豐田汽車 (TM) 2021 Q2 法說會逐字稿

[Interpreted] Ladies and gentlemen, I would like to start the Q2 financial results announcement for fiscal year 2021. This is part 2 of the announcement. First of all, let me introduce to you the participants from TMC. We present the Director and President, Akio Toyoda; Banto, Koji Kobayashi; Board Member, Chief Competitive Officer and Chief Project Officer, Terashi -- Shigeki Terashi. Now our President, Toyoda, will make his presentation.

My name is Toyoda. Today, based on our first half results, I would like to share with you my thoughts as the person responsible for the management of Toyota. We thought that a forecast by Toyota would serve as a kind of signpost for those in the automotive industry, especially in these times of much uncertainty, regarding the future due to the COVID-19 crisis. So at our year-end results announcement in May this year, we issued a full year forecast for 8 million units in worldwide new vehicle sales and JPY 500 billion in operating income, presenting a guideline-enabled abnormality management, making it possible for each workplace to flexibly respond to changes in the environment. I believe that the upward revision to our forecast this time are due to -- not only to our initiatives of these 6 months, but also to our initiatives over the past 11 years, making Toyota stronger as a company step by step.

The increased strength of our financials and profit structure has also contributed, but I think that the #1 factor has been that the people working for Toyota have grown stronger. At our manufacturing plants, we voluntarily produced face masks and medical face fields needed by the society.

On planned nonoperation days, all members engaged in kaizen continuous improvement and greatly improved productivity. On the sales front, online sales and other initiatives allowed us to continue building relationships with our customers. Every single vehicle ordered by our customers keeps our plants and the economy going. To be able to keep on producing one vehicle at a time, I believe that our members in both production and sales desperately and fully developed themselves to -- devoted themselves to their work, and that led to a rapid sales recovery.

Toyota sales recovery at the time of the global financial crisis lagged behind the market by 4%. But in the case of COVID-19 crisis, our sales recovery outpaced the market by more than 3%. I believe this is the result of our ever better cars being made by everyone and the effort to deliver them to our customers. Thus, plans suspended by COVID-19 got back into action. I believe that the site plants operating and people working energized their local communities.

That makes auto builds a driving force of the economy. I already indicated the direction. I believe all else was thanks to the power of the workplace, which continued to move in that direction.

Moving in that direction was not limited to Toyota as such action spread to 5 auto build trade organizations in Japan, including the Japan Automobile Manufacturers Association. The ripple effect is extremely strong in the automobile industry. The industry in Japan employs 5.5 million people. In Japan, auto build businesses generate approximately JPY 15 trillion in annual taxes. An economic ripple effect is 2.5x greater than the output of the automotive industry alone. Although we are only halfway through our fiscal year, I think the fast recovery of the automotive industry is already having a positive impact on Japan's economy.

The numbers we announced today are the result of the hard work of many people. They are in no way simply an outcome that came about by itself. I would like to once again express my appreciation to all those concerned. Thank you so very much.

Drive Society forward with automobiles. This commitment is not something that we realized during the COVID-19 crisis. It is exactly the commitment of Kiichiro Toyoda when he founded Toyota: Improve the quality of life of the Japanese people with automobiles. Due to the so-called CASE revolution, the automobile industry is in a one-in-a-century period of profound transformation. These are times in which the future is unclear, and there are no right answers. To where are we headed? To answer that question, I realize that we needed to know from where we came.

Please have a look at this conical shape. This graph was put together more than 60 years ago by our then top management after the passing of Kiichiro to guide them as they carried forth the baton passed down to them. I believe that to help Toyota move even further forward in a united way, top management at the time thought about what Toyota was and believed that the origin of Toyota should not be forgotten.

Toyota, though born in Japan, has expanded its presence around the world. Now we find that we are living in an era of profound transformation for our 370,000 people worldwide and their families as well as for the next generation that will support the Toyota of the future. In our Toyoda's philosophy, we have to find our mission as producing happiness for all. Even though Sakichi Toyoda made a loom and Kiichiro made an automobile, I think that what they truly wanted to make was a sense of happiness for any customer who used the products as well as happiness for all the people involved in work related to those products.

We realize that even if we change what we make, our pursuit of happiness will never change. And our vision, as defined in our Toyoda philosophy, is creating mobility for all. After all, we are in the car business. Therefore, I would like to continue to be discerning when it comes to mobility. And we use the word mobility with an added meaning. That meaning is each person should take action.

What is required of us now is that each Toyota person takes actions that lead to the happiness of humankind, including concerning the global environment. I believe that the Toyoda philosophy, which is a continuation of the Toyota precepts, is the very spirit of the sustainable development goals. And I believe that management based on this philosophy will lead to sustainable efforts toward achieving these goals, along with the aim of international society to make a better world.

Even now during the COVID-19 crisis, many people around the world are doing their best to survive while enduring hardship. With Toyota's mission being producing happiness for all, we want to work, especially in these times of emergency, for someone other than ourselves as well as for society and the future. Going forward, we will be tested whether or not we can truly mass produce happiness. We will be grateful if we could receive strict yet warm guidance and support from all of our stakeholders, including you, who are here with us today. Thank you very much.

[Interpreted] (Operator Instructions) From Daily Automotive Journal, Mr. [Fukui], please? (Operator Instructions) Mr. Fukui , could you start your question, please?

[Interpreted] From Daily Automotive Journal, my name is [Fukui]. My question is addressed to Mr. Toyoda, President. Once again, what is your appraisal and the assessment of the first half financial results? And you have increased your forecast upward. What is your outlook for the second half? Since you became President, I think this is the first time that you are speaking at the announcement of interim financial results. What is the reason for you taking through this juncture?

[Interpreted] Let me respond to your question. Thank you for the question. At the initial stage, we announced JPY 50 billion for the full -- JPY 500 billion for the full year basis. That was a projection, and we achieved that in the half year period rather than in the full year basis. And that's not an easy task. As I mentioned in my own presentation, it is quite true that these past 6 months was the period of hard work for those people at the gemba, and that was very important.

But above anything else, since I became President of the company, we encountered many challenges, great financials result -- crisis, the Great East Japan earthquake and extreme appreciation of the yen. And having gone through those challenges, we added to our efforts and the part -- effort after effort, and that accumulated to produce the results that we see today. This is the first time that I attend this financial result announcement at the half year period.

And as far as TMC is concerned, it is quite rare for the top executive to be at the interim result announcement. But the reason why I am taking the floor now is because we are in the time of an emergency caused by COVID-19 crisis. I have decided to be here. At the time of the emergency, I think it's very important to contribute through our own business and work. By all of us working, we can protect employment, we can generate profit and we can pay tax. That, I think, is the responsibility and goal of the key industry, which is the bedrock of the nation. And the automotive industry, I believe, has a huge spillover effect. The ripple effect is huge. And for us to continue doing business, continue working, we can energize the related industries. That's my view as well.

And furthermore, at the initial stage, for the full year basis, to make a projection for the full year basis, I had the following -- the feeling that is to say by giving some baseline reference point for others, to the dealers, the suppliers and employees, we're energized to respond to those guidelines. They thought, is there any better way? Is there any other way that we can energize people? Is there anything more that we can do? And they took very positive initiatives. In doing so -- and I just wanted to express my gratitude on this occasion of a financial result announcement. And at the same time, many people are fighting this COVID-19 crisis, enduring sufferings and yet, they're trying to do their best going through this and survive that. I'm aware of that. Although this is a halfway point, but us working together covering the third quarter and the fourth quarter, by continuing to work and continuing our hard work, I just wanted to convey my strong determination doing that on this occasion. That's all. Thank you.

[Interpreted] We'd like to go onto the next question. From Automotive News, Mr. Hans, please? (Operator Instructions) Mr. Hans, please?

Hans Greimel here from Automotive News. May I speak in English today?

I answer in Japanese.

That's a good deal. I'll keep my comments short. I just want to ask if you have an update on the Woven City project. Can you tell us when it will -- when construction will start, when it will finish, when it will open, when people will start moving there, how many partners you have? And maybe a second question would be, can you tell us your plans for the Olympics next year? Your technological showcase, how are you going to have to change that for the Olympics next year? (foreign language)

[Interpreted] Thank you very much. I'd like to respond in Japanese. I probably have the simultaneous interpretation so I would be continuing to speak on in Japanese. So if you can't understand me, you can just raise your hand and let me know that you don't understand. For the project, Woven City project, it is steadily progressing. And the way that we are promoting this, we use the '80 sprint method. So myself, the top executive and the person in-charge, every 3 weeks, we hold a meeting to confirm the direction of the project. This rule that we introduced to have this meeting 3 -- once every 3 weeks, every time in this meeting, I will make the decision that we believe is best at that time. So maybe it will be that the decision would be different to what we have decided 3 weeks ago. But the important thing is that every time we have this meeting, we will make the most appropriate decision that meets the environment or the situation. So this is a rule that we have adopted for -- to promote this project.

Most important is the candidate area that we will be using. This place is Toyota Motor Corporation's East Japan Higashi Fuji plant. And this plant, after 1 month, it will be closing its operation. That is the plan. And therefore, the employees that are working in the plant will be transferring to different locations to the Tohoku plant. And unfortunately, there may be employees, because of family reasons or other reasons, they may not be able to move to a farer place. Therefore, we will be cooperating and supporting so that they can find a new job and any needs that they have. And in the meantime, we are -- have been working -- with the cooperation of the community and also with the suppliers nearby, we are trying to stand by each and every individuals working in the Higashi Fuji plant to try to secure a place to work for them after the closure of the plant. And we see -- think that steadily, we will be able to secure those job opportunities for them.

And this location -- so this location of the Higashi Fuji plant, we will start the construction work from next year. And from the public affairs division, I was told that I should not say anything about any date. But I'd like to say that I want to make the announcement, on February 23. The reason why it's February 23 is because it's 2-2-3. When you read it in the Japanese way, it's fuji-san or you can say it's Mount Fuji. So in this date, you can -- to the Mount Fuji day, we can make a ceremony to do the groundbreaking ceremony -- if we can do a groundbreaking ceremony at the foot of Mount Fuji, that will be very symbolic. And I'd like to say to everyone that we're making preparations so that it may happen that day.

So now what will be happening in this location? Well, for this, we have made a declaration that we're going to change ourselves from an automobile company to a mobility company. So in this plan, we are going to utilize this location to develop the products that can create a profit for us in the future -- value for us in the future. And one is we will be doing a demonstration test, and this will be used as a lab. One thing that we'll do using this [living] lab will be the automobile driving vehicles.

Automobile driving vehicles, it's important that you think in -- together with the infrastructure, it is a package. And by having this infrastructure together, the development speed will be accelerated significantly. And with that belief, we have created one basic unit to create this Woven City. I think that's a big use of -- for Woven City project. The basic unit that I'm talking about is that each -- or there will be a 150 meters x 150 meters square unit inside of the location, and then that will be consisting of 3 roads. There will be 3 roads woven in this location.

One type of this road will be a dedicated road for automated driving -- autonomous driving vehicles. And the other road will be dedicated for pedestrians. And then the other third road will be a combination of a small mobility plus the pedestrians. So in this way, we want to look at how we can secure safety for autonomous driving vehicles. I think it will be easier to understand if we have this kind of roads. However, in the up ground, there will be weather conditions. Like it'll be different according to a sunny day, rainy day, hot day, cold day. The road conditions will differ.

And in these kinds of difference -- so we'll have this difference above ground. But underground, we can have the environment that will not change with weather. So we can utilize that place for vehicles that can -- don't have to think about weather. And up ground, it will think about weather conditions plus moving people and things. So -- and what -- I'm not an engineer. But probably, it will be the most easiest level to achieve autonomous driving with these different dedicated roads.

And for the city that is consisted by these 3 different types of roads, we're thinking of having 360 residents living in this area. And for the -- what kind of people these 360 members are? To explain a little bit, one group will be elderly -- elderlies; and the second will be people with families, the family group; and the third group of people will be inventors. So in a sense, in Japan and this Woven City, I want to -- this place that we'll be creating is a place that we will be able to understand the needs and the challenges that the elderlies and the families are facing in living in environment in Japan.

And also in this location, we want to have inventors living together with those who have challenges in their everyday lives so that these inventors will be able to invent things that will be helpful for the challenges that the elderly and the family has, and that can be invented in a timely manner.

And these inventors will apply a certain rule. So they will have a certain period of time that they can work in the city. If they cannot come up with results in that certain period of time, then we will exchange -- we'll have them changed with other inventors. So we're trying to have a rule or a mechanism so that this place will always be vigorous, will be quite active. And currently, individuals and also including corporations -- corporate organizations, there's about 3,000 peoples in corporate organizations who have applied and wanted to become a partner with us in this Woven City.

So in that sense, I think for this Woven City project, it is going to be a living laboratory as a demonstration -- we'll be doing demonstrations. It's a living lab. So it's an ever-evolving city that will never be completed, and our ultimate goal is to develop safe mobility.

And also, we want to have it human-centric. So creating this kind of city, a town, and together with infrastructure, we're going to create the future of mobility. And in order to do that, we can't just work with us alone and just automobile companies. We want to have many partners to work with us. And together with those partners, we want to develop that kind of city. So it will be ever-evolving and it will be a living laboratory.

So I hope that will be understood. And also, I'd like to ask you also to participate in a certain way. We want to create the future together with you as well. So I hope that you'll -- you can have high expectations and look forward to this project. So Hans-san, I'm sorry it was long in explanation, but that was -- that's all for my response.

[Interpreted] Now let's move on to the next question. Mr. Shimizu of Nippon Life, please?

[Interpreted] My name is Shimizu of Nippon Life. As an institutional investor owning Toyota shares for a long period of time, I would like to ask the following question of Mr. Toyoda, the President. And including my explanation, I might take a really long time. Starting with the strong performance of second quarter exceeding the market expectations and also the upward revision of the outlook and projection for the full year basis. And I think this is due to the hard work by Mr. Toyoda and the top management as well as employees and others involved in those hard work and efforts. And I'd like to express my serious respect to that.

I have been paying close attention to the words and phrases by President Toyoda. For example, in the past, you talked about intentional pause to increase competitiveness or making things is making people. And also, I want to ensure that I'll be the last person to spend time dealing with the consequences of the past activities, and those have been very impressive. And I here today heard a very strong determination. I think the very simple and succinct phrases clearly reflected the direction of Toyota moving forward and the determination of present Toyota. But I think above and beyond that is the role that Mr. Toyoda plays as a President to ensure sustainable development. Of course, that's naturally expected. But going beyond that, Mr. Toyoda seems to be taking on voluntarily an even greater responsibility at the country and global level. For example, he set as an objective of perceiving 3 million vehicle production in the domestic production. And that's a reflection of the determination to protect [one of the green] Japan, employment, technology and human resources. And at the same time, he is now trying -- implementing initiatives to achieve full redesign of Toyota to make it a mobility company. And that goes beyond the reform and change of Toyota as an individual company. But rather it reflects the determination of trying to realize the future of a mobility society that no one has ever envisioned yet, which we're [adopting] a central role. And to realize that, I think it is essential and dispensable to create the corporate alliances, partnering with other companies.

So here, I'd like to ask the following question. Not limiting yourself to Toyota as a company, but still with Toyota playing a central role, you're at the leading edge of trying to create the society of the future and to produce happiness for all. I think you are at the cutting-edge of that. But I wonder, what drives you, Mr. Toyoda, to make those efforts so passionately, aiming at those activities and responsibility that goes beyond one -- of individual company?

[Interpreted] Thank you for your question. Especially focusing amongst media people, I don't receive very positive assessment or evaluation. Not that I'm not used to that. So I feel a bit embarrassed by receiving such a positive and favorable assessment. As Mr. Shimizu just mentioned and that reflected in his questions, I just wonder to myself, what really is driving myself? And probably, I could say that for one thing, the frustration and the bitterness that I felt. Since I became President and took helm of the company, what I always said that you can never pull it off. You can never achieve this. You have never experienced any hardship, and you don't know what's going on at the gemba. You have never been there. So you can't do this. You can't do this job. Let's see what you've got. And many people are simply waiting for me to fail and make mistakes.

And as expected, I told you so, this is what we expected. That's all the people had been expecting. And faced with that, to this point, I have been able to somehow muddle through because we encountered many, many challenges and crisis.

To me, the crisis -- the word crisis, the characters, in a sense the critical situation, also reflects opportunity. That is to say predicament on the one hand and opportunity on the other hand. The word consisted these 2 words. So I have experienced those numerous crises. And every time, I try to turn that crisis or predicament into opportunity. And by doing so, I try to respond to those people who said, "You can never prove it out," or, "You can never achieve that." I wanted to demonstrate that I could do it. I did do this job. So I never wanted to be bested, and that drove me to work harder and harder.

In addition to that, and I say this in many different opportunities, as a member of the founding family, I just wanted to make things right for the founders. I have been operating over the history of over 18 years and -- including myself and those people in the management who have supporting me are now sustaining Toyota. But looking back, the founding members never experienced the benefits of what they have accomplished and the success of their endeavors. I have advocated transforming Toyota from an automotive company to the mobility company and had in mind the determination of the founding members to change itself from the automatic loom company into the automotive company. And that really reflect what the hardship they had to go through and what sort of challenges they had to go through by completing transforming themselves.

Now vis-à-vis the future generation, can we really do the same thing by transforming and redesigning the company completely? For us, we'll be able to do that, not just Toyota at the center but to make sure that Toyota, to be the company that is chosen by the people in the future society and for Toyota to become such a company that I think has been the prime mover that really drove over the years.

And if I may venture to add the following, I can refer to love Japan -- my love for Japan. Toyota is a global company today, and we always wanted to be the best-in-town company. And in any country or region in which we are allowed to operate, we have been trying to be a company chosen by the community. But the fact that we've been able to do that owes to what our founders started, that is to establish the first automotive company in Japan. And we owe us -- today to them. So to that, in Japan, we want contribute with our business, with our automotive industry. And that, I think, has been a very important driving force behind me.

At the initial stage, it is quite true that I felt very lonesome. I felt being alone. Even if I was old, nobody was dancing behind me. That's where I found myself. But today, I wouldn't say everybody or all of us, but there are so many who are dancing to my tunes. And increasingly, more and more people are dancing to my tunes or dancing with us. So for a little longer, as I look back the history -- or -- but not just looking back the history or the past, for the top management of the next generation, I want to make sure that they can move forward looking at the future. So I would like to hand the baton over in that manner. So I hope you'll continue to support us in that.

Based upon the history you are now trying to steer and forge the future, I once again heard from you the determination and the resolution.

[Interpreted] Going on to the next question from Nikkan Kogyo, Mr. [Nagatsuka], please. (Operator Instructions)

[Interpreted] I'm from Nikkan Kogyo. My name is [Nagatsuka]. I have a question to President Toyoda for electrification. We are seeing an acceleration of the flow of electrification. And Tesla's performances is quite steady. And currently, the battery cells for the vehicle batteries, they are moving in-house and trying to improve the competitiveness on cost. So I'd like to ask how you view the company Tesla, President, Toyoda. And based on your view, can you talk about your outlook for Toyota's electrification plans?

[Interpreted] Thank you for your questions. And well, I will be talking about how I view Tesla. And for electrification strategy, I will like to ask Mr. Terashi here to respond. So first of all, in the stock market, Tesla's market capitalization is around JPY 40 trillion. And this amount, JPY 40 trillion, for example, if you take Toyota and add the 7 Japanese car companies, it will be the total of -- looking at all of these automobile companies, it's JPY 33 trillion. So it means that just with one company, one Tesla, adding all the 7 automobile companies of Japan, they have more market value than these 7 Japanese automakers.

And this company, Tesla, they have made profit from BEVs, B-E-Vs. And also with software updates, they have been generating profit. So that is the business model that they have.

And also with adding renewable energies and looking at LCS, SAA, also reducing CO2, all these activities that they're doing, they are, for us, many points to learn from. But I'd also like to say that for Toyota as well, we have been taking measures to deal with the case areas. For the past 3 years, we have been making advanced investments in these areas. And in 2019, looking at the trend in the stock market, I think you will be able to see this reflected into the trend. For Toyota's stock price compared with other car companies, Toyota's shares -- or share price is making a different move -- starting to make a different move.

In 2019, the press releases regarding CASE and the decisions that we made around CASE, in the companies that are working with the real industry, I think we have been making significant investments, and that has been acknowledged by the market.

In addition, we have established TRI and TRI-AD. And in these companies, the Arene software development is being worked on, and that will be the core to have our focus, not just on hardware but to employ the idea -- the approach of software first, and it will be realized utilizing the Arene that is being developed right now.

And so what we have and what Tesla doesn't have is the units in operation, more than 100 million vehicles out in the world, and this real world that we have in the business that we are in. So being -- without being hesitant to say this, Tesla's business, if I can say, is a business is like a -- you can use analogy of kitchen and a chef, I think. So the kitchen and the chef, they have not created a real business yet or a real world yet, but they're trying to trade the recipes. And the chef is saying that, "Well, our recipe is going to become the standard of the world in the future." I think that is the kind of business they have. But for Toyota, we have a kitchen, a real kitchen, and we all have a real chef, too, and we are creating real dishes. And there are the customers who are very picky about what they like to eat, and they are sitting in front of us and eating our dishes. So with all these people, we can say -- we see that the energy situation is different according to which region we talk about in the world. And also, we are holding the menu and the recipe, probably will be selected because we have the full menu lineup.

And of course, in looking at the current share price, they are -- we are losing against their -- the evaluation as a share price. But we will always be watching and learning from them, and we will always be determined to be the electrification full lineup vehicle maker. And I think we will be one step ahead to be able to be selected from our customers because of the situation Toyota has.

And now for electrification strategy, I'd like Mr. Terashi to respond.

[Interpreted] This is Terashi speaking. I'd like to talk a little bit about our electrification strategy. So Prime Minister Suga said that Japan is going to target becoming carbon neutral by 2050 -- at 2050. So this means, in other words, in 2050, in the mobility world, you need to have a zero-emission vehicle in order to achieve a 2050 carbon neutral Japan. So in this situation, in this environment, around the globe, the environmental regulations are becoming ever more tougher. Therefore, towards 2050, in order to achieve that target, various types of technologies will become important. For example, hydrogen. There are research in regions that have excess hydrogen supplies. Those regions should utilize the hydrogen. And then renewable energy. If they have a lot of electricity that can be created from renewable energy, then they can use that. So I think there's a lot of options according to the regions that we talk about.

And like our President has just said, what -- who selects mobility? Who selects the cars? At the end, it's the customers. So whatever the regulation is, the customer will select what they want and we will be trying to achieve carbon neutral with what the customer selected.

So from those 2 perspectives, we will need to advance our technology in order to achieve that target. We can't just look at 1 side of these 2. So we need to look at the region, the customer, the regulation level, also the environment of that region. All these factors will be a factor to select the type of mobility. And at that time, we want to be able to provide a mobility that customers can select from in each of those respective situations.

So we, as a full lineup maker, will be working on the fuel cell vehicle and also the electric vehicles -- electrified vehicles, too. But amongst the electrified vehicles, the most practical solution will be hybrid. Probably next will be plug-in hybrid. So having those multiple options. And every year, the distribution will be different on how much will be supplied. And at the end, we'll be achieving zero emission by utilizing all of these types of vehicles. And that, we want always to be of help and use of those people who are going to select. Thank you, Mr. [Nagatsuka].

[Interpreted] Now let us move on the next question. From Chunichi Newspaper, Ms. Osada, please? (Operator Instructions)

[Interpreted] Osada of Chunichi Newspaper. And in your presentation, you mentioned that -- and I was about to ask the question relating to that. It related to the Toyota's car making. You said -- talked about the importance of producing and selling each vehicle one by one. And at the same time, for people working for Toyota, they have grown stronger. You mentioned that in your presentation as well. Looking at the first half and the new car sales in Japan for fiscal year 2021, the -- amongst the top 10 best-selling vehicles, the Toyota-made cars are #6 models -- 6 models -- Toyota models are included amongst top 10. So even if you're able to produce those vehicles, but unless they are appealing and attractive, customers don't choose them. The fact that your cars are chosen by customers means that you have been able to deliver and provide attractive cars in a timely manner. That, I think, led to the recovery that you have achieved to date.

In terms of the evolution of car making, has there been any important evolution -- or important factor in car making? Have -- is there anything that you have personally felt about the important factor in car making under the COVID-19 crisis?

And toward the last part of your presentation, you referred to Toyoda philosophy, and I just wanted to ask about that since this is a very good opportunity. Stemming from the Toyoda precepts, you referred to Toyoda philosophy which you propose as the company mission to produce happiness for all. Now why now? Why have you defined Toyoda's philosophy in this current context?

Going back to Toyoda precepts, starting with Sakichi and after his passage. In order to achieve this automotive industry, to determine -- the determination, Kiichiro, the founding father of this company, compiled this Toyoda precepts. And stemming from that -- as a continuation from that, you announced and codified this Toyoda's philosophy now. So could you refer to the reason behind that?

[Interpreted] Thank you for your question. The -- it is the customers and market that determine whether a car is attractive and appealing. We are trying to produce those cars and make them appealing and make them attractive. But sometimes, some models are not regarded as such by customers. And therefore, the fact that we have introduced a large number of new models -- and that's how I analyzed the situation. One of the reasons relates to the establishment of so-called company system within Toyota. We produce and sell close to 10 million vehicles on a full line basis. But in the past, within TMC, we did have a system under which we called -- what is called a global master plan was used. What sort of model is produced to what sort of volume, and the different models were prioritized based upon global master plan. That's how we did our business. And under such plan, those cars that sell well and produce a large amount of profit receives a high priority. And some years ago, I don't exactly remember when, but we had decided to introduce the company system.

And under the company system in Toyota Motor Corporation, each company would play a certain role as amongst the 10 million units. And each company will have the hardest efforts to make making so that vehicles produced in that company will become the most attractive and appealing so that they will be given higher platforms. Sometimes [it's based on] platform or the vehicles used for daily life or posters or Land Cruiser, which was not redesigned for over decades or centuries, another model. And for many decades, it didn't have any redesigns, and we didn't have a hybrid version for a century. So that's how we stood.

And in that general context, we wanted to introduce a system where somebody within the company wanted to produce and sell a certain type of models. And that, I think, produced positive results.

And in the most recent period, at the time of the great global financial crisis or Great East Japan earthquake, we wondered what we should be doing with different projects. And we applied the decelerating break at the time of the global financial crisis covering all the new projects we have decided to stop and discontinue those projects for months. But this time facing the crisis, instead of suppressing or discontinuing those activities, we simply tried to continue producing and continued doing business, especially in April and May when we were not able to operate plants -- in those plants. What happened with the different production plants? Once the COVID-19 crisis is over, the dealer starts selling. In months, we are able to restart the production of the vehicles. I'm sure there are many customers waiting to buy new models. And therefore, a maximum of 50 units per day needed to be added or increased in production. What do we do -- have to do now? And many workers at the front line thought what needs to be done at this point in order to add the production by 50 units per day. And in order to achieve that, the speed of a production line had to be shortened by 4 seconds because of Toyoda.

It's not easy to shorten production line time by 4 seconds. Some can be done when the production line is stopped. If that is the case, the production lines operating in daytime or night, idle those lines or stop using that, a stoppage. Based upon assiduous efforts, they tried to achieve a 4-second shortening of the production line. And in doing so, if the production had to be increased all of a sudden, those increased production requirement was achieved without increasing people assigned to those production lines. So by doing so, without stopping any of the new projects, that allowed us to introduce new models, as have been planned initially.

And at the same time about your question on Toyoda philosophy, why now? Why did we decide to make a statutory framework for that? Actually, inside Toyota, when I have discussion with many employees, we talk about fight and fight. I think I've been using that word very often in my discussion. But at the same time, I say I shouldn't discuss in terms of confrontation context. So people asked, why -- who are you fighting against? And once, I was asked by one of the employees, why -- who are you fighting against? And I wondered, who am I fighting against? Myself.

And the person I'm fighting against was actually for the purpose of regaining what it is that makes Toyota, Toyota. And when I was thinking, what is really making Toyota, Toyota? And when -- I had that in mind and was faced with this COVID-19 crisis. And during that crisis time, I stayed in the training center of the group, and there were many historical documents and materials. And one of the employees found that cone that showed the Toyoda precepts. And I really thought that this must be the good thing for us to think about the philosophy. So based upon that conical shape, I established this Toyoda philosophy, adding a new vision and also new missions.

But earlier, one of the members of the Corporate Auditing Board mentioned that Toyota thinks that its job is done so long as what is necessary is produced. We used to have Neanderthal and homo sapiens, but we now see the Neanderthal disappearing. Do you know the reason why the homo sapiens survived despite the fact that Neanderthal didn't survive? Neanderthal produced what they needed solidly. That's the sort of people they were. In the case of homo sapiens, in addition to that, they added beauty, enjoyment and those other aspects in addition to producing what is needed. And that's what one of the members of the [organization] said. So that's just to say based upon the vision or the drawings to describe what is needed. And even if we can reflect that in those visions, that doesn't ensure your survival. You also need beauty or aesthetics or enjoyment.

Going back to the issue of Toyota Production System, Toyota is not necessarily always after high efficiency. We always wanted to make things easier, and that is what I continue to say over the years. And according to that person and also listening to his advice, not just making things easier, I have decided to make things enjoyable. That is to say to introduce or add the element of homo sapiens. Of course, the ease and also the enjoyment use the same Chinese character. But last, enjoyment and also the like because these factors lead to people choosing our vehicles and allows us to survive over the years.

So in that sense, that's one of the reasons why we have decided to create and -- in the statutory reform the Toyoda philosophy. But by creating this, we're able to invite those advice flowing into the company. So what is important is by having such vision, we can continue discussing what it is that makes Toyota, Toyota. And always, we have been able to reflect upon ourselves in response to inevitable changes. So it's very important to use that as the tool for doing this.

In that sense, SDGs is very close to what factor that makes Toyota, Toyota. And comparing the 2, we'll make sure that we'll be able to be chosen by many partners and give them good credit as compared to the SDGs, and we'll continue to make efforts to that end. So I hope I can continue asking for your support going forward. I feel as if I'm speaking at the AGM. I have many -- major shareholders right in front of me so that somehow makes me to respond as if this is an AGM.

[Interpreted] I'd like to go on to the next question. Mr. Yasuhisa Shimashita, please? (Operator Instructions)

[Interpreted] I'm a motor journalist. My name is Shimashita. So under COVID, your performance is quite good. And President Toyoda, you always say that you don't like to win. I don't like to lose. And I'm feeling how Toyota is becoming stronger. And my question is about the Mirai. The next-generation Mirai had a test drive recently. And very simply, I thought it was cool. That's my impression. And also, I was very impressed with the very good driving performance. And so 30,000 units and -- globally and more than 10,000 units India, Japan, and growing this Mirai volume is going to be a key for Toyota. And for the previous generation, I've used Mirai for 4 years. And from that experience, well, we heard a question about Tesla. But in the similar timing, these 2 vehicles coming out, Tesla, they point also Mirai. There were people around me also who's wondering which they should buy. And Tesla, they have been updating -- using those updating opportunities with new -- of new technologies, and Elon Musk was a strong character who appealed with strong messages. And -- but Mirai on the other hand didn't have that kind of strong message. But for Toyota, I think Mirai is important. The hydrogen society in the future is important. And what is the advantages, what is necessary for the future, that kind of message was not really heard easily from Toyota's side. And that's what the people around me were saying, and I felt that way, too.

So for the people who like the advanced technologies, I think those people quite resonate with those messages and then they decide to make their purchase. So for the new-generation Mirai -- or if -- as you are going to be spreading out, popularizing the other CV, commercial vehicles, FCVs, -- sorry, excuse me, the fuel cell vehicles further, what is your idea in how you'll be doing that? Or any -- your plans about the fuel cell vehicles?

[Interpreted] Well, rather than a massage, I think it's a story that we try to tell. So we want to introduce our vehicles with a story. We want our models to be understood together with the story that it brings. For us, when we launch a new vehicle, we talk about the new features. I think there's a tendency to focus on the new features in the past. But now what we want to focus on is by using or having this model, what kind of story will be brought to you? What kind of story that you will be able to participate in as the main character? I think that should be added to the explanation that we provide when we present a new model.

And for the new-generation Mirai as well, it's not that just by launching the new Mirai, the FCV vehicles start to be seen on the road. It's not for pure EVs and also the FCVS. It always has to be thought together with the infrastructure. So it's not about which comes -- either comes first. What I always say is it's like the flower and the honeybee. So both needs the -- so you need both. Infrastructure in the vehicles is like the relationship between a flower and the honeybee. And now in the environment, we're seeing the wave of electrification with these -- around these 2. So that will be the trigger. And with that trigger, the electrification will be going on the direction of electrification. And as a full lineup maker, we want to provide the multiple options to the customers. That is what we are thinking. And I hope that, Mr. Shimashita, you will always be sharply looking at our -- what we do. And if you have any criticisms about our story, you should voice that any time. So we're looking forward to your very sharp comments.

So for those kinds of -- I hope that, that can be done in a continuous way. I think for -- to give a story, it's important to have a continuation. But give us those sharp comments with love, please. We want you to have -- with your loving emotion, please.

[Interpreted] (Operator Instructions) Mr. Takayuki Yasui, please? (Operator Instructions)

[Interpreted] Yasui is my name. About Toyoda philosophy or the company that produces -- mass produces the vehicles for the market, that's very good to define your company as such. But the important thing is whether you can sustain that and if you can remain such a company for over a long period of time. Looking at the Japanese companies in the past -- of course, the founding spirit talks about very lucky ideals. But companies tend to change over the years, focusing on profit and thinking about revenue, numerous companies and such. And Toyota does have this Toyoda precepts, but there may have been some less emphasis placed on that. And I really think it's a very good thing that they have decided to have this Toyoda philosophy. But I don't know how long and until when you will continue to be in the current position. And you never know when Toyota's performance deteriorates in the future. So when those things happen, for this to be remain the unwavering value of the company, to make sure that, that is going to be the case, is it safe with having the current situation to make sure that the philosophy needs [to come]? Or if the environment changes or conditions change, do you think that things could change in the company? The values and focuses may change? Is that how you think? So you're still thinking what is further needed to ensure focusing on this Toyoda precepts, which leads onto the Toyota philosophy?

And one of the question which is addressed to Mr. Kobayashi -- and you now are called banto. And I saw a little smile -- light smile when you're called banto. What is the definition of banto, Mr. Kobayashi? And what is the role of banto? Or what is it that banto should never do? What is the view on that? Could you share your own thoughts on that? Sorry for asking 2 questions at a time.

[ph]

[Interpreted] So let us start with the answer on banto.

Kobayashi banto. Now banto -- actually, this is until fourth year of Showa, that is 1929, and it disappeared because of the change of the commercial code because it may be considered as segregation. And when I wanted to introduce banto and the HR people rejected that. I used to be presented as a boss, and both Kawai-san and myself seem to be a very difficult superior to present. Therefore, he didn't want to call us Executive Vice President. Because he's the president, he may be looking down on those, these 2 vice presidents. So we eliminated the system of EVPs. And once the EVP position was eliminated, our President started calling banto and oyaji. So this will be -- just be the system for my own generation.

And banto's role is to help and assist the President and to convey the philosophy of President to employees in easy-to-understand manner. And whatever employees are thinking about, to make sure that those ideas of the employees are reflected and embodied in the strategy. And those, I think, are the most important role of a banto. So in that sense, I make sure when I have lunch -- whenever -- I make sure that I have lunch with executives or key employees.

And this leads to your first question. To have good and correct understanding of top executive is the key to ensuring good running of the company. That's most important. I joined Toyota Motor again at a high age. There are numerous people who are capable and with great ability, with great caliber. But whether you have the same structure as the top executive, your ideal is aligned with the top executive. Actually, the alignment of philosophy is very important. And I personally feel very strongly about that. I mean whether one is performing well or not is up to others to evaluate. But to have aligned [values] is different.

So in that context, I wanted to convey and communicate what the President is thinking to younger employees or younger executives. So by doing so -- and you talked about the philosophy. And we said you may only be focused on the -- in the future, the companies tend to change. I referred to that in your question. But including younger members of the society, as the company itself has an in-depth understanding of that, that will ensure sustainable practice of this philosophy itself in the company.

And actually in the past, we created many visions or philosophies. We had Toyota Way, codified, but none of that had really permeated throughout the company because once those are codified and printed and distributed to employees, that was the end of those, Toyota Way and other documents. But we wanted to use a new philosophy in a different manner, reconsidering our own happiness and what we should be doing. I mean Toyoda precept is the backbone, which reflect the thinking and the idea of the company. And we wanted to translate that Toyoda precept, which was written in the rather archaic Japanese into easier-to-understand Japanese. So in translating that, I -- the role that I play is very important.

So in that sense, I reprimand and scold all the executives almost every day, and that raised my blood pressure significantly. The younger employees are -- have nothing to be blamed. But when I discuss those things with the employees, they think, "I now, for the first time, understand what the President had in mind." So I'm not quite sure I'm responding to Mr. Yasui's question, but that, I think, is the role of a banto.

One of the point which relates to the Toyoda philosophy, this is not in gold. The philosophy is not in gold itself. It's only a starting point, in my view. As I mentioned earlier, to a certain extent, going forward, any conditions and environmental change and when those changes take place, for -- the next generation top executive may face difficult challenges and probably to have some guiding post when they find themselves in difficult situation. This Toyoda philosophy could serve a useful purpose. If it will be used in that manner, I think it'd be good.

And Mr. Yasui talked about focus on profit. I don't think it's wrong and it's a bad thing to pursue profit. Being a company means to make profit and pay tax. That, I think, is very important actually, and that's the best way to contribute to the society, in our view. So seeking only profit doesn't mean the company is wrong. The important thing is what that profit is used for. For whom the profit is going to be used? And having people have full understanding of the importance of for whom the profit will be used and how the profit will be used, to generate such people as many as possible is very important. It -- generally speaking, in the society, that -- making profit is something wrong. But a company not making profit cannot make any investment for its future and the future in general.

When I became President, the condition was [faced]. The company was booking deficits. We were a loss-making company at the time. And when we are still making losses, we have to stop and put a brake on everything we had been engaged in. And in that general context, we went through that. And today, we find ourselves capable of making investment in the future (inaudible) secure with employees and we can shift to those works and jobs that people can fully enjoy.

Unless you're making profit, you won't be able to do all those. You will simply continue putting your foot on the brake pedal. So Mr. Yasui and all those stakeholders, I'd like to ask all of you not to criticize or put a brake on Toyota trying to save profit -- or making profit. But please question us what those profit are used for, for what purpose and what sort of determination and intention that we are making for those profits. You can be critical on that, but please look at us from that light.

Faced with criticism or advice, we are willing to listen to those at all times. And over the long term, if we said that decision made at that time is not paying off and although everybody was against that decision made at that time, but looking back, that really represented the trading point, I would like to continue making decisions day in, day out. That -- the decision we make today could be looked at from that perspective. So I hope you'll continue to give us rather strict but also very encouraging support.

[Interpreted] Thank you very much, Mr. Yasui, for your question. With this, we would like to complete this financial results announcement. Thank you very much for your participation and your attention.

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