.

[Foreign Language]

Koji Kobayashi, Executive Vice President.

[Foreign Language]

Shigeki Terashi, Executive Vice President. Mr. Mitsuru Kawai.

[Foreign Language]

Masayoshi Shirayanagi, Operating Officer.

[Foreign Language]

Further, our President Toyoda is going to deliver a speech.

Akio Toyoda (President)

[Foreign Language]

Thank you for waiting. I am Akio Toyoda. First of all, as in past years, I would like to express my appreciation for taking time out of your occupied schedules to join us. I would like to express my deeper appreciation to all our customers around the world who have purchased our vehicles, as well as all our dealers and suppliers who have made tremendous efforts to deliver smiles to each and every one of our customers. I would also like to express my sincere gratitude to all of our shareholders, business partners, and other stakeholders for their daily support of Toyota. In Japan, the Heisei era has drawn to a close, and the Reiwa era has begun. Having become President in June of 2009 means that I was granted the opportunity to take the helm at Toyota for the final 10 years of the Heisei era.

The first three of those years were intensely focused on crisis response, with your company being confronted by a fall into the red following the global financial crisis, a large-scale recall that started in the United States, the Great East Japan Earthquake, flooding in Thailand, and other issues. Although that was a very difficult period, it was also a period in which our company, faced with quite a number of crises, was able to strengthen its sense of unity and my ability to unite. In my own way of expressing it, I keenly felt that rapid growth inconveniences many stakeholders if it is followed by a rapid fall. No matter how severe the management environment becomes, or rather, the more severe it becomes, the more we have to become a company that can steadily continue to grow, like how a tree accumulates growth rings. Sustainable growth and enhancement of competitiveness.

During this period, I took these two concepts to heart and etched them into my mind. We characterized the next three-year period as an intentional pause. Even though we have come to a temporary standstill, our goal was to achieve production workplaces that had competitiveness rooted in the Toyota Production System, TPS, as well as to achieve ever better car making that had competitiveness based on the Toyota New Global Architecture, TNGA. Although I wanted to make this a period during which we could hone our inherent strengths, what it is that makes us Toyota so that we could leap forward the future, my self-evaluation is that I was not able to sufficiently do this. What I strongly felt during the second three years was the difficulty of innovating when times are normal.

I believe it can be said that the most recent four years has been a period in which our company simultaneously strived to get back what it is that makes us Toyota and to undergo a complete redesign for the future. Under the banner of restrengthening TPS and refining costs, we are working to thoroughly eliminate waste, unevenness, and overburden, not only at our production plants but also at our offices, at our technical workplaces, and elsewhere. As I often say, because this is an era of profound transformation that could happen only once in 100 years, and because change is what is demanded, it is necessary to make clear our unshakable foundation. In other words, the things that we must not change. That unshakable foundation consists of TPS and our ability to refine costs.

While steering Toyota's management over these 10 years and with an awareness that we have entered an era of profound transformation, I have come to believe that my true mission is to completely redesign Toyota into a mobility company. A mobility company is a company that provides mobility itself and all kinds of services related to mobility. The automotive industry has continued to grow until now within the framework of an established business model. Although there are many car companies, each brand differentiates itself and has its own customers. If an attractive new model comes out, customers will buy it to replace their current vehicle. Cars that are replaced become used cars, which have their own market. Even after a car is bought, there is an established value chain that includes insurance, maintenance, and others. I think this is a very well-constructed business model.

However, due to technological innovations in the form of CASE, the very concept of the automobile is on the verge of changing. Cars from now, through information, will, by being connected to communities and to all kinds of services that support people's daily lives, become part of a societal system. This means that there is a possibility that the conventional business model of the automotive industry itself will fall to pieces. If the concept of the automobile changes due to CASE, we must also change our business model. However, I think that there are things that we should not change, or rather, there are things that we must continue to hold. First, I'd like to talk about the things that we must continue to hold.

No matter how much the automobile evolves in the future, I think there is something that will never change, that is the fact that cars are used in the real world. It is not as if we have been in the business of creating a single concept of. We have created a real world in which our products are produced by the millions and, once released into the world, can continuously be used safely and with a sense of security even 10 years or 20 years later. This is by no means something that can be achieved easily. I view that our competitiveness, which we have cultivated in this real world, largely consists of three strengths. The first is our manufacturing Monozukuri capabilities based on TPS. As I have already mentioned, this is truly the base of all of the competitiveness of the Toyota Group.

It is something that we must continue to hone. It is an unshakable foundation. In TPS, there is a saying, "Post-improvement is pre-improvement." In TPS, we are constantly changing the way we do things based on the thinking that there is always a better way. Naturally, many times things do not go as planned, but we learn from our mistakes so that we can take the next steps towards achieving an even better way. I believe that innovation does not just come calling out of the blue. Improvement is what brings it. I think that the power of continuous improvement has been and always will be the source of the competitiveness that has supported our sustainable growth. Furthermore, our initiative to strengthen our Monozukuri capabilities from the perspective of the entire Toyota Group is what I call a home-and-away strategy.

I believe our Monozukuri capabilities is only achievable because of our group companies share a common language in the form of TPS. The second is the advantage of our global network, which is spread around the world, including our rental and lease outlets. In Japan, there are 6,000 sales outlets for Toyota brand vehicles and Lexus brand vehicles, a number that grows to 16,000 when counted globally. We also have a giant supply chain that includes our group companies and suppliers. If we are able to use this network going forward, not only to manufacture and sell vehicles but to also provide new services, our future possibilities will greatly expand.

From here on, there will be an age in which the difference between victory and defeat will be decided by the last one mile, which will be our contact point with customers. In addition to cars, I think that having our own housing business and connected businesses will be a big advantage for us. The third is units in operation. Although worldwide annual sales of Toyota and Lexus vehicles is 9.5 million units, the number of Toyota and Lexus units in operation around the world comes to as many as over 100 million units. I believe that is because there is trust in Toyota. Over the more than 80 years since our company was founded by Kiichiro Toyoda, we have continued to face our customers and to build relationships of trust with them. That is why we have been able to achieve what we have been able to achieve.

I believe that as we provide new mobility and new services, having customers around the world who trust Toyota is an absolutely irreplaceable asset. These three strengths of ours as an entity competing in the world of manufacturing are powers that are our real power and that cannot be acquired overnight. I believe that continuing to hone these real powers will also lead to heightening Toyota's own original competitiveness. Next, I'd like to talk about things that we should change in line with the era of CASE. Before that, please watch this video.

Speaker 8

It's my goal to transition Toyota from an automobile company to a mobility company.

Akio Toyoda (President)

Activities for connected and sharing. At CES 2018, the e-Palette was unveiled. In April 2018, Toyota Connected Europe was established for pursuing connected strategy globally. In June 2018, the data communication module was installed, a standard for the new Crown and Corolla. In June 2018, expanded collaboration with Grab in MaaS, accelerating connected services throughout Southeast Asia. In August 2018, agreed on strategic partnership with SoftBank with the aim of building new mobility services, established new joint venture, MONET Technologies. In March 2019, the MONET Summit was held, and over 100 municipalities and 200 companies participated in the meeting for ride-sharing service providers. In February 2019, the new company KINTO was established. Subscription services began. Activities for autonomous. In March 2018, TRI-AD was established in Tokyo. Toyota, TRI, Aisin, and Denso participated to accelerate efforts in R&D.

In January 2019, a new automated driving test vehicle was unveiled, accelerating the development of both Guardian and Chauffeur, aiming for early popularization of safety technologies. In August 2018, expanded the collaboration with Uber in automated driving technologies. In April 2019, invested in Uber ATG with Denso and SoftBank Vision Fund to accelerate development and deployment of automated ride-sharing services. Activities for electrification. In December 2017, started a feasibility study of automotive prismatic battery business with Panasonic. In January 2019, agreed to establish a joint venture. In March 2019, reached agreement on consideration toward international space exploration with JAXA, the Japan Aerospace Exploration Agency. FCEV lunar mobility project started. In 2017, providing tests proving tests for FCEV electric heavy-duty truck at the port of Los Angeles. In April 2019, a new FCEV heavy-duty truck was unveiled. Toyota brand battery EVs unveiled in Auto Shanghai, April 2019.

In April 2019, established joint research institute with China's Tsinghua University with the aim of pursuing solutions for environmental issues and reducing traffic accidents. In April 2019, we announced a royalty-free license for vehicle electrification-related technologies. Toyota wants to not only provide a completed vehicle but contribute to the popularization of electrified vehicles with a global perspective as a system supplier of vehicle electrification technology. With the automobile industry develop and operate business worldwide, we've been striving to be a company that is needed by each country's people and economy, considering each country as home country and hometown. In addition, I believe the concept of home planet is also necessary now. In the midst of ongoing CASE progress, the idea of border is fading. And when we gaze at the sky, we see no borders. We have to face global-scale environmental issues with our feeling for our home planet.

Activities for CASE and creating friends will continue. Just now, giving you a look at our activities for CASE. I'd like to now provide additional information related to a transition in our business model, particularly related to the E in CASE, which stands for electric or electrification. Whether it be fuel cell electric vehicles, FCEVs, or battery electric vehicles, BEVs, I believe that until now, it seems that we have been too entrenched in supplying completed vehicles through wholesale to our dealers and through them to our individual customers, just as we have been doing with gasoline-powered vehicles. For sure, up until and including hybrid electric vehicles, this business model was valid. But this might not remain so when it comes to FCEVs and BEVs, which require new infrastructure. In advancing the introduction of FCEVs and BEVs, we once again asked ourselves exactly what it is that we should do.

We went back to our origins and concluded that gaining widespread acceptance is the answer. If environmental technologies fail to gain widespread acceptance, they will not be able to contribute to improving the Earth's environment. In thinking that way, we believe that a new mindset, a new way of thinking, will become necessary without dwelling on passenger cars and sales to individual customers, which work to gain widespread acceptance through the provision of commercial vehicles and also by working with government offices and fleet customers. Rather than insisting on going alone development, develop together with those who share the same aspirations. Rather than monopolizing our patents, make them open and increase friends. Sell not only cars but also systems that match customers' needs as a package.

In other words, I believe that transforming conventional concepts and broadly pursuing, with openness, contributions that will help improve society will lead to a new business model. We will be entering an era in which information will link all the things and services that support people's daily lives. When thinking about our own business, we should consider cars not as a separate business but as part of a mobility solution from a broad community and society perspective. In other words, the concept of connected cities becomes important. In realizing connected cities, I believe that competition and cooperation, especially the spirit of cooperation, will be critical. When looking at the world today, one can see the spread of protectionist thinking. Just as Japan, which basically has no resources, cannot survive on its own, companies as well cannot survive in a vacuum.

Japan is a country that clearly understands this, and so might global companies that started and grew in Japan. Going forward, creating friends will become a key concept. I believe that the approach of gaining controlling interest in line with conventional capital theory is not, in the true sense, creating friends. To make friends is to share common goals regarding what kind of future you want to create together. It's recognizing each other's strength and enhancing each other's competitiveness and cooperating. From Toyota's perspective, we aim to achieve a society that is kind to the environment, a society in which there are no traffic accidents, a fun-to-drive society in which the freedom and joy of mobility is made available to all. Toyota alone cannot create the future it desires. As such, we will broadly seek friends who share our aspirations.

I would like to strengthen our collaboration not only with Toyota Group companies but also with other car manufacturers and with friends who can provide all kinds of services that support a viable connected city. In pursuing such initiatives, I believe that we will be able to pave the road to becoming a mobility service platform, which is the business model that we are aiming for as a mobility company. Although I have spoken about various things, an era of profound transformation is also an era in which no one knows the right answer. If we think something is good, we have to give it a try. If we realize we've made a mistake, then we need to pull back and search for another way. I think it'll be important to think while trying. Completely redesigning a company that has experienced success will definitely take a long time.

However, clinging to the business model of the past will not lead to the future we desire. While responding to fast-paced changes in our environment, we will move forward with innovation, with a mid-to-long-term view from an unshakable foundation. So please do look forward to our future, and please continue to offer us your warm support. Thank you very much for your attention.

Speaker 7

[Foreign Language] Now, ladies and gentlemen, we would like to receive questions from you. If you'd like to ask questions, please raise your hand so that the microphone can be brought to you. We would like to receive questions from as many people as possible, so I would like to request each one of you to restrict questions to two, only two questions per person. The person in the second row from the front row, please.

Japan Economic Journal question to Mr. Toyoda.

Speaker 4

Two questions to the President. Including the financial results of the fiscal year just ended, having spent 10 years, and you divided that 10-year period into three segments, and you looked back at the business in your presentation. But from the financial aspect, what is your assessment and observation of what you have accomplished in the past decade? That's the first question. In relation to that, with respect to the growth strategy, what is your view toward the top line, which includes that in your question, the first question?

The second question, the trade issues between the United States and China is the core of my question. In terms of the macroeconomy, it is said that the impact on macroeconomy could be quite big. But how have you analyzed that? How do you view the impact from trade issues? And Toyota's basic view or stance vis-à-vis the investment into both the United States and China.

Akio Toyoda (President)

So these are two questions. First of all, in the first part of this program today, it was discussed for the first time we exceeded JPY 3 trillion in net revenue. This is the first time. This is solely thanks to the people who contribute to our sales, the customers and dealers, suppliers, and also employees. We owe this result to all those people who worked very hard over the past 80 years. This is a combined outcome of that. So through the media individuals represented here, I would like to express my sincere gratitude to the fact that we have been able to attain this net revenue supported by those people and would like to express my gratitude to those people supporting us. I shared various views of mine on the occasion of the financial results. In March 2014, I talked about the intentional pause.

In 2015, I mentioned that we have entered the implementation phase from the intentional pause. In 2016, I mentioned that this is the year in which our intention is tested. In 2017, I mentioned that financial results recognized our true self-capabilities. In 2018, I talked that Toyota's unique characteristics were reflected for the first time, honestly, in the financial results. In terms of the fiscal year just ended, it's very difficult to express in very short words, but I venture to that. Moving toward the future, this is the year that we embarked upon achieving the complete redesigning of Toyota. For better words, the capability of Toyota today is reflected in the financial results in the fiscal year just ended. Moving toward the future, we made proactive investments.

When it comes to the active investment, in this period, I think we've been able to do quite a bit in terms of investment for our own future. Activities to refine cost and activities to regain quintessentially Toyota character, to improve the corporate culture. And I think we're still halfway through in those efforts. Once again, if I may just look back the past decade, especially up until the 30th year of the Heisei period, the automotive market in the world was driven by the United States and China. These two markets drove and pulled the automotive markets in the world.

Speaker 4

And in that, what about Toyota here in the home market here in Japan?

Akio Toyoda (President)

In terms of the growth in the past 30 years, Japan hardly grew at all. In the first year of the Heisei era, the market reached its peak, but since then, the market continued to decline. In that, the consumption tax rate was raised twice during that period. In the United States, up until 2007, the growth was quite steady and good. However, we are faced with recall issue, and we had this congressional hearing. Steadily, we steered the direction in which we accumulate our growth rings, and that's what we implemented. China, I think in that market, Toyota really shoulders a national risk as a sort of company. In China, compared with other companies, the growth that Toyota attained in the Chinese market did have enough room for further improvement, I believe.

But compared with the time when I took the helm as President, based upon the existing middle business model and our speed of following and catching up with the change, I think we were able to accelerate the speed of adapting ourselves to the market change. But when the market changes substantially, when the market product mix changes substantially from sedan to SUVs, those could be regarded as a paradigm shift, so to speak. In terms of the speed of adaptation in that major change, I think Toyota has faced a rather serious challenge in that context, I believe. But this is a sort of style. Implemented to the fullest extent, possible to come up with achievements. But in terms of regaining quintessentially Toyota character and also to create such a culture and comfort, I think I'll be able to achieve that. Did I answer the question or?

Speaker 4

In terms of the first question, I think you responded to my first question. But in terms of the second question, as you look back the past decade, you suffered a lot of things that really emotionally moved you, if you could. Well, every day I'm emotionally shaken, so to speak. I mean, many people say, "Well, it's been 10 years, and when are you going to leave the current position?"

Akio Toyoda (President)

That seems to be the objective. But serving for 10 years as President is not an objective. That's not an end in itself. At the initial stage, in the early period, I had to attend the U.S. congressional hearing. So I thought I wouldn't last even 1 year. And we started with the loss-making position. So I was thinking that probably I will have to be quit in a short period of time.

I wasn't expecting to serve for a long term as President. Rather, I really tried to survive as a company every day, and that took me to this current field. Every day, I felt I'm still alive today. Today and tomorrow, I'll be able to engage in running Toyota. Every day, I worked my hardest till this day. Every day, if I may just directly respond to your question, every day I am excited, and also I'm shaken, so to speak, emotionally.

Speaker 7

Satisfied? The person at the very front in the middle, please. The woman, the lady.

Speaker 4

Well, I believe you did mention this earlier, but in January of last year, you announced the complete redesign to a mobility company, and you cited that as your mission. You've been saying that all along. Also creating friends, you said, will become the key word in achieving this. So you said that we live in an era where no one knows what's the right answer. So as President, as you create friends, as you expand your circle of collaborators, what would be your standard in choosing these friends? And if you could talk about your unshakable foundation in more detail.

Akio Toyoda (President)

Well, as we promote the creation of friends, as we create friends, the key word, I think, will be open and speed. Open and speed are the two key words. Open. What I mean by the word open is if you yourself don't have competitiveness, you yourself have to have a presence. Otherwise, no one will take you seriously, even if you said, "I will open myself up." They have to be competitive.

In that sense, just one car manufacturer can do nothing in this automotive industry. We have to be aware of this. At the same time, we have to know our strengths and also our weaknesses and reach out and work with various companies of various other industries to participate together in order to create a world where everyone can smile. And I think all of the employees shared this. And we would like to choose partners that will recognize this. But to do that, we need to build up our own trust and our own competitiveness so that they will regard us as such equal partners. Also, and this is a similar point, but Toyota is not the company that would be choosing our partners. Toyota must be chosen as a partner. We're in that position.

In terms of corporate size, people may think that Toyota is the one who is picking and choosing our friends, but we believe that we are the company that's being chosen. There are companies out there who want to create a future with us, who want to work with us. And of course, all companies have their likes and dislikes, but I guess what's important is to create an increasing number of companies that like Toyota and have an affection for Toyota. Thank you. Any further questions?

Speaker 7

The person in spectacles with a hand up, the fourth row from the front.

Alfred Ty (Chairman of Toyota Motor Philippines and Vice Chairman of GT Capital Philippines)

My name is Alfred Ty from GT Capital Philippines and Toyota Motor Philippines. May I direct the question to President Toyoda? It's very exciting to hear the future in the eyes of Toyota from your presentation, and especially talking about the new mobility society as well as the connected city. As your partners in Asia, we would definitely like to be part of these plans in the Asian region. However, in reality, ASEAN countries are still quite behind or in very early stages in terms of new mobility or connected technology. These big plans really need strong support from the government side, especially on the infrastructure. My question is, government support is necessary to realize the plans of new mobility society and connected city. What would be the required government support needed to realize the infrastructure for this?

Akio Toyoda (President)

[Foreign Language]

Speaker 7

So in the Q&A session today, President Toyoda talked about Toyota fans and good products. So I think that you talked to great length about how your company can be loved by the investors. And the red Supra in the hall was a very, very wonderful car. And the second point about the excitement about the growth potential, you also talked about in length today. There are so many changes, risks, and challenges in the world and how Toyota will change and innovate. Against that backdrop, you talked about. So the third factor, I think the third remaining factor would be shareholder return. And you have been increasing your dividend payout in the past few years. So based on this, from a mid- to long-term perspective, to those investors who will be investing in Toyota shares, from a mid- to long-term perspective, do you have any messages, President Toyoda?

Akio Toyoda (President)

Thank you. Toyota's shares for the retail investors have certain appeals and attractiveness. When you think about the elements of that attractiveness, I think within their investment portfolio, the Toyota share would be a stable stock. That's how it's positioned in many investors' portfolios, I believe. In that sense, as we think about our future growth strategy, I think the two important keywords would be sustainable growth and enhanced competitiveness. It all boils down to this. Sustainable growth, as I mentioned earlier, means that even against an extremely deteriorating management environment, the ability to steadfastly and step by step and in a not-so-flashy way achieve growth. That would be a way to win trust in the long term in Toyota shares. As for enhanced competitiveness, including CASE, we will have to collaborate with various technology companies in other industries.

Toyota has its strength in the real and physical world, and we must be chosen as a real-world partner. I think it's important for the world to think that Toyota's growth is good for the world and for the economy. Now, we would certainly like to have as many investors as possible appreciate the fact that they have invested in Toyota shares for the mid to long term, but that all depends on our daily efforts, I believe. And also in the past few years, we have invested JPY 1 trillion in CapEx and JPY 1 trillion in R&D and also JPY 1 trillion in shareholder return. We have maintained this level for the past few years, and we are still continuing to invest in the future, that is, to completely redesign the company.

So we must maintain our financial capability to continue this shareholder return, but at the same time, not fall behind in investing into the future. I think balancing these two would be our greatest challenge. But in any event, from a mid to long-term perspective, we do hope that more and more investors will invest in Toyota shares and also feel satisfied afterwards in the fact that they have invested in Toyota shares.

Speaker 7

Since of expected closing time is approaching. From here on, I would like to restrict one question per person. Person in the center of the room, the second row from the front, please.

Speaker 5

Well, several questions that I wanted to ask were already raised, and therefore, there may be some duplication. My question is about the next decade. Many challenges surround Toyota for Japan and for the entire world. The happiness brought about by mobility, of course, love is important. Thank you is important, and smiles are important. But the happiness is a key. And how are you going to deliver happiness to the people in the world? How is Toyota going to share that happiness? That's one point that I would like to ask you. So what, in your mind, the happiness of mobility means? Behind this happiness of mobility resides the unhappiness of mobility. Traffic accident is a typical example. The air pollution is another one.

Akio Toyoda (President)

These negative issues are the negative aspect of our business, and those are the issues that we really need to find solutions to as one engaged in the automotive business. So minimize as much as possible those negative cases is what I would like to realize. And by doing so, as Mr. Shinjo has just mentioned, on that basis, we can start talking about the chance that we can maximize the love aspect of cars. So day in and day out, we simply have to continue making steadfast efforts at trying to create a situation where love can be really generated. Unfortunately, traffic accidents have been reported extensively. And oftentimes, those victims of traffic accidents are the people who used to lead very happy lives. And those people were hit by traffic accidents.

Speaker 5

So those are really the tragic cases for us engaged in automotive business, and you feel so sad about that. But how can we reduce traffic accidents, those serious accidents, down to zero? How we can achieve that? Of course, the road ahead in that context is very, very long. I believe that this is the solid foundation I will keep on working on and will never change.

Speaker 7

[Foreign Language] Passed a lot of time. He would like to restrict himself to just one more question. Okay? Hi. Arigato gozaimasu. Apparently, we can take two or three more questions according to the president. So we will be exceeding the time. But of course, Honda is expected to announce its financial results today as well. Yes. So please, of course, we don't want Honda to complain to us. So please feel free to leave. The fourth row from the front, the person with the glasses.

Yamada from Toyo Keizai. So just one question.

Speaker 6

He talked about the difficulty of changing a company that was successful and also the need to change business model. The automotive business model, I think, was an extremely successful model. In any event, to change a company with a success experience, I think, causes a lot of friction and a lot of resistance. How do you intend to overcome that resistance? Are you going to bulldoze through your reforms, or are you going to wait and see, wait for things to change? But of course, you cannot afford to wait forever. So if you could share with us your views on this? If I knew the answer, I would not be so troubled. There's no answer. Either of the approaches you mentioned could be the right answer, but nobody knows. But you have to try. You have to give it a try.

Otherwise, you don't even know how people will react. So you have to act with a will. So if you tell people to face right and nobody turns right, then you will have to retract that order and then try to steer the company the other way. So not to give up, to persevere, and to try step by step. And that's what I'm trying every day.

Akio Toyoda (President)

So I do hope that we can continue to give us your encouragement and blow a tailwind for us in our reforms. Thank you.

Speaker 7

Next question. The back of the room of the center column.

Speaker 4

Hatanaka of Nippon Broadcasting System. Question to Mr. Toyoda.

Hideaki Hatanaka (Reporter and Announcer)

As was mentioned earlier, you used to say that out of industrial products, vehicles is the only one called beloved vehicles. We are moving in the age of CASE, and especially the sharing rooms, importantly. People talk about moving from ownership to usage. But from the perspective of users, by owning certain things, one can get attached to the product itself. So in this age of CASE, can you maintain the industrial product that can really earn attachment? How can you maintain this beloved industrial product called beloved cars? In terms of ownership and the sharing, for car makers like us, both are necessary. I often cite the following example, the towels and the toothbrush. When you stay in a hotel, you never share toothbrush with others, but people do share towels. What's the difference between the toothbrush and towels?

In the case of towels, even if you share with others, it must be clean. It must be safe and secure. Unless you know that, you never share a towel with others. Now, what about a toothbrush? Why do you never share a toothbrush even if it is clean and safe and secure? Why do you insist on owning a toothbrush?

Akio Toyoda (President)

So this really talks about the importance of automobiles that can earn the attachment even if it is an industrial product. And it can also be shared, and it can be owned. So talking about those, we talk with many engineers, many marketing people, many salespeople, and many key executives. We often discuss these things, but we have not come up with any concrete answer. So we have chosen to pursue both of those, ownership and sharing, both.

Speaker 7

And since we have gone overboard with the time, the next question is going to be the very final question, if I may ask you to be that one. The person at the very front in the middle.

Tadashi Isozumi (Senior Writer)

Isozumi from Yomiuri Newspaper. And my question is to President Toyota as well. Well, President Toyota, you're always saying that the automotive industry has entered an era of profound transformation overnight. But now you have a net revenue of JPY 30 trillion plus a profit of JPY 2 trillion for the past few years. So against that backdrop, President Toyota, what do you fear most?

Akio Toyoda (President)

Is the most fearful challenge of Toyota's challenges, that is, what will happen? What will be the factor that can kill Toyota? Under what conditions will Toyota die? I think to think that Toyota is okay, that would be fatal. We often discuss this internally, and I'm always asked by my employees, "Why are you trying to fan on such a sense of emergency?" I'm saying, "No, I'm not trying to fan the sense of emergency, but I just want to share a sense of common values with you." And when people say, "Well, Toyota's okay, what are you so worried about, President? Toyota is fine." I think that would be the most dangerous situation because the world is changing so rapidly around us. Every day, many incidents, accidents occur around us. Every day, many, many changes are occurring.

Every day, we must be very sensitive to these changes and try to respond to these changes. To develop such a responsiveness in such a big company, I think, will be very important. So the most challenging, most fatal to a company like that would be a sense of complacency that everything is okay. And so sometimes people may criticize me for playing up the emergency too much. But I believe that this is good for us as well as for our partners. So I will continue to ring the alarm. Thank you. Now, I would like to close the.

Speaker 7

Financial results announcement. Thank you very much for staying with us for such a long time, despite your busy schedules. Thank you.