Toyota 2012 Annual Report Download - page 38

Investor InformationToyota Global Vision Special FeaturePresident
ʼ
s Message Financial Section
Business and
Performance Review
Medium- to Long-Term
Growth Initiatives
Changes for Making
Ever-Better Cars Management and
Corporate Information
TOYOTA ANNUAL REPORT 2012
Operational and other risks faced by
Toyota that could significantly influence the
decisions of investors are set out below.
However, the following does not encompass
all risks related to the operations of Toyota.
There are risk factors other than those given
below. Any such risk factors could influence
the decisions of investors. The forward-
looking statements included below are based
on information available as of June 25, 2012,
the filing date of Form 20-F.
The Japanese economy as a whole suffered
significant damage as a result of the Great East
Japan Earthquake that occurred on March 11,
2011 and the ensuing tsunami and accidents
at nuclear power plants in Fukushima
Prefecture
(
collectively, the
“
Great East Japan
Earthquake
”)
.
The Japanese economy has been negatively
impacted by damage caused by the Great
East Japan Earthquake, costs associated to
rebuild the affected areas and interrupted
infrastructure, including energy shortages as
a result of suspended operations at nuclear
power plants throughout Japan. The duration
and impact on the Japanese economy are
unclear. In addition, the nuclear power plants
in Fukushima Prefecture are not yet fully under
control and the resolution of the situation at
these plants, including timing, remains unclear.
Continuing radiation leakage and further
aggravation of the nuclear power plants are
possible. These various issues in connection
with the Great East Japan Earthquake may
cause significant and unforeseeable adverse
effects on the Japanese economy, Toyota
ʼ
s
operations, and demand for Toyota
ʼ
s products.
The worldwide automotive market is highly
competitive. Toyota faces intense competition
from automotive manufacturers in the markets
in which it operates. Although the global
economy is gradually recovering, competition in
the automotive industry has further intensified
amidst difficult overall market conditions. In
addition, competition is likely to further intensify
in light of further continuing globalization in
the worldwide automotive industry, possibly
resulting in further industry reorganization.
Factors affecting competition include product
quality and features, safety, reliability, fuel
economy, the amount of time required for
innovation and development, pricing, customer
service and financing terms. Increased
competition may lead to lower vehicle unit
sales, which may result in a further downward
price pressure and adversely affect Toyota
ʼ
s
financial condition and results of operations.
Toyota
ʼ
s ability to adequately respond to the
recent rapid changes in the automotive market
and to maintain its competitiveness will be
fundamental to its future success in existing and
new markets and to maintain its market share.
There can be no assurances that Toyota will be
able to compete successfully in the future.
Each of the markets in which Toyota competes
has been subject to considerable volatility
in demand. Demand for vehicles depends
to a large extent on social, political and
economic conditions in a given market and the
introduction of new vehicles and technologies.
As Toyota
ʼ
s revenues are derived from sales
in markets worldwide, economic conditions
in such markets are particularly important to
Toyota. During fiscal 2012, in Japan, despite
continuing harsh business conditions due to
the impact of the Great East Japan Earthquake,
the economic environment is gradually
recovering as a result of various government
policies aimed at economic revival following the
disaster. In the United States, there has been
a gradual recovery in economic conditions,
but in Europe, the economic environment is
at a standstill, due to the ongoing sovereign
debt crisis, which has also slowed economic
development in numerous emerging economies
throughout the world. Toyota was adversely
affected by changes in the market structures
of each region with further shifts in consumer
demand to compact and low-priced vehicles.
Such weakness in demand for automobiles and
changes in market structure is continuing, and
it is unclear how this situation will transition
in the future. Toyota
ʼ
s financial condition and
results of operations may be adversely affected
if the weakness in demand for automobiles
and changes in market structure continue or
progress further. Demand may also be affected
by factors directly impacting vehicle price or
the cost of purchasing and operating vehicles
such as sales and financing incentives, prices
of raw materials and parts and components,
cost of fuel and governmental regulations
(
including tariffs, import regulation and other
taxes
)
. Volatility in demand may lead to lower
vehicle unit sales, which may result in a further
downward price pressure and adversely affect
Toyota
ʼ
s financial condition and results of
operations.
Meeting customer demand by introducing
attractive new vehicles and reducing the amount
Risks Relating to the Great East Japan
Earthquake Industry and Business Risks
The worldwide automotive market is highly
competitive.
The worldwide automotive industry is
highly volatile.
Toyota's future success depends on its
ability to offer new innovative competitively
priced products that meet customer
demand on a timely basis.
Toyota may be adversely affected by the
continuing effects of the Great East Japan
Earthquake and ensuing events.
Risk Factors
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Risk Factors