豐田汽車 (TM) 2019 Q4 法說會逐字稿

[Interpreted] Now, ladies and gentlemen, let me introduce to you the people attending this second session.

Akio Toyoda, President.

Good afternoon.

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

Nice to meet you all.

Masayoshi Shirayanagi, Operating Officer.

So further, our President Toyoda is going to deliver a speech.

Thank you for waiting.

I am Akio Toyoda.

First of all, as in past years, I would like to express my appreciation for taking time out of your occupied schedules to join us, and I would like to express my deep appreciation to all our customers around the world who have purchased our vehicles as well as all our dealers and suppliers who have made tremendous efforts to deliver smiles to each and every one of our customers.

I would also like to express my sincere gratitude to all of our shareholders, business partners and other stakeholders for their daily support of Toyota.

In Japan, the Heisei era has drawn to a close and the Reiwa era has begun.

Having become President in June of Heisei into 1 -- or

2009 means I was granted the opportunity to take the helm at Toyota for the final 10 years of the Heisei era.

The first 3 of these year -- those years were intensely focused on crisis response with your company being confronted by falling into the red following the global financial crisis, a large scale recall that started in the United States, the great East Japan earthquake, flooding in Thailand and other issues.

Although that was a very difficult period, it was also a period in which our company, faced with quite a number of crises, was able to strengthen its sense of unity and my ability to unite.

In my own way of expressing it, I keenly felt that rapid growth inconveniences many stakeholders if it is followed by a rapid fall.

No matter how severe the management environment becomes or rather the more severe it becomes, the more we have to become a company that can steadily continue to grow like how a tree accumulates growth rings.

Sustainable growth and enhancement of competitiveness.

During this period, I took these 2 concepts to heart and etched them into my mind.

We characterized the next 3-year period as an intentional pause.

Even though we have come to a temporary standstill, our goal was to achieve production workplaces that had competitiveness rooted in the Toyota Production System, TPS, as well as to achieve ever-better car making that had competitiveness based on the Toyota New Global Architecture, TNGA.

Although I wanted to make this a period during which we could hone our inherent strengths, what it is that makes us Toyota, so that we could leap forward the future, my self-evaluation is that I was not able to sufficiently do this.

But I strongly felt during the second 3 years was the difficulty of innovating when times are normal.

I believe it can be said that the most recent 4 years has been a period in which our company simultaneously strived to get back what it is that makes us Toyota and to undergo a complete redesign for the future.

Under the banner of restrengthening TPS refining costs, we are working to thoroughly eliminate waste, unevenness and overburden not only at our production plants but also at our offices, at our technical workplaces and elsewhere.

As I often say because this is an era of profound transformation that could happen only once in 100 years and because change is what is demanded, it is necessary to make clear our unshakable foundation.

In other words, the things that we must not change, that unshakable foundation consists of TPS and our ability to refine costs.

While steering Toyota's management over these 10 years and with an awareness that we have entered an era of profound transformation, I have come to believe that my true mission is to completely redesign Toyota into a mobility company.

A mobility company is a company that provides mobility itself and all kinds of services related to mobility.

The automotive industry has continued to grow until now within the framework of an established business model.

Although there are many car companies, each brand differentiates itself and has its own customers.

If an attractive new model comes out, customers will buy it to replace their current vehicle.

Cars that are replaced become used cars, which has -- which have their own market.

Even after a car is bought, there is an established value chain that includes insurance, maintenance and others.

I think this is a very well-constructed business model.

However, due to technological innovations in the form of CASE, C-A-S-E, the very concept of the automobile is on the verge of changing.

Cars from now through information will, by being connected to communities and to all kinds of services that support people's daily lives, become part of societal systems.

This means that there is a possibility that the conventional business model of the automotive industry itself will fall to pieces.

If the concept of the automobile changes due to CASE, we must also change our business model.

However, I think that there are things that we should not change -- or rather there are things that we must continue to hone.

First, I'd like to talk about the things that we must continue to hone.

No matter how much the automobile evolves in the future, I think there is something that will never change: that is the fact that cars are used in the real world.

It is not as if we have been in the business of creating a single-concept car.

We have created a real world in which our products are produced by the millions, and once released into the world, can continuously be used safely and with a sense of security even 10 years or 20 years later.

This is by no means something that can be achieved easily.

I view that our competitiveness, which we have cultivated in this real world largely consists of 3 strengths.

The first is our manufacturing monozukuri capabilities based on TPS.

As I have already mentioned, this is truly the base of all of the competitiveness of the Toyota Group.

It is something that we must continue to hone.

It is an unshakable foundation.

In TPS, there is a saying, post-improvement is pre-improvement.

In TPS, we are constantly changing the way we do things based on the thinking that there is always a better way.

Naturally, many times things do not go as planned, but we learn from our mistakes so that we can take the next steps towards achieving an even better way.

I believe that innovation does not just come calling out of the blue.

Improvement is what brings it.

I think that the power of continuous improvement has been and always will be the source of the competitiveness that has supported our sustainable growth.

Furthermore, our initiative to strengthen our monozukuri capabilities from the perspective of the entire Toyota Group is what I call a home-and-away strategy.

I believe our monozukuri capabilities is only achievable because of our group companies share a common language in the form of TPS.

The second advantage of our global network, which is spread around the world, including the rental and lease outlets.

In Japan, there are 6,000 sales outlets for Toyota brand vehicles and Lexus brand vehicles, a number that grows to 16,000 when counted globally.

And we also have a giant supply chain that improves our group companies and suppliers.

If we are able to use this network going forward not only to manufacture and sell vehicles, but to also provide new services, future possibilities will greatly expand.

From hereon may be an age in which the difference between victory and defeat will be decided by the last one mile, which will be our contact point with customers.

In addition to cars, I think that having our own housing business and connected businesses will be a big advantage for us.

The third is units in operation.

Although worldwide annual sales of Toyota and Lexus vehicles is 9.5 million units, the number of Toyota and Lexus units in operation around the world comes to as many as over 100 million units.

I believe that is because there is trust in Toyota.

Over the more than 80 years since our company was founded by Kiichiro Toyoda, we have continued to face our customers and to build relationships of trust with them.

That is why we have been able to achieve what we have been able to achieve.

And I believe that as we provide new mobility and new services, having customers around the world who trust Toyota is an absolutely irreplaceable asset.

These 3 strengths of ours as an entity competing in the word of manufacturing are powers that are our real power and that cannot be acquired overnight.

I believe that continuing to hone these real powers will also lead to heightening Toyota's own original competitiveness.

Next, I'd like to talk about things that we should change in line with the era of CASE.

But before that, please watch this video.

(presentation)

We have just now given you a look at our activities with CASE.

I'd like to now provide additional information related to a transition in our business model, particularly related to the E in CASE, which stands for electric or electrification.

Whether it be fuel-cell electric vehicle, FCVs, or battery electric vehicles, BEVs, I believe that until now it seems that we have been too entrenched in supplying completed vehicles through wholesale to our dealers and through them to our individual customers just as we have been doing with gasoline-powered vehicles.

For sure up until and including hybrid electric vehicles, this business model was valid.

But this might not remain so when it comes to FCVs and BEVs, which require new infrastructure.

In advancing the introduction of FCVs and BEVs, we once again asked ourselves exactly what it is that we should do.

We went back to our origins and concluded that gaining widespread acceptance is the answer.

If environmental technologies fail to gain widespread acceptance, they will not be able to contribute to improving the Earth's environment.

In thinking that way, we believe that a new mindset, a new way of thinking, will become necessary without dwelling on passenger cars and sales to individual customers, which we worked to gain widespread acceptance through the provisioning of commercial vehicles and also by working with government offices and fleet customers.

Rather than insisting on go-it-alone development, develop together with those who share the same aspirations.

Rather than monopolizing our partners, make them open and increase friends.

Sell not only cars, but also systems that match customers' needs as a package.

In other words, I believe that transforming conventional concepts and broadly pursuing with openness contributions that will help improve society will lead to new business models.

We will be entering an era in which information will link all the things and services that support people's daily lives.

When thinking about our own business, we should consider cars not as a separate business, but as part of a mobility solution from a broad community and society perspective.

In other words, the concept of connected cities becomes important.

In realizing connected cities, I believe that competition and cooperation, especially the spirit of cooperation, will be critical.

When looking at the world today, one can see the spread of protectionist thinking.

Just as Japan, which basically has no resources, cannot survive on its own, companies as well cannot survive in a vacuum.

Japan is a country that keenly understands this, and so might global companies that started and grew in Japan.

Going forward, creating friends will become a key concept.

I believe that the approach of gaining controlling interest in line with conventional capital theory is not, in the true sense, creating friends.

To make friends is to share common goals regarding what kind of future you went to create together.

It's recognizing each other's strengths and enhancing each other's competitiveness and cooperating.

From Toyota's perspective, we aim to achieve a society that is kind to the environment.

A society in which there are no traffic accidents, a fun-to-drive society in which the freedom and joy of mobility is made available to all.

Toyota alone cannot create the future it desires.

As such, we will broadly seek friends who share our aspirations.

I would like to strengthen our collaboration not only with Toyota Group companies but also with other car manufacturers and with friends who can provide all kinds of services that support and enable connected cities.

In pursuing such initiatives, I believe that we will be able to pave the road to becoming a mobility service platform, which is the business model that we're aiming for as a mobility company.

Although I have spoken about various things, an era of profound transformation is also an era in which no one knows the right answer.

If we think something is good, we have to give it a try.

If we realize we've made a mistake, then we need to pull back and search for another way.

I think it will be important to think while trying.

Completely redesigning a company that has experienced success will definitely take a long time.

However, clinging to the business model of the past will not lead to the future we desire.

While responding to fast-paced changes in our environment, we will move forward with innovation with a mid- to long-term view from an unshakable foundation.

So please do look forward to our future, and please continue to offer us your warm support.

Thank you very much for your attention.

Now ladies and gentlemen, we would like to receive questions from you.

And if you'd like to ask questions, please raise your hand so that the microphone can be brought to you.

(Operator Instructions).

The person in the second row from the front row, please.

[Omoto, Japan Economic Journal].

Question to Mr. -- 2 questions to the President.

Including the financial results of the fiscal year just ended, having spent 10 years and you divided that 10-year period into 3 segments and you look back the business in your presentation.

But from the financial aspect, what is your assessment and observation of what you have accomplished in the past decade?

That's the first question.

In relation to that, with respect to the growth strategy what is your view toward the top line?

Could you include that in your question, the first question?

The second question, the trade issues between the United States and China is the core of my question.

In terms of the macro economy, it is said that the impact on macro economy could be quite big.

But how have you analyzed that?

How do you view that, the impact from trade issues?

And Toyota's basic view or stance vis-à-vis the investment into both the United States and China.

So these are 2 questions.

First of all, in the first part of this program today, it was discussed for the first time we exceeded JPY 3 trillion in net revenue.

This is the first time and this is solely thanks to the people who contributed to our sales, the customers and dealers, the suppliers and also employees.

All of this result to all of those people who worked very hard over the past 80 years and this is a combined outcome of that.

So through the media individuals represented here, I would like to express my sincere gratitude to the fact that we have been able to attain this net revenue supported by those people and would like to express my gratitude to those people supporting us.

I shared various views of mine on the occasion of financial results.

Into March 2014, I talked about the intentional pause.

And in 2015, I mentioned that we have entered the implementation phase from the intentional pause.

And in 2016, I mentioned that this is the year in which our intention is adjusted.

In 2017, I mentioned that financial results recognized our true self-capabilities.

In 2018, I talked that I think Toyota's unique characteristics was reflected for the first time honestly in the financial results.

In terms of the fiscal year just ended, it's very difficult to express in very short words, in relation to that, moving toward the future, this is the year that we embark upon achieving the complete redesigning of Toyota.

For better or worse, the capability of Toyota today is reflected in the financial results in the fiscal year just ended.

Moving toward the future, we made proactive investments when it comes to the active investment.

In this period, I think we've been able to do quite a bit in terms of the investment to our own future.

Activities to refine costs and activities to regain quintessentially Toyota character to improve the corporate culture.

And I think we're still halfway through in those efforts.

Once again, if I may just look back the past decade, especially up until the 30th year of Heisei period, the automotive market in the world was driven by the United States and China.

These 2 markets drove and pulled the automotive markets in the world.

And in that -- what about Toyota here in the home market here in Japan, in terms of the growth in the past 30 years, Japan hardly grew at all.

In the first year of the Heisei era, the market reached its peak, but since then the market continued to decline.

And in that, the consumption tax rate was raised twice during that period.

And also in the United States, up until 2007, the growth was quite steady and good.

However, we were faced with recall issue and we had this congressional hearing.

So steadily, we steer the direction in which we accumulate annual growth rings.

And that's what we implemented.

But China, I think in that market, Toyota really shoulders a national risk as for the company.

And in China, compared with other companies, the growth that Toyota attained in the Chinese market did have enough room for further improvement, I believe.

But compared with the time when I took the helm as President, based upon the existing middle -- business model and our speed of following and catching up with the change, I think we were able to accelerate the speed of adapting ourselves to the market change.

But when the market changed substantially, when the market -- product mix changed substantially from sedan to SUVs, those could be regarded as a paradigm shift, so to speak.

In terms of this speed of adaptation in that measured change, I think Toyota has faced a rather serious challenge in the context, I believe.

But this sort of style may not be implemented to the fullest extent possible to come up with achievements.

But in terms of regaining quintessentially Toyota characteristics -- character and also to create such a culture in the corporate, I think I'll be able to achieve that.

Did I answer your question or...

In terms of the first question, I think you responded to my first question.

But in terms of the second question, as you look back the past decade, if you can think of some episode that really emotionally moved you, if you could.

Well, every day, I'm emotionally shaken, so to speak.

I mean many people say as well, it's been 10 years and when are you going to leave the current position.

That seems to be an objective, but serving for 10 years as a President is not an objective.

That's not an end in itself.

At the initial stage, in the early period, I had to attend the U.S. congressional hearing, so I thought I wouldn't last even one year.

And we started with a loss-making position, so I was thinking that probably I will have to be replaced in a short period of time.

So I wasn't expecting to serve for a long term as President.

Rather I really tried to survive as a company every day and that took me to this current field.

So every day, I felt I'm still alive today, and today -- and tomorrow I'll be able to engage in running Toyota.

And every day, I work my hardest till this day.

So every day is, if I may just directly respond to your question, every day, I am excited and also I'm shaken, so to speak, emotionally.

Are you satisfied?

Then the person at the very front, in the middle, please.

The woman -- the lady.

Osada from Chunichi newspaper.

A question to President Toyoda.

Well, I believe you did mention this earlier, but in January of last year, you announced the complete redesign to a mobility company, and you cited that as your mission, you've been saying that all along and also creating friends you said will become a keyword in achieving this.

So you said that we live in an era where no one knows what's the right answer.

So as President, as you create friends, as you expand your circle of collaborators, what would be your standard in choosing these friends?

And if you could talk about your unshakable foundation in more detail.

Well, as we promote the creation of friends, as we create friends, the keyword, I think, will be open and speed.

Open and speed are the 2 keywords.

Open, what I mean by the word open is if you yourself don't have competitiveness, you yourself have to have a presence.

Otherwise, no one will take you seriously even if you said I will open myself up.

You have to be competitive.

And in that sense, just 1 car manufacturer can do nothing in this automotive industry.

We have to be aware of this.

At the same time, we have to know our strength and also our weaknesses and reach out and work with various companies of various other industries to participate together in order to create a world where everyone can smile.

And I think all of the employees shares this.

And we would like to choose partners that will recognize this.

But to do that, we need to build up our own trust and our own competitiveness so that they will regard us as such equal partners.

Also and this is a similar point, but Toyota is not a company that would be choosing our partners.

Toyota must be chosen as a partner.

We're in that position.

In terms of corporate size, people may think that Toyota is the one who is picking and choosing our friends, but we believe that we are the chosen -- we are the company that's being chosen.

So there are companies out there who want to create a future with us, who want to work with us.

And of course, all companies have their likes and dislikes, but I think -- I guess what's important is to create an increasing number of companies that like Toyota and have an affection for Toyota.

Thank you.

Any further questions?

The person in spectacles with a hand up.

The fourth row from the front.

My name is Alfred Ty from GT Capital Philippines and Toyota Motor Philippines.

May I direct the question to President Toyoda.

It's very exciting to hear the future in the eyes of Toyota from your presentation and especially talking about the new mobility society as well as the connected city.

As your partners in Asia, we would definitely like to be part of these plans in the Asian region.

However, in reality, ASEAN countries are still quite behind or in very early stages in terms of new mobility or connected technology.

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

So my question is government support is necessary to realize the plans of new mobility society and connected city, what would be the required government support needed to realize the infrastructure for this?

I will answer your question first and I will ask Mr. Terashi, EVP, to supplement me from a technological point.

Mr. Ty, you referred to the markets in the Philippines and the Asian market and you mentioned that those markets are still quite behind.

That may be so from your perspective, but to us, those are the markets rapidly growing.

That's how we perceive your markets.

China is quite different, but apart from China, but -- Japan and other markets are not growing that rapidly.

But Asian markets are growing and those are the markets that grow further, including China as well.

So in the general context, we spent the past 80 years in creating this automotive business model, but with the advent of CASE, instantly the automotive company that have been operating for decades can be caught up by other countries.

And Asian countries are in the position to catch up with us very rapidly.

So that's how we perceive and look at the Asian markets.

So in that context, the usage and electrification especially -- specifically about FCV and electric vehicles, the government support for infrastructure development is indispensable and essential.

Sometimes subsidy in many respects will be required.

So in that sense, if people are willing to listen to Toyota's opinion or in considering new automotive government policy, Toyota's opinion may be useful and we want Toyota to be a part of that.

So we would like Toyota to be the company chosen to be listened to by those governments.

In any regions we operate in, we aim to be the best in town.

Now what I mean by that, sometime ago in Canada, we announced and unveiled a new model of NX and government officials who are represented there.

And they said, thank you, Toyota, for deciding on investing in Canada and our plant in Canada.

I mentioned that thank you very much for supporting us for operating in the past decade and they expressed appreciation to the government.

So mutually thankful for that.

Mutual efforts will be the sort of relationship that we really would like to establish.

So in the Philippines, we would like to see day when the government in the Philippines would say, thank you, Toyota, for investing in your country.

And from our side, we would like to be able to say, thank you for supporting us as we operate in the Philippines.

So we will make sure that we'll make every effort to be the best-in-town company.

And we need to earn smiles in the faces of all of the people concerned every day.

So once again, I'd like to express my gratitude for continued support on a daily basis.

Terashi is my name.

I would like to add some comments further.

Toyoda in his presentation mentioned that the concept of connected city, that is to say when we consider the development or creation of community or country itself, the business style must change completely.

We had been, based upon the business model, coming up with the product and then offer that, but we must work together in building the strategy from the viewpoint of developing a community or a country working with the government.

Because of the air pollution, we would like to introduce electric vehicles.

But if infrastructure is the bottleneck impeding the introduction of that, then in the early years we would introduce hybrid vehicles instead of battery in these.

And if the pollution is a clear situation, then the usage of hybrid will be equivalent to using 10% of vehicles occupied by electric vehicles.

And once the infrastructure is better developed, probably in buses, the public transportation systems will be the first ones in which the electrified vehicles will be introduced so that the demand will increase better with that preparing for the next stage.

So when we reach that next stage, we will try to offer the electric vehicle, the ECVs, that ordinary citizens will be able to purchase.

So rather than based upon short-term perspective, we work together and discuss together with government to come up with the overall development strategy.

And if we are the sort of company that the government is willing to reach out to discuss the country building or community building, we would be able to make contribution.

There are many different options most suited for different communities.

We have various options that we can offer.

So if we can -- have been chosen to work together, that would be the best in the way we see forward.

Next question, the person who is raising his or her hand.

Fifth row from the front.

[Miyata] from Sumitomo Mitsui Banking Corporation.

This is a question from a new angle.

This question is about the shareholder return.

The financial industry in Japan is engaged in various initiatives.

Shall I explain as a backdrop, the savings will be reinvested into investment and that investment will further invigorate corporate activity.

That's the sort of flow we are now seeing.

So against that backdrop, mid- to long-term investment especially by individuals is highly required.

So it's very important to think about the standards or the criteria that these retail investors use in making the investment.

And when you think about Toyota shares, I think there are 3 major factors or elements that make investors choose companies: one is whether the retail investor can actually like the company, feels they can have affection for the company; if they can feel excited about the future growth prospect of the company and the third is, of course, dividends and other financial benefits.

These are the 3 elements.

So in the Q&A session today, President Toyoda talked about Toyota fun and good products.

So I think that you talked to great length about how your company can be loved by the investors and the red Supra in the hall was a very wonderful car.

And the second point about the excitement about the growth potential you also talked about in length today.

There are so many changes, risks and challenges in the world and how Toyota will change and innovate against that backdrop you talked about.

So the third factor -- I think the third remaining factor would be shareholder return.

And you have been increasing your dividend payout in the past few years.

So based on this, from a mid- to long-term perspective, to those investors who will be investing in Toyota shares from a mid- to long-term perspective, do you have any messages, President Toyoda?

Thank you.

Toyota's shares for the retail investors has certain appeals and attractiveness.

And when you think about the elements of that attractiveness, I think within their investment portfolio, the Toyota share would be a stable stock.

That's how it's positioned in many investors' portfolios, I believe.

So in that sense, as we think about our future growth strategy, I think the 2 important keywords would be sustainable growth and enhanced competitiveness.

It all boils down to this.

Sustainable growth, as I mentioned earlier, means that even against an extremely deteriorating management environment, the ability to steadfastly and step-by-step and, in a not so flashy way, achieve growth and that will be a way to win trust in the long term in Toyota shares.

As for enhanced competitiveness, including CASE, we will have to collaborate with various technology companies in other industries.

And Toyota has is strength in the real and physical world and we must be chosen as a real-world partner.

And I think it's important for the world to think that Toyota's growth is good for the world and for the economy.

Now we would certainly like to have as many investors as possible appreciate the fact that they have invested in Toyota shares for the mid- to long term, but that all depends on our daily efforts, I believe.

And also in the past few years, we have invested JPY 1 trillion in CapEx and JPY 1 trillion in R&D and also JPY 1 trillion in shareholder return.

We have maintained this level for the past few years and we are still continuing to invest in the future, that is to completely redesign the company.

And so we must maintain our financial capability to continue this shareholder return, but at the same time not fall behind in investing into the future.

And I think balancing these 2 would be our greatest challenge.

But in any event, from a mid- to long-term perspective, we do hope that more and more investors will invest in Toyota shares and also feel satisfied afterwards in the fact that they have invested in Toyota shares.

Since the expected closing time is approaching.

So from here on, I would like to restrict 1 question to person -- 1 per person.

So person in the center of the room, the second row from the front, please.

[Shinjo].

Well, several questions that I wanted to ask were already raised, and therefore, there may be some duplication.

My question is about the next decade.

Many challenges [challenge] Toyota for Japan and for the entire world: the happiness brought about by mobility; of course, love is important; the thank you is important; and smiles are important.

But the happiness is a key.

And how are you going to deliver happiness to the people in the world?

How is Toyota going to share that happiness?

That's one point that I would like to ask you.

So what, in your mind, the happiness of mobility means?

Behind this happiness of mobility resides the unhappiness of mobility.

Traffic accident is a typical example, the air pollution is another one.

These negative issues are the negative aspects of our business and those are the issues that we really need to find solutions to as the one engaging in automotive business.

So minimize as much as possible those negative cases is what I would like to realize.

And by doing so as Mr. [Shinjo] has just mentioned, on that basis, we can start talking about the chance that we can maximize the love aspect of cars.

So day in and day out, we simply have to continue making steadfast efforts in trying to create a situation where love can be really generated.

Unfortunately, traffic accidents have been reported extensively, and oftentimes, those victims of traffic accidents are the people who used to lead very happy lives and those people were hit by traffic accident.

So those are really at the tragic cases for us who engage in automotive business and we feel so sad about that.

But how can we reduce traffic accidents, those serious accidents down to 0?

How we can achieve that?

Of course, the road ahead in that context is very, very long.

I believe that this is the solid foundation I will keep on working on and will never change.

Satisfied?

Since it's past the allotted time, I would like to restrict yourself to just one more question.

Okay?

Apparently, we can take 2 or 3 more questions according to the President.

So we will be exceeding the time.

But of course, Honda is expected to announce its financial results today as well.

So yes, so please don't -- of course, we don't want Honda to complain to us so please do feel free to leave.

The fourth row from the front, the person with the glasses.

Yamada from Toyokeizai.

So just one question.

You talked about the difficulty of changing the company that was successful and also the need to change business model.

The automotive business model I think was an extremely successful model.

In any event, to change a company with a success experience, I think causes a lot of friction and a lot of resistance.

How do you intend to overcome that resistance?

Are you going to bulldoze through your reforms or are you going to wait and see, wait for things to change?

But of course, you cannot afford to change -- to wait forever.

So if you could share with us your views on this.

If I knew the answer, I would not be so troubled.

There's no answer.

Either of the approaches you mentioned could be the right answer, but nobody knows.

But you have to try, you have to give a try -- give it a try, otherwise, you don't even know how people will react.

So you have to act with a will.

So if we -- you tell people to face right and nobody turns right, then you will have to have retract that order and then try to steer the company the other way.

So not to give up, to persevere and to try step-by-step.

And that's what I'm trying every day.

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

Thank you.

At the back of the room of the center column.

[Hatanaka] of Nippon Broadcast.

Question to Mr. Toyoda.

As was mentioned earlier, you said that out of industrial vehicle -- products, vehicles is the only one called built-out vehicles.

We are moving in the age of CASE and especially the sharing rules importantly.

People talk about moving from ownership to usage.

But from the perspective of users, by owning certain things, one can get attached to the product itself.

So in this age of CASE, can you maintain the industrial product that can be -- that can really earn attachment?

How can you maintain this beloved industrial product called beloved cars.

In terms of ownership and the sharing for carmakers like us, both are necessary.

I often cite the following example.

The towels and the toothbrush.

When you stay in a hotel, you'll never share toothbrush with others.

But people do share towels.

What's the difference between the toothbrush and towels?

In the case of towels, even if you share with others, it must be clean.

It must be safe and secure.

Unless you know that, you never share a towel with others.

Now what about a toothbrush?

Why do you never share toothbrush even if they are clean and safe and secure?

Why do you insist on owning the toothbrush?

So this really talks about the importance of automobiles that can earn the attachment even if it is an industrial product.

And it can also be shared and it can be owned.

So talking about those, we talk with the many engineers, many marketing people, many salespeople and many executives.

As executives, we often discuss these things, but we have not come up with any concrete answer.

So we have chosen to pursue both of those, ownership and the sharing.

Both.

And since we have -- went overboard with the time, the next question is going to be the very final question, if I may ask you to be that way.

The person at the very front in the middle.

Isozumi from Yomiuri newspaper and my question is to President Toyoda as well.

President Toyoda, you're always saying that the automotive industry has entered an era of profound transformation level.

But now, you have net revenue of JPY 30 trillion plus a profit of JPY 2 trillion for the past few years.

So against that backdrop, President Toyoda, what do you feel most?

What is the most fearful challenge of Toyota's challenges?

That is, what will happen -- I mean what will be the factor that can kill Toyota?

Under what conditions will Toyota die?

I think to think that Toyota is okay, that would be fatal.

We often discuss this internally and I'm always asked by my employees, why are you trying to [fan] on such sense of emergency.

I'm saying, no, I'm not trying to fan emergency -- the sense of emergency, but I just want to share a sense of common values with you.

And when people say, "Well, Toyota's okay, what are you so worried about, President?

Toyota is fine." I think that would be the most dangerous situation because the world is changing so rapidly around us every day, many incidents -- accidents occur around us.

Every day many, many changes are occurring and every day we must be very sensitive to these changes and try to respond to these changes.

To develop such a responsiveness in such a big company I think will be very important.

So the most challenging, most fatal to a company like that would be a sense of complacency that everything is okay.

So sometimes people may criticize me for playing up the emergency too much, but I believe that this is good for us as well as for our partners.

So I will continue to ring the alarm.

Thank you.

Now since it's time, we'd like to close the financial results announcement.

And thank you very much for staying with us for such a long time despite your busy schedules.

Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]