Thank you very much for taking time out of your occupied schedule to join us today for this briefing. We would like to start the financial results announcement for fiscal year 2019, the first part. And let me introduce to you the executive officers facing you. Koji Kobayashi, Executive Vice President.

Good afternoon, ladies and gentlemen.

Senior Executive Officer, Masayoshi Shirayanagi.

Nice to meet you all.

First of all, Shirayanagi will share with you the financial results outline. And after that, we will have Q&A session. At the very outset of the presentation materials distributed to you, the cautionary statement with respect to forward-looking statements as mentioned, so please go through that. So first of all, Shirayanagi is going to share with you the financial results outline.

My name is Masayoshi Shirayanagi. Thank you very much for joining us today for the announcement of our financial results. First of all, I would like to take this opportunity to thank our customers who chose us as well as our stakeholders who support us. Thank you indeed very much. Our heartfelt gratitude goes to all of you. It is my pleasure to discuss Toyota’s financial results for the fiscal year which ended in March 2019. Compared to the previous fiscal year, consolidated vehicle sales increased by 13,000 units to 8,977,000 units. This was a result of solid sales mainly in Asia. The consolidated financial results for the fiscal year were net revenue of JPY 30,225.6 billion, operating income of JPY 2,467.5 billion, pretax of JPY 2,285.4 billion and net income of JPY 1,882.8 billion. While both depth revenue and operating income increased, net income decreased by JPY 611.1 billion year-on-year. This is largely due to the specified factors that net income of the same period of the previous fiscal year includes a positive impact of JPY 249.6 billion due to the U.S. tax reform and that net income of the fiscal year that ended in March 2019 includes a negative impact of JPY 293.7 billion of unrealized gains and losses on securities due to the market deterioration during such fiscal year. I would like to explain the factors which impacted operating income year-on-year. Firstly, the effect of foreign exchange rates decreased operating income by JPY 50 billion due to the depreciation of local currencies in emerging countries. Secondly, cost-reduction efforts increased operating income by JPY 80 billion as the impact of cost-reduction efforts exceeded the increase in raw material costs. Thirdly, marketing efforts increased operating income by JPY 275 billion due to improved product mix in North America, Europe…

Now ladies and gentlemen, at this juncture, we would like to open the floor for questions from you. If you have a question to ask, please raise your hand so that the microphone can be brought to you. Furthermore, I would like to receive questions as many participants as possible, so please allow me to ask you to restrict to two questions per person. The person in the front row at the furthest end of the room, please?

Jiji News Agency, Anto is my name. I have my question – two questions addressed to Mr. Kobayashi, EVP. In terms of your overall assessment of the financial results for fiscal 2019 is my question. The competition where the non-automotive players could become even fiercer, so how do you assess the financial results? And for the first time, the net revenue exceeded JPY 30 trillion, so if you could include that in your assessment, how you feel about that. Secondly, Toyota or Mr. Kobayashi has been taken the lead in taking initiatives to improve cost. Mr. Kobayashi, you have been saying that you’re going to make Toyota more muscular in terms of its constitution. How far have you made progress to date? And in terms of the positive profit contributing effect of a cost improvement for the full year basis, you talked about JPY 110 billion for March 2020. Is this the appropriate level, or do you need to further take initiatives to improve cost?

First of all, in terms of my own assessment of the financial results, earlier, I cited I only give negative assessment, and I gave the impression that nobody is working hard enough. And therefore, I think I need to give you a more elaborate and detailed answer. In terms of the volume of activities or the size that is reflected in volume, and therefore, the volume is important, reflecting the physique of the company. But as a result, the net revenue exceed – reached JPY 33 trillion. But in terms of my evaluation of that compared with the previous year, the market share increased by 0.1 percentage point, which shows the outcome and the result of customers supporting us as well as each employees making maximum efforts. So probably the net revenue has been quite satisfactory. The problem can be found in cost. We have been taking initiatives in various ways, and that has been well established. For example, the incentives in North America starting in the fourth quarter, so after third quarter but into the fourth quarter, it has turned into the negative increase, which means incentives are now used more intelligently or more efficiently than in the past. But the incentives is required when you are faced with competition. So what are the major competitors facing our model? Who are we competing against? And what sort of activities we do would make customers happier? So analyzing the situation in greater detail in terms of regions and customers and competitors, we were able to use incentives and allocate incentives more smartly. But what is important is if you use more incentives, you face problem. That is to say that greater incentive depreciates the value of the product itself. And therefore, without incentives, we need to deliver customer need –…

Yes. I’m satisfied.

We’ll move on to the next question then, please. Yes, that person, second row from the front, please?

My name is Oskiri from Nikkei. My first question is about the United States. Earlier, Vice President Kobayashi, you said that in about 2020, that you want to bring up to peak your profit margin for each destination. And you only know about the operating income for each region, but I think this is improving. So through your reforms, well, perhaps you may not be able to bring it up to the peak, but how is your reforms proceeding? And what’s your feeling about the achievement of those calls? The second question is about China. For the first time, you’ve disclosed the Chinese operations and the operating income for that. And due to the Lexus price reduction last year, I think that had an effect, but you may be suffering from a backlash of price reduction. And of course, the additional tax tariffs imposed by the United States may reduce the economic growth. So how do you view the future? And I believe that against the annual target of 60 – sorry, 1.6 million sales – vehicle sales a year, do you think you can achieve it?

For the United States, 8% – our operating margin is around about 8%. So we want to bring it up to that level in all regions, but we are still at a snail’s pace, working at a snail’s pace. However, our colleagues in the United States are really taking this call seriously. They have taken to take this call seriously. And last year, I myself and also President Toyoda went to the United States to listen first hand to what they have to say and to see and feel the situation, and we’re seeing signs of improvement. One is about the incentive, as I said, but that’s not the only reason; for example, improving efforts to improve the productivity of the plants and also to identify a lot of the cost items and assign each to a chief team head in order to reduce it. And we also relocated our headquarters to Texas. And now we were all disbursed across the country, and so there was a doubling of accounts. There are some redundancy of accounting, but we’re now able to reduce that redundancy in accounting. And of course, as you know, the SUV/truck ratio is increasing. Highlander has also been launched. And so the high-margin products which the customers desire are actually becoming a majority of our lineup. So I have not actually lowered the flag yet. And by the fiscal year 2021, we want to bring the margin up to about 8%. We are making that effort. As for China, as you know, well, we are still one lap behind when it comes to China. Other companies are selling maybe 4 million or 2 million in China. And thanks to our customers, we were able to achieve 1.47 million, but this is partly due to the reduction in tariffs. And another point is the coastal areas and the inland areas, the customers' demand differ in these two regions. Especially in the inland areas, the cars are not prevalent yet. Therefore, we’re taking some measures – countermeasures to launch more affordable, smaller compact cars in order to gain widespread acceptance. And the Chinese market is a 28 million market. And I saw it in the newspaper, the U.S. and Chinese trade friction is increasing, but China has a population of 1.3 billion people. So although there may be some twist and turns, I believe that the number of customers will increase – shall increase. And we will develop to those customers including hybrid products and overcome the national restrictions and regulations and provide fine-tuned services to the customer so that we can increase our sales. But it will be very difficult to increase the sales overnight. We need steadfast and step-by-step improvements in China.

Thank you very much. I would like to entertain the second – the next question. The person in the central row, maybe third row from the front row, please, the person with the hand up.

Kigawa of Toyokeizai. I have two major questions. In relation to purchasing and procurement, the cost reduction is going to be continued in the new fiscal year as well. But looking at individual companies within Toyota Group, looking at the financial results of the fiscal year just ended or the year beginning, the cost reduction seems to be getting more and more. And suppliers are spending more time in relation – more money in relation to case. So while we talk about working together to improve costs, but at the same time, the suppliers and the Toyota Group seems to be suffering a great deal. I mean trying to enhance competitiveness together must be the basic premise. But in terms of your procurement strategy going forward, could you share with us your view. Even if the company does not belong to Toyota Group, are you willing to procure from outside of the group? I do understand that, that policy has been conveyed as well to a certain extent. So while trying to enhance competitiveness, how are you foreseeing some change in the procurement, both inside the group and outside the group? Secondly, you are the top shareholder of Akebono Brake company, and it is now restructuring and trying to change the business. And as a company, it issued a comment that you are going to work together with Akebono to improve the production. If you are requested to inject capital, are you willing to do that? Of course, if you cannot purchase those brake equipment or component from Akebono, you will face a serious difficulty, and not just Toyota but other companies as well. So as far as you’re concerned, as a single company, what is your attitude or stance vis-à-vis Akebono?

Well, I should be responding to that question, but the person who used to be in charge of our procurement is with me, so I would like to ask Mr. Shirayanagi to answer that question.

As you mentioned before, the 10-day holiday period, the group companies announce their financial results, and many companies announced increased revenue but decreased profit. And I realized that the situations and environment must be very tough. The factors are similar to ours as skyrocketing raw materials prices or the increase in R&D development or keeping at least at the same level the R&D expenses for advanced technological areas. And therefore, in order to enhance our readiness for case together with us, those group companies are making advanced investment for advanced technological field. And that’s the impression I received by looking at the financial results announcement. As far as we are concerned, we strongly believe that we need to work together to enhance competitiveness together. Different companies do have different difficulties. Some companies do say that parts for Toyota is very difficult to make, and we hear about that. And for those standards are concerned, we are going to revise those wherever possible, not leaving anything unattempted. And also, what should be the cost? How should we achieve the cost that is acceptable to customers? From the very early stage of the development and design, we will work together to come up with the appropriate level of cost. So we will exercise TPS together with the suppliers as well. And we really must enhance and hone our competitiveness, and that’s the awareness shared by those two group companies and ourselves.

And if I may add a further comment, the quality standards, and it seems that Toyota has the solid quality standards, and if anything, it is even added and made even more stringent. And we are now going to put that under the wholesale review. Looking at the current way of making things and materials available now, we are going to reexamine those quality standards as well. If a certain component is added or combined with other components, we say that there should be no noises, so to speak. If those components are clash to others or dent to others, there should not be any noise. But in certain cases, if you bolt them together, certain very detailed standards may not be necessary. So these are the detailed areas that we are reviewing right now in terms of our standard. We – Toyota has a system overall, that is to say in the context of overall things, we consider whether this needs to be really necessary, whether the handle should be located there or not. So these are some of the detailed aspects that are placed under the strict scrutiny. And this should be quite useful for our suppliers as well. As far as Akebono is concerned, we have not received any request for capital injection, and therefore, we have not considered it at all. But as you pointed out in your question, the brake business, for Akebono to be able to run a viable brake business and to enhance their productivity and enhance their competitiveness, we are willing to work closely together in every aspect of that.

Next question, please. So the person at the very front on the back section, yes?

My name is Tanaga of Kawazu. Regarding next fiscal year, your sales – vehicle sales will increase, but the net revenue will be reduced by JPY 225 billion. So I guess that the exchange rate effect would be about JPY 280 billion. So the increase in sales volume and the reduction in net revenue means that you’ll be shifting to low-priced cars? Is that the idea?

Well, this year, it was the reverse. For example, Europe, we sold a lot of hybrids. And they are, of course, high-margin, high-priced products, so our net revenue increased despite the not-so-high increase in sales – vehicle sales as it all depends on the model. In Japan, the Crown is selling well. So our finances are pretty good. So it’s actually an effect of the model mix that led to that. So we – and there’s no fundamental what’s wrong – what’s right or what’s wrong. And Corolla Sport, of course, is included.

Next question, please, that person that’s second from the row at front.

Takeda of TV Tokyo. One question. To whom should I address it, maybe Mr. Shirayanagi. It relates to foreign exchange rates. For March 2020, the foreign currencies expected to be a negative factor to reduce the profit at the yen/dollar, JPY 110; and euro, JPY 125. At this point, the dollar is JPY 109, and euro is JPY 123 vis-à-vis €1. So you are expecting yen appreciation. And what is the best scenario? What is the impact of such a risk scenario of an even stronger yen? And in relation to that, you are going to accelerate the business activities in emerging countries. And I think when it comes to the emerging country currencies, it seems that the ForEx loss seems to have increased somewhat. What are the specific impacts for these specific countries? Could you share that information with us, in which country did you have greater currency loss?

As you pointed out, as far as ForEx is concerned, we produced 3 million units in Japan. We export our vehicles to foreign markets, so we are impacted by currency movements. You talked about the dollar, euro. Currently, the yen has strengthened, as you pointed out. And the currency assumption is JPY 110 and JPY 125. These are not a forecast base, but basically, it is the prevailing exchange rate at the end of March. And we lowered that in the unit of JPY 5. So that’s the manner in which we make the currency assumption. So if the prevailing rate is different, that affects the actual outcome. In terms of emerging country currencies, the impact they’re in for the current fiscal year, in terms of other currencies, we had the impact of JPY 110 billion. The major ones include Aussie dollar, yen appreciated vis-à-vis Aussie dollar; and Canadian dollar, yen also appreciated against the Canadian dollar; and yen appreciated against GBP; and also yen appreciated vis-à-vis Russian ruble. So appreciation of yen against those currencies are subtracted from the profit.

Are you satisfied? So may we move on to the next, please, at the third person from the front?

Sean McLain from the Wall Street Journal. I was wondering if you can explain this new stock compensation plan that you plan to send to the Board, explaining what the purpose is. It looks like you’re reducing the cash compensation for directors but increasing stock compensation? Would that increase overall compensation for Board directors? And what’s the intention here?

[Foreign Language]

Those people above executive officers who are in charge of activities, at this moment, the remuneration is mostly in cash. And by paying that in shares, they can be engaged in longer-term strategic activities. And based upon that, we have decided to have paid a certain amount of remuneration in equities, but the aggregate total amount will not change. So in terms of the breakdown, we are going to pay a part of the total compensation in shares. Did I answer your question?

Probably there may be more questions, but since it’s close to the closing time, perhaps we can entertain one or two additional questions. Yes? So any further questions? Yes, the lady.

Naomi Tajitsu from Reuters. [Foreign Language] I was wondering, you mentioned that you wanted to increase your operating margins in North America to run 8% in the next year or so. That sounds very ambitious given that operating margins are on the 1% level at the moment. Can you give some specific examples of how you’re planning to achieve this? Thank you.

[Foreign Language]

Well, as I said earlier, first of all, the North America, as you know, the proportion of SUV and trucks is increasing. Corolla, Camry, we do sell such sedans, but other companies are selling more trucks because of the higher margin – price margin on trucks, as you know, because they are larger vehicles. So that will be one major change that we will institute. As for internal efforts, as I said earlier, of course, regarding our sales and marketing costs, we want to – including various – for Canada, et cetera, we want to utilize our sales and marketing costs more effectively and efficiently. Another is including the planned productivity, we want to reduce costs overall. Currently, our operating margin is about 2%, so can you really increase it by 6% in such a short time period, I guess, was the gist of your question. I don’t have confidence, but I want to continue to argue that message because somebody has to continue to speak out that message. Otherwise, the message will be lost. However, however, our North American top officials are – we are always constant in communication with them, so – and we’re always working towards that goal, with that goal in mind. So I do hope that you can expect more from us. Thank you.

Takahashi of Bloomberg. And my question relates to the issuance of a corporate bond by the end of May. For the first time in two years, I received the information that you are going to issue corporate debt. What is the timing of that, what’s the maturity of that and also the size of the issuance?

None of those are decided. We have not yet decided on those. And as far as I’m concerned, when I joined the company, I was in the accounting department, and we have been taking the policy that you must borrow when the rates are very low. And of course, taking loan directly is one avenue. But by having your own corporate debt in the market, your face is to be known in market, to increase our value, that’s not our objective. I mean when it comes to funding, including refinancing, we would like to procure when the rates are very favorable. And we have been requesting that to Mr. Shirayanagi. And probably that sort of idea or information must have been leaked. So whenever the rates are low, we would like to fund ourselves.

It’s not been decided yet.

Maybe one more? I guess the person with her hand up – with his or her hand up?

Nakashima from Kyodo News. Regarding your R&D expenses, in the 2020 March, I think it will be a record high of JPY 1.1 trillion. And I believe that in a vis-à-vis case, you’ll be required to invest more in R&D. But major IT companies are investing more into a case. Do you think that Toyota’s rate of R&D expenditure is enough? And how do you intend to respond to the ever-increasing competition?

Well, expenses including R&D expenses, the more you expend, the more it will apply lower pressure on year profit. And if making our prices higher, that’s why we need to reduce costs. But I think this is a matter of prioritization. Connected case, such requirements account for about maybe a little less than 40% of our R&D costs, and we will most likely increase that to about 50% of R&D in the not-too-distant future. But when it comes to the basic performance and functionalities of the car, I think the automotive industry is still immature. Well, it’s – as President Toyoda says, we must make ever better cars. And for that, the elementary technologies and fundamental research, basic research is very important. So we need to strike that good balance. So there’s never an ideal proportional ratio of R&D cost that we can put in the case.

Are you satisfied? Okay, thank you. Since it is time, then I would like to conclude the first session. Session two will resume at 10 past two after a 10-minute break. Thank you.

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

Good afternoon.

Koji Kobayashi, Executive Vice President; Shigeki Terashi, Executive Vice President.

Nice to meet you all.

Masayoshi Shirayanagi, Operating Officer. So further, our President Toyoda is going to deliver a speech.

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, and I would like to express my deep 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 Heisei 2021 – or 2009 means I was granted the opportunity to take the helm at Toyota for the final 10 years of the Heisei era. The first three of these year – those years were intensely focused on crisis response with your company being confronted by falling 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…

Now ladies and gentlemen, we would like to receive questions from you. And if you’d like to ask questions, please raise your hand so that the microphone can be brought to you. And 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.

Omoto, Japan Economic Journal. Question to mister – 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 3 segments and you look back 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? Could you include 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 macro economy, it is said that the impact on macro economy could be quite big. But how have you analyzed that? How do you view that, the impact from trade issues? And Toyota’s basic view or stance vis-à-vis the investment into both the United States and China. So these are 2 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 and this is solely thanks to the people who contributed to our sales, the customers and dealers, the suppliers and also employees. All of this result to all of those people who worked very hard over the past 80 years and 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 share the various views of mine on the occasion of financial results. In the March 2014, I talked about the intentional pause. And in 2015, I mentioned that we have entered the implementation phase from the intentional pause. And in 2016, I mentioned that this is the year in which our intention is adjusted. In 2017, I mentioned that financial results recognized our true self-capabilities. In 2018, I talked that Toyota’s unique characteristics was 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, to venture to that. Moving toward the future, this is the year that we embark upon achieving the complete redesigning of Toyota. For better or worse, 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 the…

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, if you can think of some episode 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. That seems to be an objective, but serving for 10 years as a 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 one year. And we started with a lossmaking position, so I was thinking that probably I will have to be replaced in a short period of time. So 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. So every day, I felt I’m still alive today, and today and tomorrow I’ll be able to engage in running Toyota. And every day, I work my hardest till this day. So every day is, if I may just directly respond to your question, every day, I am excited and also I’m shaken, so to speak, emotionally.

Are you satisfied? Then the person at the very front, in the middle, please. The woman – the lady.

Osada from Chunichi newspaper. A question to President Toyoda. 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 and also creating friends you said will become a keyword 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.

As we promote the creation of friends, as we create friends, the keyword, I think, will be open and speed. Open and speed are the two keywords. 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. You have to be competitive. And in that sense, just 1 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 strength 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 shares 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 a 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 chosen – we are the company that’s being chosen. So 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 think – 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?

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

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. And these big plans really need strong support from the government side, especially on the infrastructure. So 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?

I will answer your question first and I will ask Mr. Terashi, EVP, to supplement me from a technological point. Mr. Ty, you referred to the markets in the Philippines and the Asian market and you mentioned that those markets are still quite behind. That may be so from your perspective, but to us, those are the markets rapidly growing. That’s how we perceive your markets. China is quite different, but apart from China, but – Japan and other markets are not growing that rapidly. But Asian markets are growing and those are the markets that grow further, including China as well. So in the general context, we spent the past 80 years in creating this automotive business model, but with the advent of CASE, instantly the automotive company that have been operating for decades can be caught up by other countries. And Asian countries are in the position to catch up with us very rapidly. So that’s how we perceive and look at the Asian markets. So in that context, the usage and electrification especially – specifically about FCV and electric vehicles, the government support for infrastructure development is indispensable and essential. Sometimes subsidy in many respects will be required. So in that sense, if people are willing to listen to Toyota’s opinion or in considering new automotive government policy, Toyota’s opinion may be useful and we want Toyota to be a part of that. So we would like Toyota to be the company chosen to be listened to by those governments. In any regions we operate in, we aim to be the best in town. Now what I mean by that, sometime ago in Canada, we announced and unveiled a new model of NX and government officials who are represented there. And they said, thank you, Toyota, for free deciding on investing in Canada and our plant in Canada. I mentioned that thank you very much for supporting us for operating in the past decade and they expressed appreciation to the government. So mutually thankful for that. Mutual efforts will be the sort of relationship that we really would like to establish. So in the Philippines, we would like to see day when the government in the Philippines would say, thank you, Toyota, for investing in your country. And from our side, we would like to be able to say, thank you for supporting us as we operate in the Philippines. So we will make sure that we’ll make every effort to be the best-in-town company. And we need to earn smiles in the faces of all of the people concerned every day. So once again, I’d like to express my gratitude for continued support on a daily basis.

Terashi is my name. I would like to add some comments further. Toyoda in his presentation mentioned that the concept of connected city, that is to say when we consider the development or creation of community or country itself, the business style must change completely. We had been, based upon the business model, coming up with the product and then offer that, but we must work together in building the strategy from the viewpoint of developing a community or a country working with the government. Because of the air pollution, we would like to introduce electric vehicles. But if infrastructure is the bottleneck impeding the introduction of that, then in the early years we would introduce hybrid vehicles instead of battery in these. And if the pollution is a clear situation, then the usage of hybrid will be equivalent to using 10% of vehicles occupied by electric vehicles. And once the infrastructure is better developed, probably the buses, the public transportation systems will be the first ones in which the electrified vehicles will be introduced so that the demand will increase better with that preparing for the next stage. So when we reach that next stage, we will try to offer the electric vehicle, the ECVs, that ordinary citizens will be able to purchase. So rather than based upon short-term perspective, we work together and discuss together with government to come up with the overall development strategy. And if we are the sort of company that the government is willing to reach out to discuss the country building or community building, we would be able to make contribution. There are many different options most suited for different communities. We have various options that we can offer. So if we can – have been chosen to work together, that would be the best in the way we see forward.

Next question, the person who is raising his or her hand. Fifth row from the front.

Miyata from Sumitomo Mitsui Banking Corporation. This is a question from a new angle. This question is about the shareholder return. The financial industry in Japan is engaged in various initiatives, which I will explain as a backdrop. The savings will be reinvested into investment and that investment will further invigorate corporate activity. That’s the sort of flow we are now seeing. So against that backdrop, mid- to long-term investment especially by individuals is highly required. So it’s very important to think about the standards or the criteria that these retail investors use in making the investment. And when you think about Toyota shares, I think there are 3 major factories or elements that make investors choose companies: one is whether the retail investor can actually like the company, feels they can have affection for the company, if they can feel excited about the future growth prospect of the company and the third is, of course, dividends and other financial benefits. These are the three elements. So in the Q&A session today, President Toyoda talked about Toyota fun 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 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?

Thank you. Toyota’s shares for the retail investors has certain appeals and attractiveness. And 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. So 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 and that will 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. And Toyota has is strength in the real and physical world and we must be chosen as a real-world partner. And 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. And 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. And 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.

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

Shinjo. 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 challenge Toyota for Japan and for the entire world: the happiness brought about by mobility; of course, love is important; the 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. These negative issues are the negative aspects of our business and those are the issues that we really need to find solutions to as the one engaging in 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 in 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 accident. So those are really at the tragic cases for us who engage in automotive business and we feel so sad about that. 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.

Satisfied? Since it’s past the allotted time, I would like to restrict yourself to just one more question. Okay? 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. So yes, so please don’t – of course, we don’t want Honda to complain to us so please do feel free to leave. The fourth row from the front, the person with the glasses.

Yamada from Tokyokesai. So just one question. You talked about the difficulty of changing the company that was successful and also the need to change business model. The automotive business model I think was an extremely successful model. In that 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 change – 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 a try – give it a try, otherwise, you don’t even know how people will react. So you have to act with a will. So if we – you tell people to face right and nobody turns right, then you will have to have 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. So I do hope that you – we can continue to give us your encouragement and blow a tailwind for us and our reforms. Thank you.

At the back of the room of the center column.

Hatanaka of Nippon Broadcast. Question to Mr. Toyoda. As was mentioned earlier, you said that out of industrial vehicle – products, vehicles is the only one called built-out vehicles. We are moving in the age of CASE and especially the sharing rules 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 be – that can really earn attachment? How can you maintain this beloved industrial product called beloved cars.

In terms of ownership and the sharing for carmakers like us, both are necessary. I often cite the following example. The towels and the toothbrush. When you stay in a hotel, you’ll 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 toothbrush even if they are clean and safe and secure? Why do you insist on owning the toothbrush? 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 the many engineers, many marketing people, many salespeople and many executives. As 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 the sharing. Both.

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

Isozumi from Yomiuri newspaper and my question is to President Toyoda as well. President Toyoda, you’re always saying that the automotive industry has entered an era of profound transformation level. But now, you have net revenue of JPY 30 trillion plus a profit of JPY 2 trillion for the past few years. So against that backdrop, President Toyoda, what do you feel most? What is the most fearful challenge of Toyota’s challenges? That is, what will happen – I mean 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 sense of emergency. I’m saying, no, I’m not trying to fan emergency – 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 and 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. 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 since it’s time, we’d like to close the financial results announcement. And thank you very much for staying with us for such a long time despite your busy schedules. Thank you.