Toyota Motor Stock

Thank you very much for joining us today, and welcome to Toyota Motor Corporation Fiscal Year 2026 Financial Results Briefing. I'd like to thank you very much for attending despite your busy schedules. I am Hashimoto the moderator of this conference. I am from Corporate Communications. So I would like to introduce our speakers first, Kenta Kon, President and Chief Executive Officer. Yoichi Miyazaki, Executive Vice President and Chief Financial Officer; and Takanori Azuma, Accounting Group Chief Officer. And from Corporate Communications Chief Officer, Hiroyuki Ueda.

As for our agenda, this conference will begin with presentation by Takanori Azuma and Yoichi Miyazaki to explain the financial results, followed by a brief greeting by our President, Kenta Kon, and then we will have a Q&A session at the very end. So I'd like to hand it over to Takanori Azuma, please.

Hello. Ladies and gentlemen, I am Azuma, Accounting Group Chief Officer. We'd like to start by sincerely thanking our customers around the world who love Toyota cars, our shareholders who support our efforts as well as our dealers and suppliers and all other stakeholders involved. Thank you so very much.

I will begin with a summary of the financial results for the fiscal year ended March '26. Operating income for fiscal year '26 amounted to JPY 3.8 trillion. Despite the impact of U.S. tariffs, we were able to secure profits in line with our guidance due to increased vehicle sales volumes and the effects of price revisions underpinned by strong product competitiveness as well as steadily accumulated improvement efforts such as expanded value chain profits. Taking into account the Middle East impacts, we are forecasting operating income for the fiscal year ending March '27 of JPY 3.0 trillion, representing a year-on-year decrease of JPY 800 billion. As a result, we expect operating income to decline for the third consecutive year. We believe this is because our response to changes in the operating environment has been limited to measures that can be implemented in the short term, while progress on business structural transformations from a mid- to long-term perspective remains only partly complete. Therefore, in the current fiscal year, we aim to return to a sustainable growth trajectory.

Regarding shareholder returns, the dividend for fiscal year '26 will be JPY 95 per share, an increase of JPY 5 year-on-year. And for fiscal year '27, we plan another increase of JPY 5 for a forecast annual dividend of JPY 100 per share, and we will continue to uphold our policy of stable dividend increases to reward our long-term shareholders.

Now I'll explain the details of the results for the fiscal year ended March '26. Consolidated vehicle sales for this fiscal year reached 9,595,000 units or 102.5% year-on-year. Toyota and Lexus vehicle sales totaled 10,477,000 units or 102.0% over the previous percent that is over the previous fiscal year. Thanks to strong demand from customers, mainly in Japan and North America, vehicle sales increased. Sales of electrified vehicles exceeded 5 million units for the first time, primarily driven by HEVs that were well received in regions such as North America and China, while PHEVs and BEVs also posted volume growth. Consolidated financial results were sales revenues of JPY 50,684.9 billion, operating income of JPY 3,766.2 billion, income before income taxes of JPY 5,152.9 billion and net income of JPY 3,848 billion.

Now let me explain the factors behind the changes in operating income. Against the backdrop of steady demand centered on hybrids through sales efforts, including increased vehicle sales, price revisions and value chain profits, we absorbed the negative factors such as foreign exchange fluctuations, higher R&D expenses, increased labor costs and materials cost inflation. However, we were not able to fully offset the impact of U.S. tariffs amounting to JPY 1.38 trillion. And as a result, consolidated operating income declined by JPY 1,029.3 billion year-on-year.

Now this slide shows operating income by geographical region. In Japan, operating income decreased due to foreign exchange fluctuations and increases in expenses. In North America, operating income decreased due to the impact of U.S. tariffs and other regions recorded an increase in operating income due to the impact of price revisions. Our Chinese business saw bottom line increases in, one, operating income due to marketing efforts; two, in share of profit of investments by equity method and cost reductions; and number three, in the Financial Services segment with an increase of outstanding loan balances.

Now let's talk about the forecast for the current fiscal year ending March 2027. The consolidated vehicle sales forecast has been set at 9.6 million units, which is 100.1% of the previous fiscal year. While Hino Motors is excluded from consolidation from the fiscal year ending March '27, production will go into full swing for models refreshed in the previous fiscal year, such as the RAV4, resulting in a level comparable to the previous fiscal year. Toyota Lexus vehicle sales are expected to be 10.5 million units or 100.2% of the previous fiscal year. Additionally, hybrid sales should exceed 5 million units for the first time this fiscal year and total electrified vehicle sales approximately 6 million units.

Next, on the consolidated financial forecast. The full year foreign exchange rate assumptions are JPY 150 per dollar, at JPY 180 per euro. Our guidance for the full year consolidated results, sales revenues of JPY 51 trillion, operating income of JPY 3 trillion, income before taxes of JPY 4,230 billion and net income of JPY 3 trillion. Now the year-on-year changes in operating income. In the current fiscal year, we will work to absorb increases in labor costs and other expenses through marketing efforts such as price revisions and expansion of value chain profits. However, we do not believe we can fully offset negative JPY 670 billion. Middle East impact resulting in the operating income forecast of JPY 3 trillion, down JPY 766.2 billion from the previous fiscal year.

Next, let's turn to shareholder returns. Our dividend policy is to increase dividends in a stable and continuous manner in order to reward our long-term shareholders. Despite a decrease in profit for the fiscal year ended March '26, we set the full year dividend of JPY 95, an increase of JPY 5 from the previous year. For the fiscal year ending March '27, while performance is hard to forecast due to impact from the Middle East and other factors, we set the full year dividend forecast at JPY 100, an increase of JPY 5 from the previous year. Regarding share buybacks, we will not set year-end share repurchase limit. Moving forward, taking into account of the stock price levels and other factors, in order to respond as necessary to requests to sell our company shares, we will flexibly implement share repurchases.

Next, our CFO, Mr. Miyazaki.

Yes, I am Miyazaki, CFO. As Accounting Group Chief Officer, Azuma mentioned earlier, the business environment remains extremely uncertain. Against this backdrop, we achieved operating income of JPY 3.8 trillion for the fiscal year ended March '26 and have announced operating income outlook of JPY 3 trillion for fiscal year '27. We would like to express our sincere gratitude for the day-to-day efforts of our employees as well as the continued support of many stakeholders, including dealers and suppliers. Looking ahead, we intend to move forward with confidence together with such stakeholders.

On the other hand, we expect operating income to decline for the third consecutive fiscal year in fiscal '27. I take this very seriously in my capacity as CFO. This reflects the fact that amid the rapid changes in the business environment, the scope of the responses and measures we took have been largely limited to what can be implemented in the short term, resulting in slower progress in business structural transformations that should be performed from a mid- to long-term perspective and slower pace of sowing seeds for future growth. This shows the factors contributing to changes in operating income over a 3-year period from the actual results for the fiscal year '24 through fiscal year '27. We offset rising material costs and comprehensive investments aimed at future growth with improvement efforts such as cost reductions and the expansion of value chain profit, enabling us to maintain an earnings power of JPY 5 trillion. However, due to major business environment changes like U.S. tariffs and the situation in the Middle East, we have yet to fully offset these impacts.

Now I'd like to talk about how we will overcome this challenge and how we will once again return to a sustainable growth trajectory. Our initiatives have 2 main pillars. One is making ever better cars. The other is transforming into a mobility company. Making ever better cars is being advanced by an overwhelming expansion in model lineup through 5 brands led by Century and by the multiplication of our ability to generate income. On the other hand, transform into a mobility company is being pursued with the following key elements: further expansion of existing value chain revenue, provision of new mobility across land, sea and air and robotics, leveraging connected as well as SDV technologies.

So let me walk you through these key points. First, let me talk about earning power in ever better car making. As we expand our 5 brand lineup, what becomes increasingly important is our ability to produce vehicles properly and deliver them reliably to customers. And the key to this lies in the maximum utilization of production capacity, specifically by capturing the effects of initiatives such as AREA35, we will fully utilize existing factory space and capacity, while at the same time, proceeding with previously announced capacity expansion, including new plants in line with actual demand. In addition, to further enhance earnings power, we will proceed in parallel with initiatives such as enhancing capacity for HEV batteries and units in line with the generational evolution, globally reorganizing our production models, further accelerating localization of procurement and pursuing cost reduction by addressing costs beginning at the source, including the reconstruction of parts scenarios. By advancing these initiatives, we aim to maximize the contribution margin per unit for each model at the time of model change.

Next, I'd like to explain how we will link our transformation into a mobility company to mid- to long-term business structure reform. Revenue from our existing value chain has been growing at a rate of approximately JPY 150 billion per year over the past few years. And going forward, we hope to maintain this current pace of growth by increasing the number of units in operation and expanding initiatives to other regions and countries. Moreover, we will add these as new initiatives, new mobility across land, sea and air and robotics leveraging connected and SDV technologies. And by doing so, we aim to achieve further revenue growth. So I would like to now explain Toyota's approach to robotics. Through collaboration between people and robots, Toyota aims to improve productivity and create a more comfortable working environment while also contributing to improvements in quality of life and address the challenges of an aging society.

Within Toyota, across the globe, we have production plants producing 10 million vehicles annually, skilled workers that are capable of helping robots grow as partners and the Toyota production system rooted in production floors. So based on this, we will evolve our robots and by having robots contribute their skills back to people, we can look to a future for both people and robots to grow as partners, changing the landscape of production plants. Toyota's strength in robot development lies precisely in the fusion of manufacturing and intelligent systems, and we believe through the Toyota Group, it is able to support manufacturing reform in Japan. Now by steadily executing on what I have explained today from a mid- to long-term perspective, we will work to improve our breakeven volume while at the same time advancing toward an ROE of 20%. Until now, we have increased shareholder returns as a business structure with high earnings volatility, primarily driven by the new vehicle business.

Going forward, by transforming to a business structure that more reliably secures stable growth through the expansion of value chain businesses and nurturing new business domains, we aim to create a greater capacity to provide shareholders with stable and continuous dividend increases. At the same time, through optimizing our capital structure, we would like to aim for an ROE of 20%.

With that, I would like to conclude my remarks and sincerely ask for your continued support. Thank you.

Now let me introduce to you, Mr. Kon.

Hello, I am Kenta Kon. I would like to share my thoughts on Toyota's management philosophy. Since I came on board as an appointed President in April, I have visited many Gembas, including development, certification, plant suppliers and dealers. There, I saw many colleagues of ours who are working tirelessly to build ever better cars. There, I've seen firsthand our ability to develop talent, our culture of continuous improvement, Kaizen in pursuit of TPS, penetration of problem-solving methodologies, online participation by all and motivation for getting things done with a clear sense of ownership. All of these observations represent Toyota's remarkable Gemba capabilities. Still, there are many challenges.

I feel there is still significant room for improvement in our administrative operations. If we further examine where our abilities truly lie, we move beyond just managing the Gemba and instead get directly involved in support operations. Instead of just managing numbers on paper, we can take part in reducing costs at Gemba. We can shift from work -- administrative work to work that create value. It is all about returning to the starting point of Toyota, Toyota production system. The strength of manufacturing lies in having both products in Gemba. The production line speed is an indicator for product sales. Abnormality stops the line, break things and cause defects. Challenges never stop coming and no 2 days are ever the same. Unless we solve the problem right in front of us, we cannot deliver cars to our customers. There's no place to hide in Gemba. And that precisely is what motivates us to improve the situation, drawing out wisdom and ingenuity and cultivating individuals capable of critical thinking. I believe it is my role to create such an environment and continuously send skilled talent into it.

Our 17 years under Akio Toyoda and Sato-san as Presidents was a period during which we were guided by the motto "Let's Make Ever-Better Cars", adapted product and regional centered management and established our foundation as a global full lineup automotive manufacturer. As a result, we can now aim for both carbon neutrality and freedom of movement for all. I will increase the number of people who can build ever better cars. And that is the engine for Toyota's sustainable growth, and that is my mission. Although I'm a novice driver, I sometimes receive driving instructions from our evaluation drivers. Brakes are there to help you go fast. Without good braking, you can't stop -- step on the accelerator. Actually, that's what Akio-san told me at the time.

To me, to accelerate means not letting up on our growth investments and seeing them through the end, a global flow lineup, our multi-pathway, a hydrogen society, AI and robotics and woven city. All of these are important, and we have colleagues who are working tirelessly in Gemba to develop so to turn them into reality. With so many technologies and new players emerging these days, we are in an era without clear-cut answers. That's precisely why my role is to encourage colleagues to take on challenges without fear of failure. Looking back, when Akio-san became President in 2009, our company had just fallen into the red due to the global financial crisis. We are facing a critical juncture that really threatened our own very existence.

At the time, I was an assistant to Akio-san. He said, being in the red means I cannot let anyone take on new challenges. I witnessed Akio-san regularly making hard decisions that sometimes sadden the people, decisions to abandon various undertakings. I have never forgotten that. I have always been committed to sustainable growth, believing that even rapid growth would highly inconvenience many people if we were to reverse suddenly. It is precisely because we have this foundation that even the current situation where environment is becoming increasingly uncertain, we can remain determined to implement reform and continue taking steps toward our future growth.

Our automotive industry is broad-based. It is indispensable. We have to be Toyota all the time. We have to remain strong, and we must endeavor to have many people see Toyota's growth as a good thing. We will grow sustainably together with our 5.5 million colleagues across Japan and with our stakeholders worldwide. I believe that is the kind of Toyota management required. While visiting various work sites and Gemba, many people approached me and taught me a lot. Cherishing colleagues who speak their minds in this way, I will strive so that they will be able to say to me, you've made a decision and you've taken responsibility. While cherishing opportunities for many colleagues to take on new challenges, all of our members will strive in unison to realize a Toyota in which both the company and its people can continue to grow. I would greatly appreciate your continued support. Thank you.

Thank you. Now we'd like to take questions from the floor. [Operator Instructions]

Asahi newspaper [ Kondo-san ]

Yes. This is Kondo from Asahi Newspaper. Can you hear me?

Yes, we hear you fine.

Now a question to President Kon. And I would like you to present us your impression on the financial results. Now Kon-san, you -- what is I believe that you have shown that the increasing breakeven volume is a challenge. And under the Trump tariffs, you were able to record very good operating income. So based on these challenges, if you could give us your overall impression of the financial results for fiscal year '26. As for the forecast for 2027, I believe that you have forecast a decline in your operating profits due to the Middle East situation. And I think it's very difficult to foresee into the future. So on what assumptions did you set the forecast for 2027? What were your assumptions? And although this may be from a short-term perspective. From here, what sort of measures -- concrete measures do you intend to take to improve the operating profit or the financial results from here on?

Yes. Thank you, Kondo-san, for those questions. Regarding the first question, I, Kon, would like to present my overall impressions. As for our forecast for this fiscal year, fiscal year '27, Azuma will respond to that question, if that's okay. Now as for my impressions for the past fiscal year, fiscal year '26, as was mentioned in the presentations by Miyazaki and Azuma, despite the very major changes in environment, we were able to generate a profit of JPY 3.8 trillion. And of course, the financial results is actually the financial results for Toyota Motor Corporation for this year, but it's actually an accumulation of many years of efforts and not only efforts by Toyota Motors, but by many, many different stakeholders and collaborations, co-working with all of these stakeholders. That's the accumulated results.

So the fact that we were able to generate such good results, I think we owe a very deep appreciation to all of our stakeholders as well as all of the past colleagues. And we did not have to apply brakes, certain brakes on our growth strategy despite the environment. So I really thank our predecessors for this. But as you mentioned, for the breakeven volume, we are not able to apply the brakes on the increase in the breakeven volume, as you indicated. But like during the Lehman shock, the number has not exceeded 8 million like during the Lehman shock. But still, it's quite the truth that it is on an increasing trend. So as mentioned in the presentation, I believe that we are able to do things that we had to do in the short term, and these initiatives have only begun this term. So we will continue with these initiatives over the next 11 months.

As for the medium- to long-term initiatives, we have just embarked on them. And last fiscal year and this fiscal year, of course, many have not actually generated results. But if we continue steadfastly on these initiatives, I'm sure they'll begin to generate impact. Therefore, as for my overall impression, I believe that we are able to step on the accelerator because we are in a situation where we can continue with our growth investments. So rather than applying the brakes fully, we will remove waste one by one and one by one, we will restructure the business. So I think that's the situation we are in now.

Regarding the second question about the Middle East situation and the assumptions for the forecast, this is Azuma to reply to that question. It's largely divided into 2. One is the reduction in sales volume, and that has -- we have forecasted JPY 270 billion impact. And this is because the lead time to the Middle East will, of course, become longer. So once we have this on the assumption that if this situation continues over 1 year, that's half of the actual impact that we forecast. The other would be about JPY 400 billion in inflated materials costs, and this is based on the levels of material costs as of March.

And if this high inflated level were to continue over 1 year, then that would lead to these forecast. For example, fuel and transportation costs as well as paint used for painting and materials used for painting, all of these are factored in to -- and the forecast is based on the assumption that this work to continue for 1 year. Of course, these are just forecasts. So we are thinking of, for example, relocating or redirecting these products to other destinations and other customers in order to alleviate the impact.

I'm sorry, maybe I may have been upside down because my camera was upside down. Sorry for that.

Let us move on to the next question. [ Tokomito-san ] from Kyodo Press.

I am Tokomito from Kyodo Press. I have 2 questions. About the fiscal year that has just ended. Kondo-san asked you about the operating income, more than JPY 50 trillion for the domestic sales. Sorry, I've received the chat that I'm not being heard. But now JPY 50 trillion for the -- over JPY 50 trillion for the very first time. What is your reflections on that? Of course, your hybrid vehicles are performing well, but there are other factors. So please provide us with that insight. Number two, multi-pathway strategy of yours. You have been focusing on that for some time. Yesterday, Nexa's EV 3-row passenger seat vehicles was announced. Under Mr. Kon's managerial philosophy, what will be your policies on BEVs?

This is Miyazaki. I would like to respond to the first question about the previous year's results. Well, actually, JPY 50 trillion is not the number that we have been aiming at as we do our operations. Each day, we consider how we may be able to deliver successfully our cars to our customers. And together with our stakeholders, we have taken a very solid step in just doing so, and it's just the result of doing that. As Azuma-san mentioned earlier, the overall sales volume is increasing and many -- a large part of that certainly is hybrid vehicles. It is very true, as you mentioned. We have put efforts into hybrid vehicles, of course, and our dealerships efforts have been combined to achieve these results. We will continue to offer products that our customers will choose. And together with our stakeholders, we will continue to deliver such valuable products.

Thank you very much for your questions about our policies and thinking about BEVs. As I mentioned earlier in my presentation, we continue to pursue carbon neutrality. At the same time, we will remain a global full lineup automotive mass production manufacturer. So to our mass consumers, we will deliver our cars together with the convenience that such mobility provides. That will remain our mission. The question is what sort of markets are out there. It is very difficult, if not impossible, to predict the markets going forward, but we will continue listening to our customers to understand the different markets, different countries, different regions. There are differences in market requirements and demands. We will always listen to what these customers want in those different regions and reflect such input into our product development. That's what we have done in the past, and that's what we will continue to do.

Whatever the cars that our customers want, we would like to deliver. If our customers want BEVs, we will deliver them good BEVs, and that will remain the fundamental part of our strategy. Our multi-pathway strategy is the ideal for offering our customers what they want to have. Pursuing such an ideal is a must that we have to continue because that's our mission at Toyota. Actually, we are in a fortunate position to be able to do so. Thank you for your questions.

Thank you, Tokomito-san. Yes. Thank you very much. Going on to the next question. Nikkan Auto News [indiscernible]

This is [indiscernible] from Nikkan Auto News. Can you hear me?

Yes, we hear you. Please come on.

Yes. Now the sales of electrified vehicles is about 6 million units, and this will exceed 50% of your total lineup for the first time. And this is mainly hybrids, I believe. But so the electrified vehicles and sales increases, where do you intend to strengthen in order to increase the sales of electrified vehicles? And the other point is about earnings power that Miyazaki-san talked about, in particular, the value chain and the new mobility, these 2 areas, how do you intend to enhance earnings? Because the new mobility is a new area. So I think there will be some birth pains to begin with. So how do you intend to link these pains to actual earnings?

Yes. Thank you. So I would like to respond to both questions in succession. Well, originally, you have asked when are you going to reach 5 million units? We've received that question all along from you. And my view was we wanted to achieve this 5 million sooner than we did. And from our customers, especially in Japan, we still have many customers waiting for the delivery of their cars. So 50% is a statistical number, but we would like to continue to deliver reliably to areas of demand. And we have a full lineup, we have full hybrid for almost all of our models. So we would like to enhance ever better car making in order to enhance our hybrid line. And so we want to create a production system and a delivery system that can keep pace with that demand. That comes first.

And as I said earlier, as the basis of earnings power, we want to utilize to the fullest our current production capacity, and we will prepare with that in mind for electrified vehicles as well. And the value chain and new mobility, how are we going to enhance that to lead to earnings power? Well, for value chain, profits. We began that effort in full gear just before or after COVID-19 because until then, we tended to focus only on new cars. But after COVID-19, we decided that one of the strength that we have is the units in operation, and we wanted to utilize or leverage that strength in new activities. So globally, we are not engaged in such value chain activities at all uniform levels all across the world, but we would like to cross-deploy these efforts. And we believe that by doing so, we'll be able to maintain a growth of JPY 1.5 trillion per year.

Now your question is then what does new mobility mean? Well, we want to test as many possibilities as possible. And as President Kon said earlier, we would not like to release the accelerator, but we will remove the waste so as to make the acceleration more effective and to find which mobility areas will be most effective in increasing our earnings power. And so both ground land, sea and air and robotics, this will be the new areas of mobility that we will most likely focus our efforts on going forward.

Let us move on to the next question. [ Kodama-san ] from Yomiuri Daily.

I am Kodama from Yomiuri Daily. Am I being heard?

Loud and clear.

I would like to ask you about the forecast for this fiscal year. In major markets or the U.S., Japan, Europe and China, how do you forecast your business environment, respectively? And another question, which is about the tariffs imposed by the U.S. It is not factored in into your changes in the performance, but JPY 1.38 trillion is what you expect out of this. Are there any efforts to avoid such impacts going forward?

Thank you very much for your questions. I would like to respond to the first question about our forecast of different markets. To begin with, fiscal year '26, as we just began our new fiscal year, as we look at the first 3 months, the U.S., Japan and Europe, all of them have remained rather stable in terms of our business performance. The U.S. market remains healthy for us. In the Japanese market, although there have been some changes in the tax situations in March, has been some delays in registration, not much impact has been felt. And we have seen solid demand in Europe as well and plus China, the same situation. But then we have seen some midterm changes in all of these markets.

We will not take a one size fit all type of an approach when we address different markets. As we assume different numbers in those different markets, macroeconomic situations really tell us that we have to be vigilant. But as we see the backlog of orders, the number of vehicles that our customers are waiting, the first thing we have to achieve is to deliver the cars to our customers. So we will have to continue keeping balance between the 2. Low inventory situation continues. Our customers continue to wait. And therefore, we do have room even if the situation rapidly changes in the market. So we will be able to respond. Thank you.

This is Azuma. I would like to respond to your second question. The impact of tariff, JPY 1.38 trillion is factored in, just like we did last year. We may revisit this, of course, together with our suppliers, we will work toward the betterment. Last year, we shouldered a large part of that at Toyota. But together with our suppliers, we have to work together to reduce cost in all fronts, not only the tariff impacts. So that's the important part of it. We will work together with our suppliers. We do not know whether the impact will be felt this year, but local production, local procurement will be further pursued going forward in different regions and markets. So those are the focus points of our efforts going forward. Thank you for your questions.

Going on to the next question now.

This is Inajima from Bloomberg. Can you hear me?

Yes, we hear you.

I have 2 questions to Present Kon. First question, I believe you talked about reducing the breakeven volume as an important point when you assume presidency. And in your presentation, I believe you talked about increasing the earnings power. So I think there's some overlap in that. But toward the reduction of your breakeven volume, what sort of initiatives or steps do you intend to take? And also, if you have a specific target regarding to what level you want to decrease your volume -- breakeven volume. Now Kon said I believe that because you came from the accounting department, there's very much expectation on improvement of ROE from the market. So how much are you committed to the ROE improvement? And also, you have set a target of 20% ROE. And when do you intend to achieve that target? What's your schedule?

Yes. Thank you very much. First of all, about the earnings power and reducing the breakeven volume. Well, Miyazaki in his presentation, talked about enhancing earnings power through business structure transformation. And I believe that herein lies the majority of the steps and initiatives we intend to take. And the our hybrid customers have been waiting a long time to receive delivery. So we must deliver to these customers reliably. That's the first thing we must achieve because we are a manufacturer. That's our biggest mission. As for reorganizing our production models, well, I myself believe that this will, of course, include a review of the model mix as well as the numbers. production numbers. But as we pursue along the line of multi-pathway, that will naturally increase the number of models, but that means there will be an increase in the number of parts and the number of specifications, which will make things even more complex for customers.

So I believe that if we can review that complexity, that would have a major impact. So inclusive of that, we would like to reduce costs. And up to now, we have been with our suppliers and dealers been creating a strong foundation. Now we'd like to link that to productivity increases. I think the time is right to do that. And so we're communicating with them on that. Of course, there are many areas where we have not been able to establish a strong foundation for some suppliers, I believe that's true. So we would like to continue with the efforts in areas which have -- where we have been able to complete these efforts, we would like to review each challenge so that we can continue to reduce costs. And as a result, I believe an accumulation of that would lead to the decline in breakeven volume.

As for the target breakeven volume, there's no specific numerical target that we want to achieve because that is not the target or objective in itself. The objective is to restructure our revenue structure or mix. And that would be -- I think that would lead to the creation of the next structure that would help us to achieve that goal. As for the ROE, 20%, as was mentioned in the presentation, we have not published any time line or target date for achieving this 20%, but we would like to engage in discontinuous growth so as to achieve that ROE target.

And as Miyazaki said earlier, value chain profits and also new mobility through these efforts, we want to enhance our operating margin. As for capital, our revenue structure will once it shifts to value chain and new mobility, then of course, we will be able to lighten our capital structure to match that shift. And that's within sight as well. But of course, this capital is something we received from our shareholders. So we have to listen to the shareholders' voices. But having done that, we would like to aim toward that flag of 20% and take many initiatives to achieve that goal.

Let's move on. Shinya Yamamoto-san.

This is Yamamoto speaking. Am I being heard?

Loud and clear. Please start.

Earlier, the earning power was mentioned a number of times. Now the cars should be profitable. That's what it means, I thought. But then when Akio-san -- before Akio-san was the President, there was a thinking of selling volume of cars and which has deteriorated -- cost deteriorated quality of products and product power. But now you're focusing on enhancing product power. Now building ever better cars and building stronger earning power, are there anything that you will endeavor to achieve in order to hit both of them, achieve both of those initiatives?

Well, thank you for your question. As I mentioned earlier, we do not pursue any numbers. We pursue individual customers -- each individual customer satisfaction so that they will be satisfied with our cars, and they will continue to select Toyota. So for those 5 brands, we define roles, different roles for those vehicles. And along with that line, we continue building ever better cars and deliver those to our customers. On the other hand, since we are a business, we have to really respond to our customers' demand, especially those customers who are still waiting for the hybrid cars. Hybrid cars evolved and a part of our technological innovation is to reduce cost. As hybrid performance increases, customers may be willing to pay something additional for the enhanced performance.

So cost reduction and ever better cars should be combined along the way. As Kon-san mentioned earlier, there are multiple processes that are involved in making cars. We will continue to deliver affordable cars, good quality and affordable. And if ever better cars certainly will entail a wide range of lineups of our products. Yamamoto-san, you mentioned there was a time when we only pursued the volumes, we will never go back to that. And each of our employees understand that. We will continue to value and cherish smiles on the every face of our customers. That's what we mean by ever better cars. Thank you.

Kon-san earlier mentioned you have to have a good braking in order to accelerate. Baking is also used to turn your vehicles. I hope you'll be able to turn to a better direction.

Yamamoto-san thank you very much. That's encouraging.

Moving on to the next question.

[ Asayama ] from Nikkei. Can you hear me?

Yes, we hear you.

Regarding the forecast for this fiscal year, I have a question. The dollar-yen exchange rate, can you hear me? Are you -- can you hear my voice?

No, we hear you fine.

The dollar-yen exchange rate, your assumption was JPY 150 to the dollar. Currently, it's JPY 156 to JPY 157. So I think you have set your assumptions at a relatively high yen rate. So what are the assumptions for calculating this exchange rate assumption? And the second question is a softer question. Kon-san, the question is to you. If I could ask about your thoughts about car building. Now I think that recently, you're beginning to see results on the for example, [indiscernible] winning at the WC. So building better cars through the development of people and good cars. So you have developed good cars as well as good engineers. But for this to become a business and an earnings source, I think that you need to develop cars that can earn money. Now I think that Kon-san declared yourself as a car guy, I believe. So what sort of cars do you want to build? And what sort of cars do you think will be required by society going forward?

Thank you. So let me reply to the first question regarding the exchange rate assumptions. Well, normally, we quite mechanically take the monthly average that is the monthly average of the month before the beginning of this term without any other additional factors. But for this month, as you know, there has been many fluctuations, including the Middle East situation. So for this year, we have decided to take the 6-month average rather than 1-month average as the exchange rate assumption. That's why we arrived at the number of JPY 150 to the dollar. So this is something that's different from past years. The practice has changed because this is a very highly fluctuating year.

Yes. Thank you very much, Asayama-san, for that question. Through motorsports, I believe developing cars through motorsports is the initial philosophy of Toyota, and we would like to continue that philosophy going forward. Now when it comes to car making, I perhaps don't have had experience -- direct experience, but with limited resources and limited time and the extreme specifications required, the cars are trained and you'll be able to see defects that will not appear during mass production. So I think that motorsports is something that can really refine your efforts to build good cars, and that's absolutely necessary for car making, good car making. And as a result, in the world of professional motorsports, Toyota is getting results, which is something wonderful. But of course, if we want to turn this into a business, of course, just because there's a good opportunity, you can't just throw money and investment on that opportunity because within some restrictions within limited capacity, you have to use your ingenuity, I think, to make the best investment. And I think it's the same for motorsports.

So we will continue investment in motorsports, but it will not be unlimited. Blue Sky investment, Toyota Motor Space racing or Gazoo racing and all others have their respective capacity. So they have to also use their ingenuity and that would lead to better development capabilities and the development of better talent. So GR Yaris that car has enhanced the Yaris brand in Europe and the base car model has been highly appreciated by customers. On the other hand, Corolla is building its brand in North America. So the brand and also the strength of the car, which was trained and honed in motorsports, I think will be required to gain the customers' assessment and appreciation over many years. So this is going to be a long journey, and we would like to sustain our efforts toward that long journey.

So giving -- my role, I think, is to give a very good solid support to that effort. Thank you.

Let us move on. Automotive news [indiscernible]

I have a couple of questions about the U.S. market, in particular. I see that North America has had an operating -- a regional operating loss for many quarters in this current year. Can you explain a little bit the background of why that is a regional operating loss? I guess it's because -- or partly due to tariffs. But can you get to a place where you can eventually fully absorb the tariffs and have a normal profitable business in North America? When do you think that can happen? And how do you get there? And related to tariffs, I'd like to ask about Chinese cars in the U.S. market. There's lots of concern among many carmakers that if Chinese auto makers are allowed to sell their cars in the United States that the legacy makers can't compete in the U.S. market against them. Do you think that there is a need to put up barriers to keep the Chinese out to give the legacy automakers time and space to improve their products against Chinese -- low-cost Chinese automakers?

Thank you very much for your questions. Now first of all, about our business in the U.S. market, as you mentioned quite rightly, as a region, we continue to struggle over the past couple of years. There are 2 background factors. Number one, TNGA shift that we have seen in the past, Camry, Corolla was the starting point. And then into trucks, the truck platforms been revisited as well. As we did so, electrification also had to be taken into consideration. So investment in the U.S. multiplied over the past couple of years. So that's an important part of our business structure. So currently, we see our profitability structure led by such investment. And then that challenge is compounded by tariff. Our business structure in North America, therefore, continues to be very challenging, and that is reflected in the financial results this year.

What really we do going forward? As I mentioned earlier, we have to make sure we solidify our earning power there as well based on building ever better cars. So as you see on the slides, these are the initiatives that we will implement solidly going forward. So that will be my response to your first question. Is it being translated simultaneously? I hope it is. Now let me go on to the second question.

Now our basic thought is that, well, actually, in the past, Toyota used to be a new emerging manufacturer, especially for the big 3 incumbents in the U.S. led by GM, those incumbents, well, actually, Toyota learned from those incumbents. And that's what got here -- got us here. Now what we have to ensure is that competition gives delight to the customers through better technologies and innovations, making cars more affordable and close to them, and that will be the healthy situation. Therefore, we have to have a level playing field where we can have a fair competition and different OEMs compete fairly with each other to offer ever better products to our customers, leading to even better societies going forward. To that end, we will continue to hone our capabilities to be able to effectively do so. And during the course, there will be different challenges to which we will continue to adjust our strategies.

If I could ask one follow-up to your question or to your answer. Without tariffs, do Chinese entrants into the markets like Europe or the United States or Canada, are they playing on a level playing field without tariffs?

Well, actually, I'm not in the position of being able to guess what the Chinese manufacturers are thinking. I can only speak for ourselves. In Asia, for example, we see many emerging manufacturers. Now local production, working together with local suppliers is something that we do so that we can contribute to the local economies. So that's what we do as Toyota. Now there are cars which are made in China, not locally produced. They may not be a contribution to the economy of the market. We will solidly remain in the position of being able to contribute to the local market and local economy in that manner. I hope I answered your question.

Next question from Chunichi Newspaper, Atsumi-san.

This is [ Atsumi ] from Chunichi Newspaper. Can you hear me?

Yes, we hear you. Please go ahead.

I have 2 questions to President Kon. Just before, when you assume presidency, you said your role and you mentioned name of Taizo Ishida. And regarding Mr. Taizo, you said that he would not exert any money to wasteful things, but he did make a very ambitious investments for the future. Now we asked about your business structure transformation earlier. So as a President, what would be wasteful for Toyota today? What would be the investment that's necessary for the future for Toyota? And second question is about your relations with the suppliers. And here, Taizo Ishida said that it will be a relationship of coexistence and coprosperity, but not one of overreliance. And I guess that it's necessary to enhance your supply chain because of the very tough environment. So what is the ideal relationship in your mind with the suppliers? And how do you intend to achieve that ideal relationship with suppliers?

Yes. Thank you, Atsumi-san. Well, issues investment towards the future of what would be the future investment? I would like to respond to that question first. Well, as I said earlier, mobility is something that's absolutely necessary for people and society for the far future. And it's something we have to establish or improve because mobility can really change people's lives, not only their lives, but also change their heart and for example, their emotions being able to see things that they've seen for the first time to meet people they meet for the first time. And for that, I think the mobility plays an extremely important role to provide such delight to people. So mobility will continue to become absolutely necessary for people and society. And so my image of future investment is something to achieve that sort of mobility. And that's what we are investing in today.

And the other part of your question had to do with waste. And in terms of TPS, it will be the types of work that is not value-added work. That is work that does not generate true value add. And so I guess removing waste is to exhaustively remove such non-value-added work, but nobody is doing work that they think is wasteful. So what is value-added work? What is the sort of task, the work or activities that are absolutely necessary for Toyota. That has to be defined, I believe, very strictly. And that is the role of the management to do. And in any workplace, any work site, I think the same holds true. So that is the sort of waste that I would like to remove.

As for our relationship with suppliers, through our meetings with various suppliers and from the [indiscernible], they call Toyota their colleagues or patriots. And in order to make sure that they continue to call us colleagues or patriots, we, as an OEM, believe that we must not flee from our end users who are the most strict customers for us and deliver good cars to them. And I believe that, that would be the first condition that must be met for us to be regarded as colleagues or co-patriots by our suppliers. And if we can't do that, then we are not worthy of being called co-patriots. And for the suppliers, our toughest -- they must continue to become our toughest customers.

And if you want to deliver really good cars to our customers, we have to make some demand -- very demanding conditions on the suppliers, but that is not for Toyota. It's for the sake of our customers, the end users of our cars. And if that's necessary, then we will be determined to make demanding demands of the suppliers. But when things really come to hitch. When really things come to a critical situation, then we will work together with the suppliers and coordinate with the suppliers and maybe if necessary, support our suppliers. And I think we want to continue to play that sort of a role vis-a-vis our suppliers as well. And that, I think, will achieve the goal of Taizo Ishida, who said that it's coexistence and co-prosperity and not just overreliance on each other.

Let us move on. Nikkei Cross Tech, [ Chikaoka-san.] There seems to be some problems with the connections. We will come back to you later.

[ Tanigawa-san ] your turn.

I am Tanigawa. Am I being heard?

Loud and clear.

In your presentations, robotics was mentioned as a part of your earning power enhancement initiatives, robotics are being forecasted as physical AI. Multiple layers, AI, robotics, semiconductors are involved. Which part of the robotics are you focusing on to enhance your earning power? Now in this physical AI arena, autonomous vehicles as well as robotics will be the 2 major markets. Now Toyota has Arene OS, Arene platform. Will there be some common development for robotics as well? Or will robotics be something totally separate? Will you remain captive for Toyota as well alone? Or do you also see outside of Toyota markets globally?

Tanigawa-san, thank you very much for your questions. Actually, you are far ahead of us, Tanigawa-san. Well, actually STVs are something that we continue to pursue and explore. Autonomous driving enables various types of automation. Let's take a look at the plant, for example. When we receive components in a plant, something unloaded from the trucks can be automatically conveyed. But then as we look at the groups, forklifts are automated and other machines can also be automated as well. We have lots of opportunities. As we think of that, as you mentioned, the physical AI may be able to enable autonomous driving.

And as I mentioned in my presentation, Toyota really has lots of different types of Gembas, different Gembas with different areas of expertise, which can be combined to build robotics, which can be used in different fronts. And robots will learn expert craftsman's skills and be able to teach other robots after that learning is done. So we can dream big as a matter of fact. Currently, we are discussing and exploring different opportunities, and we will continue to do so to realize something tangible going forward. What sort of technological pillars we will have going forward has not really been defined, but you can teach us so that we'll be able to solidly develop our AI and robotics capabilities.

Tesla, for example, have Terafabs. So they're into semiconductors as well. How about Toyota?

Well, it is too early to discuss that publicly.

Moving on to the next question. [ Terasaki-san ]

[ Terasaki ] from [ Best Car. ] Can you hear me?

Yes, we hear you.

I have 2 questions. First question to President Kon. After you assume the presidency, this is the first financial results briefing. And for us, it was an out of the blue change of President and not -- it's not been half a year yet. And at the outset, you said that your outlook has changed because you visited many work sites. If you could explain in more detail your feelings and maybe things that were unexpected after you became President, things you found to be different from your expectations, et cetera?

Second question, I want to ask about your products and next year's products, BEV would be 246% that is 600,000 sales volume. That is your forecast. And BEV around the world has reached a plateau, many people say. So compared to the global sales, I believe this may be a bit conservative. But still, you intend to increase your sales volume by close to 2.5x. So where would you be able to sell how many of these BEVs to the extent you can divulge such numbers? So these 2 questions, please.

Yes. Thank you, Terasaki-san, for your questions. Well, yes, I did visit many work sites. And your question was, if I found things to be rather unexpected off my expectations. Well, I don't know if it was of my expectations or not, but I found that many people candidly say many things to me. That was my very candid impression. And there are many things that were being improved. And frankly speaking, there are many concerns and there are some people who said that they're so frustrated, they sometimes fall into tears. And I listened to these statements, and I talked about the value-added work earlier, but I felt -- well, not one of these colleagues think that what they're doing is wasteful, but they're frustrated that, that is not leading to value-added work, and they're also frustrated that they cannot deliver cars to customers as the customers expect. And I felt very strongly that frustration or their desire, yearnings. And that was my very frank and candid impression after making rounds of the work sites.

This is Miyazaki to respond to your second question. Thank you for that question. Well, up to now, I think that we were told you're only selling this much in many cases, but Terasaki-san said you're going to sell so much. That's a big surprise. But from what we had initially expected, it is true that we were able to adjust the actual sales numbers to the actual demand. And in areas that where BEV will grow, one would be China, also Europe and North America, these 3 regions are areas where -- which will cover the growth in the battery EV because China is a mainstream market to begin with for battery EVs. And so up to now, we have been telling you that we'll be developing cars that can sell in that market. And these products are actually working there, and that's why we have grown the sales volume and plan to do so.

As for Europe, there are cars that we produce jointly with Suzuki and so we have received delivery of these cars. And so for Europe, we do have plans to introduce our own battery EV, so there will be growth. And for North America, as we pursue the full lineup approach, our share of battery EVs will increase as well. So in China and the developed countries, our plan is to grow the BEV business.

Now we are getting to close to the closing time. So last 2 people to ask questions. From Nikkei, [ Yao-san ] please.

I am Yao from Nikkei. Am I being heard?

Loud and clear.

I have 2 questions. Number one, about 30th slide, your forecast for the volume production, 10 million for the year, which is about 100,000 increase from the previous year. And your sales, I believe, is increasing as well. Now if there was no Middle East crisis, do you expect the numbers would have been larger? The second question about 29th slide, R&D and CapEx, JPY 1.6 trillion in R&D. Is this the record high? And what it means is that you will continue stepping on the accelerator in investment. Is it reflecting your comment? And what do you do in R&D software, any cutting-edge technologies? And then in CapEx, CapEx seems to be lower than the previous year. Why? Because I think you're planning on building a new plant.

Thank you for your questions. This is Azuma speaking. I would like to respond to your questions. About the volumes, you're very right. As I mentioned, we do have some impact from Middle East, and that's factored in. So these numbers would have been greater if there were no Middle East crisis. So you're right in there. About 500,000 to 600,000 is the number for our exports to Mid East and about half of that will be reduced. Your second question about our R&D and CapEx. R&D is a record high. You're right. Now our R&D expenses are increasing year-on-year over the past several years. Starting 2 years ago, certification issues that we had to respond. We are spending money for the right way of working. So that's a part of our investment. When that is done, the R&D expenditures may plateau, but it is true. It remains record high, as you mentioned.

As for CapEx, in the fourth quarter, as you mentioned in our previous briefing, third quarter and fourth quarter saw lower profit level. Therefore, starting in fourth quarter, CapEx, especially for BEVs increased. So for the next -- going forward, CapEx is also likely to become more stable. But from the last quarter, we started investing in CapEx. Actually, we do not have any clear-cut forecast for the following quarters, but anything that we invested in CapEx, depreciation cost is likely to go up. So we have to continuously revisit our fixed cost.

Now in R&D, what are you investing in other than certification like woven city or software?

Well, investment for talent and investment for future are the 2 directions for our future investment. Now for future, we have BEVs, hydrogen, woven city-related investment, autonomous driving as well. So these are the areas where we expect to see some R&D investment increasing. So those are the areas where we make investment in addition to investment in people. And this is something that we expect to continue.

Final question. Nikkan Kogyo newspaper [ Kawaguchi-san ]

This is Kawaguchi from Nikkan Kogyo Newspaper. Can you hear me?

Yes.

I have 2 questions. As your forecast for the '27 year, I think forecast is JPY 51 trillion. And with hybrid, you foresee an increase in sales volume, I believe. But on the other hand, as Kon-san and Miyazaki-san said, you have to reliably deliver the product to customers. And I think that the delapidated factory and the need for maintenance repair factories was mentioned during the spring labor offensive. So in the medium to -- medium term, I think that you are taking various measures. But how do you intend to deliver to customers? How do you intend to build a reliable structure for production? If you could talk about your policies for 2027 for that?

And the second question, this has to do with international competitiveness. Across the supply chain, you are delivering some cost reduction efforts, I think, which will be very important. And I think you've been doing this for many years. So against this external environment, how do you intend to speed up or accelerate these initiatives? Because the way your supply chain work because you are such a -- Toyota is such the biggest car manufacturer in the world. What are your views of improving the supply chain?

Thank you very much, Kawaguchi-san. As you said, how to produce and deliver reliably to customers is a key question. And during the labor management negotiations, we talked about the reality of the work site and how we should communicate our roles to the people at the work site. And there's been catch though. And I think that understanding -- mutual understanding has deepened and stopping the production lines will have a major impact on customers. We agreed on this, and we wanted to correct the situation from here. So the management went to the work site and listened to the issues at the work site in order to improve the situation. And domestically, for example, we have a very broad lineup, but there are some models where there is some restrictions on taking of orders or some models where we could not take orders, and there's been some vacuum.

And one would be the minivans and the small compact cars, I think, are witnessing such difficulty. And the fact if we cannot produce these kind of cars, they will not be able to achieve our cost of delivering to all customers. So for family cars and compact cars, we want to make sure that we can produce these cars for customers. And so we have prioritized these models. For minivans, due to the hard work by our colleagues and the cooperation from our suppliers, our delivery time is becoming shorter. And so what remains is the compact cars. And compact cars are, for example, manufactured in Tohoku area. And so regarding the logistics routes, we're having to receive the cooperation of many stakeholders. And there are many issues that remain. But this year, we want to commit ourselves to centralize our -- focus our efforts on that.

Now against that backdrop, how to engage in the cost reduction activities across the supply chain. As was indicated earlier, inflation and the Middle East impact will, of course, increase our costs inevitably. And we must make various efforts to alleviate that impact. But the first is not to manufacture wasteful or redundant parts. We must go back to such basics. So AREA35 is an activity that we are actually promoting for this. And suppliers give us information such as well, this part is not selling well, do you really need to manufacture it? And also, we will go to the suppliers, visit the suppliers. And although they're very hesitant to say this, if it's products to deliver to Toyota, with just a small scratch, we hesitate to deliver the part to Toyota, they say.

And so we will listen to their voices, and we can give them assurance that they can deliver such parts to us if the scratch is very small. So we would like to steadfastly engage in cost reduction activities from the perspective of the customers. Now Kon-san talked about our relationship with the suppliers earlier. And we will not be able to manufacture a car if we're lacking even just one part. So we would like to work with the suppliers to improve quality and also to reduce costs. So we ask for your continued support and guidance toward us. Thank you.

Thank you, Kawaguchi-san. Now then we would like to conclude the session. Thank you very much for participating despite your very busy schedules today. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I am Yuta Tomikawa of Toyota Times. And we are having this important notice on short notice on Toyota Times and 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 these 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 2026, April 1, executive changes have been announced. And 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. And 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. So this will be the new formation of the executive structure. Thank you very much for understanding, and we would have these gentleman to take a seat now to proceed.

And later on, we would like to receive questions from the floor as well, but please allow me to start with the first question. I'd like to ask Koji-san first -- Sato-san first. So why is it that Toyota decided to change to this new executive structure? And as a reason for your decision, can you explain?

Yes, thank you. So I'd like to say first that it was a short notice, but thank you so much for attending our Toyota Times interview -- live interview today and also many connected remotely, I appreciate this very much. So Tomikawa-san first asked about what is the purpose and what -- why we have made this decision to be -- 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.

And 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 2 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.

And 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 our concrete collaboration initiatives and identify the pathways for Japan to remain competitiveness. 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. And 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 are facing.

And 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. And with that, consequently, we have held the Board of Directors meeting and the Board approved these role changes today. So 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. And for Kon-san, current Operating Officer, he possesses strong expertise in accounting and finance. And 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. And we believe that in advancing the earning power initiatives, he will be able to leverage his strength to provide the strong leadership that we will need in advance -- to advance our initiatives.

And 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 ]. And I intend to be able to accelerate the pace of the collaboration. So I intend to be more active than ever on the ground on the front lines connecting Toyota with the industry.

And 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. And since I became President, what was always on my mind is to maintain the speed of management and also to continue to take action. So 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. And under this new formation, we want to fully carry out our respective roles. We sincerely ask for your continued understanding and support. Thank you.

So of course, as the new structure, you explained the new formation. And from this executive appointing meeting, when you received the proposal, what was your impression?

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. And because of several reasons, they have asked that Toyota could take the lead in JAMA. And 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. And then there was this proposal from the executive appointment meeting. And then I was wondering if I could serve both of those roles in this formation.

And I think this proposal was quite effective in terms of governance because from the third party's view, this position is quite overload. And then because of the proposal from this meeting, appointment meeting, I became very objective and then started to think that this is something that I should consider.

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. And you also were thinking you wanted to continue your president.

Of course, because I've been working at Gemba all along, and I love cars. And of course, the ---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. And of course, some -- a part of me was really had this attachment to this. 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?

Well, I knew you were going to ask this question. Well, honestly speaking, I think it is short. However, there are 2 points I wanted to -- I have in my mind. First of all, it's still 3 years, but it's already 3 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 3 years. And when I became the President, Chairman, Akio when he asked me to become President, car making in 14 years of his presidency, it's 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 in -- 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 has to be done at this timing, although the 3 years was so short, but that is not the reason for anything.

So I thought you did something bad because it was so short 3 years. And I'm sure some of the attendants of this press conference are thinking about the same.

Yes. So honestly speaking, some of my friends texted me and ask me if I did something bad, what did you do? So to avoid any misunderstanding. There is no wrong doing 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 weird text.

Is that your final answer?

There's no wrong doing, nothing.

So as was mentioned in the press release, it is not just the executive change in the 1st of April. But as of the shareholders' meeting in June this year, there's going to be announcements, and you are going to no longer be a Board member.

That is correct. There are 2 points to this. The first of which is that we are aware of the corporate governance code. And the way corporate governance should be is that -- so Toyota has been making efforts to improve the management, and we're going 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. So all the Board members are always present at the BOD meeting. And diversity of the BOD members and numbers of Board members are the important points for us to consider at TMC.

And as I became the Vice Chairman, the general public, they are very cautious 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 one reason. And second of all, what we try to do in the future. And 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. And then in some cases, we do agree with the whole -- overall topic, but there are some oppositions amongst some companies.

And when that happens, if I'm wearing the hat of Toyota, then that could sound like a pressure -- peer pressure from Toyota. I was struggling all along. 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 cross industry or the reform that is to be done in the industry. So that is another reason.

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

Yes. It was in middle of January when just like Sato-san said, there was an executive appointment meeting members that talked to me about this concept.

So what was your first impression about it?

Well, I am sorry for the executives, but I was so surprised. And I totally blacked out. And I think I listened very well to this story, but I don't really remember what I heard at that time. And as Sato-san said, those purpose and intention of this role change was explained by the executive who were in the same meeting to inform me, but I was like, wow.

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 3 years.

That is correct. Kon-san, you used to be a Vice President. When you were Executive Vice President, did you think that you will be the President afterwards?

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 hiding your motivation for your new role.

Yes, I think so, too. 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 has -- it is also new things that I've learned today as I was listening to Sato-san.

And 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 will be the formation of the management team. And 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 that will be a -- we will be able to look at a larger scope and cover a larger scope, and that will also be something to consider as I take on this position of captain for the club team.

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

Yes, I think so. So as of now, I am in Woven by Toyota. I belong to Woven by Toyota. And this organization, we have relatively younger members, and this is a software development company. So 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. But 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. And that's also one thing. But it is close in distance probably to Toyota Motor Corporation, but we still are -- have a distance between at the same spot. I was in this company that was a little distance from TMC. And so this experience of looking at our from that position outside of Toyota, 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 these things that is not really acceptable.

What is that -- I wanted to point -- I think that -- what was the negative point that you recognized?

Well, there's quite a lot actually, what I recognize that should -- 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.

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 is a lot of accumulation of the past experiences that we've had in the history. And -- but on the other hand, if we try to do something new, we tend to be bound by the past precedence 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, important perspective.

But if it's new challenge, something new that we're trying to do, we need to take a different perspective and a different approach that's what I thought from an outside perspective.

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

Well, I agree to what he said because I think there's many things 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 you're 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 under -- from their perspective, from that environment, probably we are more kind of working in a standard way and having -- being siloed and so having that objective perspective in having that feeling that we need to change Toyota that is very important to move us forward. And 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.

And also Sato-san, for you, you have been visiting the Gemba very much, especially after Toyota experienced a certification issue. And is there anything that you want to succeed pass down to Kon-san relative to the Gemba activities?

Well, for the first year that I become a 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 and just one word. In these times, go to the Gemba, Sato. That was what he said. Very simple and very short.

And I thought that because I was always at the Gemba doing development as an engineer, I thought I knew about the Gemba but once I followed his advice and went to the Gemba, I found out that I had no idea about the Gemba. For Toyota, in all plants, Gemba, all the development Gembas, 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 everything, all that they had and thought that I knew about Toyota's Gemba.

So then what I thought is that if I can -- if I can help to make -- create an environment so that they can do something everyone wants to do, that probably that's my role. And 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 cars. So they would invite me, so I'll go and I drove the car -- tested cars for a full day. So that the people, the guys who's doing -- engage in the development projects, they really have shining bright eyes and they're fully putting -- 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. And what I felt when I went to Shimoyama and met these young members who has 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. So 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. And 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 bar, which -- that Kanji character bar which means space. So I thought that, that bar or the space of Toyota is expanding and is changing. And I -- it was a trigger for me to think about what is the bar 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 bar, create that space for them to excel. So you talked a little bit about car making. And Akido-san was an old man who loves to drive cars, and you were the guy that likes to make cars. So if we go in that style, then Kon-san, what kind of guy are you?

Well, I also do love cars. But right now, I'm in charge of finance and accounting. And so I -- 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'm focused on.

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

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 save money, it's not that you want to keep that money for yourself. You're not the greedy type?

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 a [ bantle ] or 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 waste for 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. But -- what I'm thinking of when I say I like money is I want to use money for the future of Toyota and also that money at Toyota is not something that we generated just by -- only by Toyota. And so we use -- we should use that money that we have for others as well for others in the industry, others in the country. And 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 -- that we should always be -- have attention on. And 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.

In the press release, Toyota's one of the important theme is to improve the breakeven 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.

I think both because each unit of car, 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 to Tomikawa-san, quality when it comes to Toyota's revenue, we don't have any numerical target for our revenue. But 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. And I think that is the revenue stream and the structure that our stakeholders are requesting for. And in order to maintain that, we want to reduce the breakeven volume points. In other words, even in a bad time, we want to hang in. And that is the kind of structure that we want to create as a company.

Yes. So unless you have an earning power -- well, unless we have earning power, we cannot do what we want to do. So earning power is important in order for us to achieve what we should do. So Kon-san, you were very humble and you're not trying to show your aspect of loving cars. And I have to say this. Kon-san and I had this minivan discussion before, Kon-san loves minivans.

Minivans?

Yes, he was so humble that he is not talking about it. But once he starts talking about minivans, then he would talk about the Noah and Voxy. I think he loves those models.

Minivans only?

Yes, minivan limited. So is this not good.

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

Well, just like before, I want to continue to drive cars. That's my intention.

Well, you make me feel better. So he is so good that I can't even compete against him. I'm going to pass the microphone to the audience soon. But so Koji-san, did you talk with Akio-san about this role change?

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 the scope and -- that he's thinking and the 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 will give you detailed instruction, but not at all. It's much smaller than or fewer than before. But rather, he will give you this mainstream because he want to be instrumental in making Japan better. And then we've been talking about this industrial report, industrial contribution.

So this HR formation, is he involved at all?

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 the 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. And 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. And then they got me involved in discussion and I made this decision. And ultimately, we all decided at BOD that we are going to propose this to the General Shareholders' Meeting.

So -- and as Kon-san was saying, what is Akido-san's impression?

Well, as Kon-san was saying that in each timing, there is an appropriate formation. And that kind of flexible management is always called for.

And from the viewpoint of Chairman Toyoda, I think he is 69 years old, and he's going to turn 70 this year. And as he continues as the Chairman from now on, he said that there are 3 points that you want to focus on, and one of them is HR development. Under his leadership, learn the execution of management and so that we can have a more rich pool of human resource who are involved in the management, and that's going to be quite important. And 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. That is the kind of thinking. I think he has against or at the backdrop of this HR change.

So you mentioned about 3 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. [Operator Instructions] Since we have limited time, we'd like to limit one question each. If there are 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.

Nikkei xTECH [indiscernible] is my name. And I want to ask about the direction of engineering development. And if it is irrelevant, I'm sorry, but the end-to-end autonomous driving technology, Tesla and the Chinese players have been accelerating their development effort. And for this kind of a trend, Toyota, the -- what is the current situation of the capabilities? And what will be your future policy to promote the development? Well, I want to understand what's -- how Kon-san views this topic.

Thank you very much for your question. Well, regarding autonomous driving, if I can expand the scope, it will be including Toyota's SDVs. Why does -- is Toyota engaged in developing SDVs. And when we think about this question, a little while ago, actually, there was a core direction that the Chairman, Toyoda showed to us and that was the target to achieve 0 traffic accidents. And 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.

And 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. And if the question is, is Toyota advanced in their level? But if that's not true, and 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 a 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 for -- more for the future, a complete autonomous system. We're working on all these ends.

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

Well, if you can think -- comprehend in that way, I will 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, there will be other engineering members. There's many engineers, talented engineers in our company. So the leaders will -- we have those leaders.

And for my part, I will have -- 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're 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 having -- establishing this good profit structure, this foundation so that people can take courageous challenges will be my role.

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

This is [indiscernible] 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 breakeven volume. And then at Toyota, in the past 10 years, this number has been improving, I think. What kind of challenges and issues do you have? And as a President, how are you going to lead the solution for this problem or for this challenge?

So we recognize the challenge, and we made announcement of the fiscal numbers and then breakeven numbers in the past 1 or 2 years have been increasing a little. There are some external reasons and also the price level is another factor. But 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. And that is something that we are all aware.

And there are many factors like Sato-san said, the functional access without having the overall picture, if we accumulate, 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 are now -- we have this theme of intentional pause e and Sato-san also talked about it. So we want to have more of a company-wide approach for this.

So going to the next person. Anyone who have any questions. The person in the back in the business suit. Nagai-san, please.

I'm Nagai from TV Tokyo. I have a question to President Sato. Earlier, you mentioned that it was a short 3 years. But in the past 3 years, as President, what were the things that you were able to accomplish? And on the other hand, in this short term of 3 years, that probably were things that you were not able to accomplish and probably there's things that you want to succeed to Kon-san. Can you talk a little bit about those?

Thank you for your question. Well, on things on a -- I don't think that there are any things that I need to do on a personal level. And like I said, the subject should not be I, but I should always be thinking from a we perspective. And we are now targeting to transform into a mobility company. And at the beginning -- at the starting line, we did say that we want to become a wealthy 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 3 years, we've tried to first take action. That was the consciousness that we had. And my feeling is that because we continue to take action, little by little, those concrete measures that we need to do, the initiatives is becoming more clear.

And when we know what kind of action we need to take more clearer, then we know the challenges. And then if we know the challenges, we're able to make the changes necessary to overcome those challenges. So, I guess, this initial torque to start and move as toward a mobility company was probably ignited by the efforts in the past 3 years. Then 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.

We are -- that is the center of our business. And currently, Toyota vehicles are being chosen and are being loved. And 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 is tied -- 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.

So 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 so 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.

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

My name is [indiscernible] from [ Nikkan Gendai ] newspaper. I have a question to Kon-san. So under presidency of Sato, I think the team management and also evolution and the 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. Executive members, we have the Presidents and Divisional -- Chief Officers and all these executive members are there at Toyota. We don't have one super man. We are working to make Toyota and Japan better altogether, and that kind of style is going to stay the same. And as Sato-san just said, making ever-better cars, that theme or the mission will stay also the same. There is no person at Toya 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 would 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.

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

I'm Sato from TV Asahi. 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?

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, since immediately after this resolution has 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.

And we wanted to have an opportunity to convey our thoughts as well. That is why we use the setting of Toyota Times to hold this kind of opportunity. And also in just -- 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 this setup. Thank you.

Okay. Next, this gentleman in the center.

[indiscernible] Toshiba. My name is Atsumi. So you talked about HR development is one of the most important point for Toyota. And 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 they would not become like a regular company. And how do you -- what's your impression on this theme for Sato-san, looking back to your tenure and also Kon-san for your presidency from April 1 onwards.

Well, I will not pretend that I know everything because this is something -- a question that I've been asking myself all along. I've always asked what's the unique point about Toyota? I don't have the correct answer. But for someone other than myself or 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 preset. And then we have this thinking of always be faithful to your duties and thereby contribute to the company and to overall good.

So that means we have to execute and then contribute to the society, and that is how we can have a meaning in our work. And 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, subject of the sentence tend to become yourself and you become self-centered, but that will narrow down your perspective and then you might digress from what Toyota should do and I interpret that as to be a warning.

I quite agree with what Sato-san said. For someone other than myself, that's how we started. And that is the weaving machine at the TICO or loom that we started to work at 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 theme.

And another point which was also mentioned before is that so Chairman used the word bar or place or space. And I think this is also correct. At Gemba and Odaiba or the sales front, we have to keep the focus on those words of places. And outside of those bar -- outside of those places, we don't make decisions or prioritize things. Anything that happens at those places or bar, we have to pay attention and take actions. I think that's the uniqueness of Toyota. That is what I think right now, and that's the mission I was given. And I will try to create such a bar for everyone else. That's the focus for me.

Then maybe we can have 1 or 2 more from the floor and then go to the online members. I can't see very well from here. The person on that side. Please go ahead.

I'm [ Yao ] from Nikkei newspapers. And I also want to ask Kon-san a question. So most recently, for the TOB of TICO project is being continuing. And you are Toyota Fudosan Board member as well. And 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? And 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.

First of all, for TICO's TOB, I have not participated in any of the decision-making at Toyota Motor Corporation. And there is an information blockade for -- from between TMC and myself. So as an offer, as an acquirer from Toyota Fudosan, I am participating in this transaction. And even with this role change this time that we announced today, we are going to have good management of the conflict of the interest for this TICO transaction, and this will not change. Therefore, for -- in the position of Toyota Fudosan, we are now in the period of TOB as an offer. And for this transaction, I will continue to be participating from the Board member position of Toyota Fudosan.

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 questions for those remote participants, [Operator Instructions]. Okay. So [ Hans-san ] from Automotive News. [Operator Instructions]

I'm Hans from Automotive News. Is it okay to ask in Japanese. I made a mistake. Can I ask in English. I made a big mistake.

Yes, please go ahead.

I like English better. 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?

So I think I will start to respond to your question first. 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 be 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, 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 assess -- we don't assess things just for money or numbers. That's not what I meant. It's about being prepared for the -- 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 to the future.

Thank you very much, Hans-san. And I'd also like to add a little bit of comment myself too. For me, I think it's the opposite, as 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 care making, there will not be anyone who is unrelated to fun-to-drive in every-better car making at Toyota. I think that was a very important point from Kon-san because there -- 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 at 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.

Thank you for your question, Han-san. We would like to move to the next question. Tanigawa-san from Car Watch, please. [Operator Instructions]

This is Tanigawa from Car Watch. Can you hear me? So I think you're going to be more focused on the Keidanren, also JAMA's role, but the issue here is tariff and regional assets, and I'm sure there are many challenges. What is the first point that you're going to start and more focused on? If you know your focus, please let us know. Another question is that in mid of January, you were informed about it. And in the beginning of January, you mentioned that you want to be a referee in between Akio Toyoda and Mr. Nakashima, but who is going to take this role now?

So do you want me to show the video of this referee? And we can start from there. Okay. So let's start from the second question.

Well, DR members made this, but its process with AI, and I look like such an evil person. Yes, Kon-san is going to do this. Please, would you?

Yes, we changed the facial expression.

Yes, I like this better. Okay, it is not to show that we have a conflict inside TMC. This passion of making ever-better cars I think is multidirectional. There is -- we're not fixing the approach of making cost to one. 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 the funnel. I like this, and I hope that we can change this person to Kon-san and then this distribute this -- and on your first question, actually, we couldn't hear the first part.

As the Chairman of JAMA and also Vice President of [ Keidanren ] what will be your first thing to start. And what is the biggest challenge that you think is in front of you?

Thank you for that question. Yes, in case of JAMA, there are 7 challenges that's in front of you -- in front of us and how seriously can we tackle this. When they selected the Chairman, we had a huge discussion with the top management of the member companies. And then 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.

And then the sense of crisis actually is common. So those competition amongst the company's 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, and I think that's the consensus. So I'm not going to mention specific names, but Toyota and Honda, the error is not the time -- it is not the time to do things differently amongst 2 OEMs. I shouldn't just mention Honda. I should just mention all the OEMs, [ Matsuda ] and Nissan. That's my understanding. So challenges.

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 unlike before where we have this regular meeting and discussion and then set direction. Unless we take actions, we won't be able to drill this blueprint. So my work, I think, is to draw a specific picture.

I think we passed the 1 hour time. So I'll just check on what kind of comments that we see on our social media. And there are some questions so we can end with these social media comments. So the President, even if the structure changes, I hope that if -- even if it changes, the ever-better car making if it continues, it's okay. So I think this is okay. And Sato-san, I was waiting the next MR2 coming out next-generation MR2 coming out.

Accounting and finance background. So Toyoda will only be thinking about money and more so initiatives. It's not going to be continued. Now this part, we don't have to worry.

And Kon-san you have good voice very good way of speaking, good President. So you're already receiving comments. Now cost management, cost control is going to become more tough. Will it? I think so. So if you need to be careful Taizo Ishida was a person that will not waste money, but use words important. I guess that's going to be our policy.

And the final question. I want to -- 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. You're then -- or we can ask Kon-san, what is your expectation Kon-san? What will happen? Kon-san about Celica.

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. So. Sato-san, Nakajima doesn't really say this real thing like we're going to do or we're going to stop. He never -- 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 and ever-better car is being developed, it's not about responding to the instructions from a company and giving 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 up passion in this company, I don't think we have to be worried.

So I was asking from a perspective from 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.

Well, in today's conference -- press conference, I think we were able -- I hope that I was able 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, and I hope that you will continue to have high expectations to us, and we'll make our full effort to be able to respond to your expectations. We're okay.

And Kon-san please listen to the employee's voice. Is Toyota okay going forward?

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

Thank you very much I'm sure that there's many much 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 reassured you'll be able to take a photo after this. Both of them will go behind the screen for a while, but will come back so that we will -- can have a photo session.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Happy New Year, everyone.

Happy New Year.

So now last year, I'm now reminded that I wasn't able to come because of the flu.

I'm really happy that you're here on stage with me this year. And we saw the movie last year. So you were watching online, YouTube, from your home and you gave us a comment saying, I'm alive and well. So you were participating from home.

Yes. And I didn't have any -- it wasn't -- but -- well, it wasn't really bad, but it was a flu after all, so I decided not to come. And it's not AI. It's not a robot. It's me. It's the real me here.

Thank you. Well, last year, you weren't able to come, but we had people that were standing on stage on behalf of you, and we talked about Morizo's top 10 news story. It was like a prediction of the future. So maybe we should just briefly go over how it turned out. So let's look at that roughly.

#10, Morizo's dream garage comes to life at Tokyo Auto Salon, you did achieve that last year and WRC Triple Crown regained. And yes, you regained that. And last year, we had this congratulation message from Hyundai on the newspaper ad page. So it's the right-hand side. This is from Hyundai to Toyota GAZOO Racing, congratulations on the Triple Crown. And actually, it started out from the message from Toyota GAZOO Racing to Hyundai, congratulating the great competition.

The final race then was Rally Japan and Hyundai's Chairman also came to Rally Japan, and we were very grateful that the Hyundai, Ford and also Toyota competing each other in the top category. I think because we're having this open fight, if we -- if they won -- if -- they were saying, they were going to win, so we wanted to send a congrats message, and we thought that the Manufacturer's Champion would be Hyundai. But at the end, well, there was this kind of a miracle change, and Toyota won. So we had to rewrite this message. But this is like this call in response between the rivals.

I think it's wonderful that this kind of communication is going on. So let's come back to the ranking.

#8 to #6, because it's a head-to-head competition, it's quite difficult to achieve it. But #5, able to drive more cars a year than usual. Yes, you have the midship, the hydrogen engine, GTR 3 (sic) [ GR GT3 ]. You've already -- you've driven all those cars. I think you've achieved that, yes.

And #4, GR Yaris finishes 24 hour at Nurburgring. Also, additional R and both TG-RR, you've entered in Nurburgring. So you've achieved that. And #2, 2-liter engine revs into action. #1, midship takes off. So most of it, you've achieved it. So Morizo-san, the midship did take off. And you've actually driven it. How did you feel? How was it? How was the feeling?

Well, the professional drivers who teach me driving, especially driver, Mr. Sasaki-san. So I've driven 86 and then GR Yaris. And then people who've mastered those cars, what he told me is that you need to have a midship to master the next stage. And so the GR Yaris that I'm mostly used to driving, we've modified it into a midship and the Okayama rally -- the race in October, Super Taikyu, it's not rally, Super Taikyu at Okayama, we've entered this car.

And after you've driven it, you said, I want to drive more with this car. So I assume that you had a lot of fun.

And this car, in Okayama, we are divided in 2 classes. And until the end, it was competing to finish with the top drive -- top car. And 50 years younger driver than me won after all, but I think it did show the potential of this car.

And speaking of midship, recently on the social media, we've heard there were some of conversations.

[Presentation]

So everyone is like what is that? And it's the midship 2-seater that was customized. Is my understanding correct?

Yes, it's that.

Then another one that we wanted to...

[Presentation]

It sounds quite harsh. Things are getting rough. So with those conversation, actually, they've chosen the theme of auto salon, and we chose it to be the match up. It's going to be a 3-round match. And let's see what kind of a fight is going to go on one by one. So the first round, it's the parent-child quarrel or the family feud, GR and Daihatsu. So that's why you're saying parent-child, parent company and subsidiaries.

So Hoshika-san, the Vice President on the right-hand side. So this was created by AI. So the face is slightly strange, but look at the right -- lower right-hand side. It's a Kei truck, the mini truck. Yes, it is a midship. It is a 2-seater. So which side picked up the fight?

So Daihatsu had caused a lot of fuss on the media, very sorry about that. There were some issues with Daihatsu. And in those kinds of times, we're saying that we need to create good products and has -- that product be used by our customers so that the employees and the customers, we can gain -- regain the credibility from them. That's what I proposed to Daihatsu.

And then from Daihatsu side, the response was, "if that's the case, can I have a competition with you?" So they challenged me. And so I said, which car are you going to use and -- in the lineup from Daihatsu and we're then saying that it should be a midship. That's why we got the 2-seater midship and this is like a national car of Japan that we're very proud of, the Kei truck, the mini truck. So -- and the car that developed by Daihatsu, we're going to use that. So Hoshika-san is the one who challenged me.

And then you said that if they -- if you want to fight, then I'll take it. So I think we should straighten out the facts with Daihatsu and Morita-san, you're in the Daihatsu booth.

Yes, Kyonosuke Morita here from Toyota Times. So this is about the first round fight. The people who picked up the fight is Daihatsu. We got Hoshika-san and also Tanaka-san from Daihatsu. So you're the one who challenged Morizo.

Yes, I guess I did rather courageously. Well, but at the end, there's a lot of employees in our company that really love the Kei trucks. And if we say that we're going to have a competition with this -- with our products, there's a lot of people who want to engage and who want to participate because there's a lot of car lovers in our company. And we want to win absolutely.

So yes, you're going to give it all -- give your all to this fight. Now the person who is going to take on that challenge on behalf of Morizo is Sasaki-san because you're the one who always customizes Morizo's cars. So you've now picking up the fight too.

So yes, this is quite difficult, this topic of modifying a Kei truck. And then I'm competing with an OEM, and we are in the GR garage. It's like a small -- very small garage in the town with small people trying to win. And so now you see this clear positioning.

And I'll ask Tanaka-san, what are the key points of your truck?

Tanaka here. Well, we know the Kei trucks -- to every detail. We're the OEM who made this, and we looked at what the Kei can do because it's a Kei. So we -- it's about carrying, working, also supporting. And we've expressed this all in our modification.

And there's going to be a voting method for all of you to join to see which is winning. And Sasaki-san, anything you want to say?

Well, I could see how well they knew about the truck, this Kei truck, and I've learned that we can remove the roof of this Kei truck and so quite impressed.

Now Sasaki-san, what about your modification?

Well, Kei-truck is about a working car. So I've changed it completely to a car fun to drive, so -- is to enjoy fully. So it's a 2x2, 2 people is more fun than 1, 4 people is more fun than 2 people. So we have 2 seats attached to the rear, right. So with this car, have Morizo drive it on the off-road, do off-road driving.

And Morizo likes to entertain people, likes to have people have fun and turn them into smiles. So that's why I wanted to add more people so that more people can turn into smiles. So a car to have fun with, the truck to have fun with.

Well, Sasaki-san said you wrote that design in your mind, and it's a cool buggy. So it looks like a car that we can have it in rally competitions. So quite a strong car that we need to win over.

Well, we're the like-minded colleagues that we are engaged in car development together. So we're going to have a head-to-head match.

Both of it looks cool.

Yes, I like it. I like both of it. And I'm a person who's like a representative of a big company.

Yes, you are. You actually are a representative of a huge company.

And so a person like me was intentionally going -- brought this fight from the company. And we're doing this like as if we're the owners of garages in the town. I think this is very fun. We want to support the car industry of Japan, but just the OEMs make -- working hard won't help this whole industry. And it's not -- we can't just rely on the small garages, small companies and SMEs to support the industry.

So we want to show the potentials of what everyone has and especially what the kind of techniques that Japan has and with -- especially with the light truck, unique truck to Japan. And in the 3 days, we're going to have a voting so that you can participate to see who wins.

So it's a Kei-truck that is modified from an OEM perspective and then a Kei-truck that is modified from a small garage perspective. I think that is also interesting to see. And to determine who's going to win, we will have a voting that the vote will be casted by people who come to the Auto Salon, all of you visitors.

And I'll explain how it's going to be done very briefly. So at the side of each of the cars, we've lined it all up like this. We are going to have this box and you can cast your vote with these balls. So the car that you want to ride, please put in that ball into the box that says either Daihatsu or Toyota GAZOO Racing. And after 3 days, we're going to count all the balls, see how many votes that each car receives. So you can do as many voting as you want to, but be -- try to think of not being -- let's try to be fair here.

Well, and let's think of what kind of reward that we can give for the champion. So Auto Salon, we're going to have only the invited guests, but the general public will be coming in as visitors from tomorrow and on Sunday. So we'll look forward to all the votes.

And I did say that it's a 3-round match, let's go to the second-round match. It says internal feud -- company feud erupts. And referee in the middle is President, Sato. And Akio-san is on the left-hand side. Well, you're the Chairman, I guess, of the company. And then on the right-hand side is EVP, Nakajima-san. It's like you're almost going to be punching each other, and this is what was made by AI.

Well, actually, 2 days ago, we had a press release out that quite surprised us, I guess. As you can see, Toyota's European R&D center changes its name, competes in WEC with a new brand, Toyota Racing. It's a new name. Also, it says Toyota GAZOO Racing, reverting to GAZOO Racing to pass on and evolve the making of ever-better cars and the fostering of talent. So it's no more the Toyota name out. It's just GAZOO Racing.

And the booth still has Toyota name in here because we were in time to remove it. It was just a sudden change. So now we see this GAZOO Racing versus Toyota Racing. And let's call in the representative from the Toyota Racing side. So here you are, so we see the Giaiano and Bulldozer of TMC.

Well, I have things that I want to say. I was listening at the side, and you're talking about Morizo constantly. Of course, as Morizo -- there are many people who want to make ever better cars with Morizo in the center. But there are people that say that even without Morizo, we want to make ever better cars, many engineers like that inside of TMC. And I'm the one who represent all of those people.

So Morizo, we're going to be divided from Morizo's GR. And I'm going to represent Toyota Racing. So I came to pick this fight. Finally looking in the eyes.

But until yesterday, he didn't look me in the eyes. He wasn't able to look at me directly. Well, it was like he was watching the side, and now you're really going to look me in the eyes and fight me. So maybe your mother is watching this.

Well, after this, I'm going to call my mother.

So she might worry that you're going to lose your job.

I'm going to worry -- I'm going to call her after this so that she'll be -- I can relax her.

Well, can you talk about this?

Well, for Toyota Racing, the World Endurance Championship, especially in WEC, we are going to be fighting ourselves without the help of Morizo, just with the engineers. And this year, we're definitely going to become champion of Le Mans. And then I'm going to bring back the trophy and smash it into your face.

So everyone you heard it. You heard that declaration, right? So you're going to smash it to us, and we need to take that -- Toyota Times needs to take that and cover that. So it's not a lie, right? You can say that to your mother, too.

My mom, I'm going to win definitely.

Let's believe. Let's believe it. Well, then how are you going to divide the work between the two companies.

So for WEC and NASCAR, it's going to be done led by Toyota Racing. Then GAZOO Racing will be leading WRC, Super GT, Super Formula, Haas Formula 1, also the Japanese Rally Championship. And TG-RR was started last year. And Nurburgring, Super Taikyu, Kyojo Cup, this will be led by TG-RR. So it will be these three teams. Now how it will turn out this year, I think it's something that we should look forward to.

And we were talking about a 3-round match, and we have a final round for our fight. It's the customization showdown. Both of you, you look good in sunglasses.

Where is mine?

Yes, we have yours too. You want to have it on? So I'll receive your glasses, so you can have your sunglass.

You think it's cool? They look cool?

Is this press conference okay? Is it okay from the Toyota perspective? Well, anyway, we'll just move forward.

So customization showdown, I think it's like rough deserts of U.S. And you know kind of what you're going to use. Camry -- I shouldn't say that.

Something like a Camry.

Well, we have it mosaic, so we're trying to blur it. But we're going to pick up a certain car and do a customization showdown. And that will be revealed at 4:00 p.m. when we have another talk show. But since you have your sunglasses on, we'll do a photo session with the press. So maybe you should go downstage. Maybe we can't.

If you can go to the center, we have a T sign on the stage. So if you can move there. This is going to be our official photo for Toyota GAZOO Racing booth this year. And have your gloves on, sunglasses. All set? Yes, to that position, please. Also, look to the front and have that fighting pose like in boxing. Look to the right, please and your gloves up. This is the official photo for everyone. It's going to be the official photo. In your press -- in the press releases, please use this photo. It's the official one. We're having a fight, a serious fight. Wow, there are so many people here. And then the left side.

So our serious fight is going to start here. Everyone, make sure you get a good shot. And maybe you have to have that serious face. It's a fight. Wow, Nakajima-san, you look really good. Well, I can't say Nakajima-san, you're going to be called Giaiano. So Morizo versus Giaiano.

So Toyota GAZOO Racing booth presentation will end here. And from 4:00 p.m. this afternoon, we're going to have a talk show, and we're going to talk in more detail about this 3-round fight. So I hope you can come back to our booth. Thank you very much, everyone.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you very much for joining us today, taking time out to presumably busy schedule. Now, we would like to begin TMC's FY '26 Q2 Financial Results Briefing. I am [indiscernible] from Corporate Communications, pleased to be your MC today.

Now I would like to invite our Chief Financial Officer, Kenta Kon, for his presentation. Kon-san, over to you.

Good afternoon, ladies and gentlemen. Thank you for the introduction. I am Kon. Before I begin, I would like to start by sincerely thanking our customers around the world, who love Toyota cars; our shareholders, who support our efforts; our dealers and buyers and our other stakeholders.

Here is a summary of Q2 results. Our operating income for the first half of this fiscal year was JPY 2 trillion. Despite the impact of U.S. tariffs, strong demand supported by the competitiveness of products has led to increased sales volumes, mainly in Japan and North America and has expanded value chain profits.

The full year operating income forecast is JPY 3.4 trillion, despite the impact of the U.S. tariffs, we have continued to build upon our improvement efforts, such as increasing sales volume, improving costs and expanding value chain profits.

We are steadily translating comprehensive future investments into improved productivity and increased returns with a strong focus on improving the breakeven volume. As for shareholder returns, to reward our long-term shareholders, the interim dividend is raised to JPY 45 per share, and the full year dividend forecast is JPY 95 per share.

As announced at the Japan Mobility Show 2025, we will clearly define the 5 brands of the Toyota Group with clear directions. A diverse range of products, meet the needs of each individual customers and thereby expanding choice for our customers. I will now delve into our financial results for the period ended September 2025. Consolidated vehicle sales for the first half reached 4,783,000 units or 105% of the same period last year. Toyota and Lexus vehicle sales totaled 5,267,000 units or 104.7% compared to the previous fiscal year. Thanks to a strong demand from customers around the world, vehicle sales increased mainly in Japan and North America. The ratio of electrified vehicles rose to 46.9%, driven mainly by strong HEV sales in regions such as North America and China.

Consolidated financial results. Sales revenues of JPY 24,630.7 billion; operating income, JPY 2,005.6 billion; income before income taxes, JPY 2,478.1 billion; and net income of JPY 1,773.4 billion. The factors that impacted operating income year-on-year, are shown on the slide.

Next, the geographical operating income. In Japan, operating income decreased mainly due to the impact of exchange rate fluctuations and increased expenses in North America, it decreased because of the impact of the U.S. tariffs. Other regions saw an increase, mainly due to higher sales volume, improved model mix and other factors.

Our China business saw increase in operating income and share of profit of investments accounted for using the equity method. Operating income in the Financial Services segment increased largely due to an increase in loan balances.

Now, we will move on to the shareholder returns. We will raise the interim dividend by JPY 5 compared to the previous fiscal year to JPY 45 per share. The forecasted full year dividend will also be increased by JPY 5, reaching JPY 95 per share. We will continue to increase dividends in a stable and continuous manner to reward our long-term shareholders.

As for share repurchases, in June of this year, we passed the resolution to establish a repurchase program of approximately JPY 3.2 trillion as part of taking Toyota Industries Corporation private. Therefore, no new share repurchase program will be established at this time. We will continue to conduct flexible repurchases of shares, considering factors such as common stock prices.

Next, I'll explain the forecast for the fiscal year ending March '26. Consolidated vehicle sales remain unchanged from the previous forecast. Toyota Lexus vehicle sales has been revised upward by 100,000 units to 10.5 million units.

Through the strong competitiveness of our products, we will capture even more robust demand, particularly in North America. Next, let me explain the full year consolidated forecast. We have adopted the full year ForEx rate assumptions of JPY 146 per dollar and JPY 169 per euro. Our forecast for the full year consolidated performance are sales revenues of JPY 49 trillion, operating income of JPY 3,400 billion, income before income taxes of JPY 4,180 billion, and net income of JPY 2,930 billion.

The factors impacting operating income year-on-year are as stated on the slide, despite the impact of U.S. tariffs amounting to JPY 1.45 trillion improvement efforts such as increasing volume, model mix, cost reductions and expanding value chain profits are expected to result in a positive impact of JPY 0.9 trillion.

To maintain and strengthen our earnings power, we will work with all stakeholders, including suppliers and dealers to leverage results of the strengthening of our operational foundations to further improve productivity.

I believe, everyone here has seen the models we unveiled at the Japan Mobility Show. These cars speak more for themselves than I ever could. Each and every product is something that could not be created overnight. Toyota is a company managed through its products, which are the results of long-term efforts built up by many people. Our products were created by our development teams, production teams, suppliers, dealers, and of course, our customers and the market.

The first half financial results reflect these efforts, and our cars have generated solid profits. And now, in addition to Toyota, Lexus, Daihatsu and GR, we are able to introduce the new Century brand. By having each brand take on clearer roles within the Toyota Group to form complementary relationships, we can expand customers' choices even further with a diverse range of products that meet the needs of each individual.

We hope you will continue to have even higher expectations for the Toyota Group moving forward. A diverse range of products supported by such strong brands has led to 150 million units owned by our customers worldwide, and the value chain business has expanded to the order of JPY 2 trillion in operating income.

This is the result of the efforts by our teams on the front lines in service, sales finance, used car sales, insurance, and other areas to maximize the value of each vehicle, supported by product strengths, such as ease of repair and strong supply of parts, as well as high residual values.

The new RAV4 is the first to adopt Arene, a platform designed to efficiently develop software.

RAV4 is our best-selling global model, with annual sales of 1 million units. We deliberately chose to lead with this challenging model.

By utilizing the vast amount of data collected from roads and vehicles across the world, we will develop and refine SDVs together with our customers.

By adding our SDV strategy to the virtuous cycle of the new cars and value chain businesses, we will further strengthen our profit foundation.

Over the past two years, we have grappled with certification issues and lack of capacity head-on, carrying out to reinforce our operational foundation. As a result, we have thoroughly focused on safety and quality while securing additional capacity, leading to a stable production. On the other hand, investments in human resources and future-oriented investments have expanded, and, combined with the impact of U.S. tariffs, our break-even volume has risen significantly.

To bring our break-even volume back onto a downward trend, we are launching a company-wide initiative. We will review the allocation of people, materials, and capital, and turn the results of the reinforcement of our operational foundations into earning power. We will pursue waste-free, value-added work and improve productivity, and also continue to focus on improving the break-even volume. This concludes my explanation of the financial results. Thank you.

Thank you very much, Kon-san. Now we would like to open the floor for questions. Let's prepare the stage.

[Operator Instructions] Your questions will be addressed by our Chief Financial Officer, Kenta Kon as well as our COO,

Takanori Azuma from the accounting group. Please allow them to be seated as they respond to your questions. [Operator Instructions] In the second row in the middle section, please.

I am Taguchi from Nikkan Kogyo Shimbun. Two questions. Number one, first of all, for the past several years, you are focusing on earning power. There must have been various external factors. But how have you raised your earning power with those efforts? And how has that been reflected in these Q2 results? Now 15% in September is something that we heard about the U.S. tariffs, as determined. And further, throughout the year, how do you plan to minimize the impact? I am sure you're working in various fronts, but probably you can tell us your directions.

Thank you very much for your questions. Well, earning power. So the first question was how our efforts have delivered, and that certainly is a question about our financial results themselves. As I mentioned in my presentation, JPY 2 trillion and JPY 3.4 trillion in operating income is what we have announced. We do have external factors, of course, but we do have global customers with very strong demand for products. And we feel that day in, day out, because of the high quality and the power of our products, which has been the result of our accumulated efforts.

Regionally, North America, as you know, because of the impact of the tariffs, the situation is not rosy although I cannot share with you other than North America, for example, China, Europe, Asian markets and Africa. These markets, although the situation is not easy, but in terms of both revenues and sales volumes, we have seen some healthy situations.

Brazil experienced some typhoons and hurricanes, but yesterday, we announced the restarting of the production. Actually, that has been brought forward by tremendous efforts made on the -- in the front line of our business, and that certainly is a part, a very important part of our earning power.

In terms of our value chain, JPY 2 trillion annually is the revenues that we can expect for 150 million cars being owned, of course, is the basis of that value chain revenues. But once again, that represents the power of our products. Residual value of used cars, for example, is maintained very high. And also, Toyota vehicles are often said as being very easy to repair, because that concept is already built in, in the design of the cars. The repair personnel is involved in design so that easy to repair is an important part of our product, although it is not visible from outside. All of those components put together have been integrated into our earning power and that's the Q2 results.

As for the second question of your is about the impact of the U.S. tariffs, how we responded successfully. I think I showed you some slide about that. Did I? Well, JPY 1.45 trillion is the impact from the U.S. tariffs. At the beginning of the year, our President, Sato-san talked about this. We really should not panic and try and respond hastily by raising prices of the cars. That's not our way.

For each vehicle, each model, each region, we will scrutinize the competitive landscape and the market, and we carefully determine the price point. And as you can see on this slide, and of course, the efforts were not solely made to respond to the tariffs, but as you can see on the right-hand side, our improvement efforts amounted to JPY 90 million -- excuse me, JPY 900 billion, JPY 900 billion. And of course, that includes strong sales reflecting the strong capacity of the product as well as the value chain revenues. Do you have anything to add? Probably not. Thank you for your question.

So next to the previous questioner. Mizuno from Yomiuri Newspaper.

My question is to Kon-san. The Chinese semiconductors, the Nexperia, they shift Nexperia. What sort of countermeasures are you taking against that shortfall? Has it impacted you? And what sort of measures do you intend to take going forward, please?

Mizuno-san. If you could ask 2 questions at once? Or are you satisfied with just one?

Just one is fine.

Well, most recently, we have not seen any impact so far, but we do know that there's a risk. Therefore, we're trying to scope the impact and the areas where the impact would be felt, and we are currently monitoring the situation very closely. And of course, this is not only for Toyota, but it's, I think, for the entire supply chain, and we're looking for alternatives and what other options have available. We are researching such alternatives, and also monitoring very closely the impact situation.

May I have the person with the white jacket in front?

I'm [indiscernible] from TV Tokyo. I have two questions, for Kon-san. Number one, about the U.S. market forecast. For the entire year, you have made some changes or not, no, you have not made any changes. But according to researchers, after October because of the tariffs, car prices could rise in the general U.S. market. So how do you view the North American market going forward?

The second question is about what you mentioned in the second part of your presentation, earning power in order to regain the downward trend, the all-out efforts will be made. What sort of efforts will you be making in terms of breakeven volumes, for example, what level would you like to bring it back by what time frame?

Thank you very much for your questions. As for the North American markets going forward, as you mentioned and very rightly so the volumes that we expect have not been changed from the previous announcements. As we hear from the U.S., we see lots of very strong demand for our products.

You may know this, the sales incentives tend to be really low, reflecting the strong value of our products. Still, we can barely cover the demand, and our inventory level tends to be rather low. And of course, on the front line, they are doing their very best in producing the number of cars needed.

In terms of sales, therefore, we expect very healthy situations going forward. Now about the breakeven volumes in our earning power. I said that we will be making an all-on efforts involving different and various activities and initiatives. There are so many, I don't know, which one should take the highest priority, but enhancing the value-add work, eliminating wasteful tasks.

For example, wasteful time of meetings with lots of people involved without much contributions. And of course, we'll be very careful in determining price point and increased sales certainly reduces breakeven volumes, our value chain revenues as well. We do not have the clear goals in terms of quantities, but we have seen this trend of increasing breakeven volumes, and we would like to see it decline.

Second or third row from the back, yes.

Chikauka from Nikkei CrossTech. I have two questions as well. First question about hybrid. Hybrid is growing quite rapidly. So going forward, do you have any expectations about the future growth of hybrid going forward? As for EV, in 2030, 3.5 million units, I think is your base volume and you don't intend to change that base volume? That's the first question.

Second question is about the price pass-through of tariff costs, tariffs basically speaking, or in essence, should be borne by the U.S. side. That is my recognition. If so, well, you mentioned that there's a strong demand for Toyota, which means that perhaps 15% of the entire tariff could be passed through to prices, and then for Toyota and for your cooperating companies that would lead to increased profit and would be beneficial for both. So would you say this is not as simple as that? Could you tell me your thinking on this point, on this issue?

Yes. May I? Regarding hybrid vehicles, it is growing very rapidly. And would that continue going forward? I guess is the gist of your question. Well, we believe that growth will continue. And I can't say, but from what I hear of from my observations of the market, the request for increased production toward hybrids and the demand from customers for hybrids is very strong.

So we would like to accommodate such requests through production -- through increased production and accommodate the customers' requests, thereby increasing our volume for hybrids, I believe. As for BEV, well, we're looking at the actual demand, and it seems that compared to our initial estimations, things are actually declining. That is -- there's a shortfall against our expectations.

And therefore, we have to look at the customer and market situation to at an appropriate timing, deliver good products that meet their needs.

And the next one was about the price pass-through of tariff costs. Well, if you say that because you have such competitive product, if you increase your prices by 15%, it will be beneficial for all you said, but for many years, in the case of Toyota, we have many cars that's really been loved and used by our customers. For example, Carola, Hilux, Surf, or 4Runner in the United States or Highland Cruiser -- these -- we have many, many different models, and many customers are loyal to these brands. They continue to use them for many, many years, and many of our customers are fans of our cars, which means that for us to price these vehicles out of the expectations of customers is very difficult for us to do.

So we want to enhance the value of these cars in order to charge the customers an appropriate price that meets that value, because if you outprice the customers' expectations, you can really lose their loyalty. So our method would be to take it step by step. As for hybrids, in 2025, I think somebody said it will reach 5 million units. Perhaps it was a goal that somebody mentioned, I'm sorry, I'm not quite sure about this, but 5 million in 2020-something, do you have a goal like that, a numerical target?

You mean hybrids. Yes, hybrids. Really, well, at least I don't have any numbers firsthand on when we will reach 5 million, but the hybrid ratio amongst our -- sorry, 4.46 million units this year, that's about 200,000 unit up from last year. So this pace of growth, I think, we will -- we should maintain this pace of growth going forward.

Now person in the second row, in this section, please.

I am Nakano from Nishinippon Daily. Now I have two questions. The first question is about Kandamachi in Fukuoka Prefecture. The battery plan for EVs. In April, you were to be -- to sign the MoU with the Prefecture, but now it has been prolonged and postponed to autumn. What is the progress? And also, 2028 start of operation that has been planned as well as the production capacity? Have there been any changes to your original plans?

The next question is about taxes. Under Takaichi -- Prime Minister Takaichi, the tax treatment Minister has been appointed and some special measures could be taken in terms of taxes. And what is the view on that situation? And also, with the outlook for any preferential tax treatment. Do you have any outlook for that?

Thank you very much for your questions. As for the first question, Fukuoka Kanda battery factory, ongoing study continues. So I heard that is. Now we are talking with the Fukuoka government and stakeholders in Fukuoka Prefecture currently. As for the taxation, well, we have seen the changes in the administration in this country. Now there are various taxes involved in automotives and revising and changing of those taxes have been something that JAMA and other organizations have been advocating towards the government, Well, when it comes to taxes, we have to consider how we may be able to maintain monozukuri in production in this country in a healthy way.

It's very important for the entire industry, not only for the automotives. I hope any form of taxes will be able to enhance domestic demand for the industrial products. Therefore, it is my belief that JAMA will continue to advocate for that.

Then the person in white at the very back of the room.

From Kyoto, my name is Tokumitsu. I also have two questions. First question, the Japan Mobility Show is now on, and I saw the exhibit there. And the Century branding has come to a milestone, I think, but I think that some of these pilot cars are also viewed toward mass production. So do they represent the future production plans of Toyota. The second question is about the impact of tariffs? You said it was of JPY 1.4 trillion, but now that's been increased to JPY 1.45 trillion. So a slight increase. And in August, the -- you had calculated on a reduction in auto tariffs, but you did make that modification after the imposition of the actual tariffs in September. Is that the reason for this slight increase is the question?

Regarding the Japan Mobility Show, thank you very much for coming to our booth at the Japan Mobility Show. As you said, well, I don't know if we intend to mass produce all of them. But of course, several of these models overall be marketed in the future, at least I believe they will be. And I think this attest to the strength of our product competitiveness. That's it in a nutshell, but especially the Century brand was launched. We were able to launch a totally new brand called Century, which I thought was a very big step forward, because currently, new car names, new models are very hard to come by. But to start from starting a totally new brand, I think, was a major initiative in the company, and it's also a big message from us.

The launch -- you may have heard the presentation to launch Century, our Chairman, Toyota said this is the pride of Japan. He said, Century, the car and the brand is the pride of Japan, he said. So from that perspective, it goes beyond just car model. I mean, I think, in Toyota, it represents not just a model, but something beyond that. So I do hope that you will take it as such.

Regarding the second question, may I address that question? In the first quarter, it was JPY 1.4 trillion, but now we've added 5 million. And as you said, from mid-September, there was a 15% tariff imposed. That is a tariff level was decreased. So this is based on the recalculation of the impact of tariffs and the tariff impact will hit not only Toyota, but also our suppliers and about 70% of part and components -- well, the components and parts manufacturers account for 70% of the market. So we want to work together with them to overcome this.

When I visit the suppliers, each supplier has, for example, embarked on labor-saving and also changing their processes, et cetera, to challenge new initiatives to address the impact. So in addition to the product competitiveness, we would like to master our forces together as a manufacturing industry to overcome the tariff issue.

The person on the left, please.

I am Toyoshima, WBS TV Tokyo. Kon-san, I have some questions for you. As a result of the U.S.-Japan tariff agreement. What do you think of it? Well, actually, the end result was as Toyota had expected, 15%, but now you are expecting the JPY 5 million in negative increase, is it because you have taken the very conservative way of revisiting your numbers? Or is a situation really, really difficult?

Well, shortly after the announcement of your Q2 results, your stock price went up a little bit, but now it began to decline. Probably the market expected more of the improvement in revenues and profit, but how do you view that? Are there any risks of downward revisions going forward or upward revisions. Any of you?

Thank you very much for your questions. Well, to be honest with you, what do we review the situation? Well, they are striking the agreement itself is something that we are extremely thankful to the government officials. Without anything being decided, we really cannot plan on production in the automotive industry, which certainly is a very big industry.

So uncertainties would not lead us to focus, cannot plan on cost reduction, cannot plan anything. Therefore, I really would like to thank all those people who are involved in the negotiations. And it is not a small improvement. And certainly, we will have to work on what we can do, both short term and mid- to long term in order to make further improvement, not only North America, but procurement, production, sales and marketing, all of us have to work together to bring about some positive results.

Are you relieved? Or do you still see the situation to be rather difficult? Well, I would say both. Well, upward revision or downward revision possibilities. Actually, we are often called being very conservative in our projections, but I do believe we are being pretty neutral about this.

But of course, towards the end of the year, we certainly do make efforts so that we can provide you with the -- even the slightest upside. Thank you very much for your questions.

Now we'd like to entertain questions from participants online. And after that, we'll come back to the people in the audience for questions. [Operator Instructions]

Okay. Terasaki-san from Best Car, please.

Can you hear me?

Yes, we hear you.

This is Terasaki from the Editorial Department of Best Car I have two questions. First question. Well, it's been mentioned several times about the value chain and that it takes up a big portion of your operating profit. And looking at the graph, from 2020 for 5 years, you've probably increased your operating profit from value chain by double. You're doing many things. I think, of course, value of used cars is increasing. But 5 years ago, I believe the residual value of your used cars was still very high, but the operating profit doubling, I think, is something really a tremendous feat.

So specifically, what pushed up the operating income so much? And you have 150 million cars in position. That's quite a large number, but 5 years ago, I think you had similar numbers. So what changed to boost the operating profit in the value chain so much over the past 5 years to the extent that you can disclose? That's the first question.

Second question, since this is a good opportunity, you talked about the Japan Mobility Show, but in the booth in the Southern Hall, it was a very popular in Century. There was a 40-minute waiting line to view the Century. And so for the mobility show as a whole, I think the Japanese market will be boosted and galvanized.

So if you could, Kon-san, talk about your impressions about the heat at the Mobility Show?

Yes. First question will be addressed by myself, Azuma. The value chain, well, about 7 years ago, for the employees and to the outside, the -- then President talked about leveraging on the ownership and 6,000 stores and overseas 16,000 dealership network, leveraging that strong dealership network to communicate one-to-one basis with our customers. And that declaration was made in 2017 or '16. And then we started Tinto, and about 5 years ago, the car ownership was a little more than JPY 100 million. But over the last 5 years, thanks to you, new car sales has been increasing 10 million a year. And also, our ownership of our cars has also increased. And against that backdrop in Europe, we extended our guarantee period so that we can entice customers to come to our dealers more often.

And as the years go by, our -- we lose contact with our customers, but we wanted to recapture that content -- contact, sorry, to have them come to our dealers and purchase supplies and accessories. And that cycle has now begun to turn, and that's now expanding from Europe to the other regions. So that's one major initiative that led to this. And in Asia, we offer second part that is more inexpensive accessories and supplies and also financial services are provided.

So we want to utilize the dealership network to extend our touch points with the customers. And just the head office telling these regions what to do, you'll not come up with good ideas, but such good practices are now being leveraged across various regions, and we are building on these good practices, sharing these good practices, and that's leading, I think, to the very good results we are seeing today.

About the Japan Mobility Show. Thank you very much for your attendance. And my question about the Japan Mobility Show was your question. Well, we had such a large turnout so many customers who were viewing our cars with joy. And I was very, very happy to see the delight on their faces. The Japan Mobility Show, Motor Show, well, I think all across the world, you see regions where the scope or scale of these mobility shows are being reduced.

And they're shifting toward the electronics and the electrical components of cars. But in Japan, we call this a Mobility Show. It's a show for mobility, and to have so many people come and delight in these exhibits and have fun. We were really encouraged and heartened by them.

And looking at the smiles on the faces of customers, we are very, very happy ourselves.

Now let's come back to the on-site journalists. In the middle section, the second row from the front.

I am [ Matsumi from Trinity Daily ]. About the United States, I have 2 questions. President Trump the other day talked about $10 billion investment for Toyota to build a new plant in the United States. So what is your take on what he had said? And have you made any changes to your investment plan in the United States? So that's the first question. Second question, the U.S. government talked about Toyota expanding its dealers network to sell other brands' cars. Is it true? And if you -- if it is, when are you starting that effort?

Thank you for your questions. For one thing, $10 billion, I read that in news. Now the United States really wants to see employment increasing and customers should be served with next generation of cars and services. Therefore, we do plan sizable investment plan going forward. I cannot really say it's $10 billion, but I would say Toyota will continue to make a sizable investment in the United States. I have to limit myself to that.

Now in terms of Toyota's dealership to sell imported cars, well, Toyota makes cars in the United States. So we are considering doing something about the Toyota cars made in the United States. Now how about other OEMs? Vehicles being sold in Toyota's dealers network. Well, it is not for us to decide. But if there are any demand or requests for that end, then we may consider it.

Yes, the person in front of the microphone with a spectacle.

Ohira from Asahi newspaper. It's related to that. I have 2 questions on tariffs. First question. Toyota, you're considering selling U.S.-made cars in Japan and that was announced when President Trump came to Japan. But considering the briskness of the U.S. market and also the U.S. and Japan production capabilities and cost of transportation, it doesn't seem to be very economically rational. So what would be the goal or what was the motivation of doing this if you're going to do it?

Also, second question in relation to that, the -- for the cars assembled in the United States, conventionally, you are procuring parts from across North America. Now these parts may be replaced by U.S. domestic made parts. Are you considering such a shift? Or have you already started such initiatives?

Yes. Thank you. First question -- I'd like to address the first question about the economic rationale, what's the meaning of -- or rationale behind engaging in reverse imports. As you say, when you look at the economic situation currently, it may not be such an economically rational initiative. But it may deliver to Japanese customers products that are not easily available in Japan. And of course, the model segments, et cetera, and how to price these models, what sort of supply structure we will take, there are many challenges. So we will consider all these challenges to consider what sort of business we can make out of that offering. So we are currently making preparations now. So that's it for the first question.

Thank you. Regarding the second question about the local production in the United States, and of course, this is not just limited to the United States, but in all regions of the world, we want to produce locally and procure locally so that we can manufacture cars on that basis in each region. For example, this year, in North Carolina, we have built a battery plant, which was a major decision, and this led to increasing the local procurement rate in North America. So our plan to produce locally as much as possible remains unchanged. We would like to move -- make efforts toward that end going forward.

How about Mexico? How about replacing with the Mexican parts? Are you considering such a possibility?

Well, currently, we have no concrete plans to do that yet. But let me consider the suppliers who have already made forays into the local market and the manufacturing they do there. And of course, they are hiring employees, and they have to, of course, create a livelihood of their families as well. Therefore, I think we'll have to take all that into consideration when we make such decisions.

The 2 people who have raised their hands will be the last to ask questions. Let's begin with you.

I am Fukui from Nikkan Jidosha. I have 2 questions. So your sales remains brisk because of your product competitiveness. Even the ever better cars that you have advocated for the past 10 years certainly delivered the results. Now at the Mobility Show, you announced a new brand strategy, which sounds a bit futuristic.

In 2024, you experienced the certification irregularities. And at the time, you revisited your product plans altogether. And you launched various projects to do so, revisited them and some projects, I understand, have been either delayed or canceled. What sort of impact do you see now out of that because development takes 2 to 3 years? Your healthy product portfolio towards the latter half of 2020s, do you think you will be able to maintain momentum and that would impact your profitability?

So I would like to learn your midterm view. In relation with that, your investment in the United States has been mentioned this year, for the year, you increased number to about -- by 130 units, but then your production plan remains at around 10 million and in United States, you have a very low inventory level because your cars are selling so well. So how do you plan on your capacity increase in terms of production? Because just increasing the capacity would only increase your fixed cost. So how do you plan to go over 10 million vehicles? Do you plan to enhance your alliance within the group and to be more efficient in procurement of components? So what's your plan going forward?

Thank you very much for your questions. About the product competitiveness for the midterm future, it seems that you may have a question about that. Well, 2 years ago, we did experience the certification irregularities, and we put on lots of efforts in reinforcing our foundation. Well, sometimes we had to halt our production lines. So 2 years ago, 1 year ago, we experienced that quite frequently. That is not about the product competitiveness, but it was about the production. But certainly, those hiccups we experienced in the past, but they have decreased -- they have been decreasing very rapidly. It is still increasing the fixed cost rapidly will have a future impact.

Therefore, we really have to be careful when we plan for that. For example, it may be an impact of 1 second or 2 seconds on the production line, but we have to make steady efforts in order to enhance our productivity step by step. We are not talking about thousands or hundreds of thousands of vehicles or million vehicles to increase in our production. So when it comes to the product competitiveness in the midterm, we will make sure that we will maintain that going forward. That's all from myself. Anything would you like to add?

Final question, the person in the very front row.

Yao from Nihon Keizai newspaper. I have also 2 questions as well. First question. Your management is based on product and region. So one of your access is, of course, the region and you want to be the best in town. So compared to other manufacturers you have a revenue structure that's not biased in particular countries or regions. So what sort of impact do you feel from the tariffs on this regional-based sales operation? And another is related to this. You -- about maintaining the production capacity of 3 million units a year domestically in Japan. In the previous financial results, you also announced about the new construction in Toyota City of a factory, but due to increased tariffs by the United States, your export costs will increase. And I believe that you announced that you will adjust destinations to adjust for that. So how do you intend to work towards maintaining the 3 million units production capacity in the domestic market in Japan?

So I'd like to address the first question. Well, we manage our company based on product and also region, and we are also managing company based on that. And about 10 years ago, we were skewed on North America. More than half of our sales was from the United States and the remainder from the rest of the world. But if we had been imposed such tariffs with the same sort of situation, then the impact would have been much larger. So we have to think first about the customers in each region to engage in our business operations, and that's done by the regions. The same for revenue Lexus customers, GR customers and the mini car companies, each are attended to by each of these divisions or regions.

So the regions are working hard not against each other, but in a balanced manner, and that's why we have a very good revenue structure. For example, in Africa, in the past, Africa was part of the other -- the rest of the world. Also, Latin America was the same. But these regions have been referred or transferred to Toyota Tsusho and with Zephyr I think it's being run by -- that business is run by people who think first about Africa. So they support very high revenues in Africa. And in the earnings report, Japan, Asia, Europe, Africa and the other regions, and the other regions are actually leading the revenue for us.

And within Asia, India and also in Europe, there were some very difficult regions where Toyota were using these markets to polish our products, but now these regions are seeing an increase in revenue. So we're very well balanced in terms of regions. And so all of Toyota is making a global effort to accommodate the U.S. tariffs. And so we would like to ask each of the regions to actually focus on their respective regions and the businesses there.

Regarding the 3 million production capacity and our strategy vis-a-vis local production, well, 3 million units domestically is a very, very important goal for Toyota. We have the field, genba, right next to the production facilities, which enables us to turn that cycle very rapidly. And that would help monozukuri or manufacturing prowess in Toyota. And so that becomes a source of our global competitiveness, I believe. Of course, to safeguard monozukuri or manufacturing in Japan, we need to maintain or retain a significant amount of domestic production because if that declines and then the supply chain will also weaken that could lead to or impact jobs and others. So we have to earn foreign currency and purchase resources to run the domestic business. I think that's how we survive. And so domestic production in Japan must be safeguarded and protected.

On the other hand, local production is important too in many ways. And I think to manufacture where the customers are, to sell where there is a market for the product or to produce where there's a market for the product. And also, we must develop components and parts or vehicles that match those needs. And then that's best produced locally. So in Japan and non-Japan areas, perhaps we can allocate the production of different models. That sort of adjustment is done. But we don't intend to transfer something drastically from Japan to the United States or overseas to Japan. We're not discussing such drastic measures. We will continue as we have in the past. Thank you.

Thank you very much, ladies and gentlemen. It is now time to close the session. Thank you very much for being with us today. Please excuse the presenters. With this, we would like to conclude TMC's FY '26 Q2 Financial Results Briefing. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]