Toyota 2012 Annual Report Download - page 39

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
of time required for product development
are critical to automotive manufacturers.
In particular, it is critical to meet customer
demand with respect to quality, safety and
reliability. The timely introduction of new vehicle
models, at competitive prices, meeting rapidly
changing customer preferences and demand
is more fundamental to Toyota
ʼ
s success
than ever, as the automotive market is rapidly
transforming in light of the changing global
economy. There is no assurance, however,
that Toyota will adequately and appropriately
respond to changing customer preferences
and demand with respect to quality, safety,
reliability, styling and other features in a timely
manner. Even if Toyota succeeds in perceiving
customer preferences and demand, there is
no assurance that Toyota will be capable of
developing and manufacturing new, price
competitive products in a timely manner
with its available technology, intellectual
property, sources of raw materials and parts
and components, and production capacity,
including cost reduction capacity. Further,
there is no assurance that Toyota will be able
to implement capital expenditures at the level
and times planned by management. Toyota
ʼ
s
inability to develop and offer products that
meet customers
ʼ
preferences and demand
with respect to quality, safety, reliability,
styling and other features in a timely manner
could result in a lower market share and
reduced sales volumes and margins, and may
adversely affect Toyota
ʼ
s financial condition
and results of operations.
Toyota
ʼ
s success in the sale of vehicles
depends on its ability to market and distribute
effectively based on distribution networks and
sales techniques tailored to the needs of its
customers. There is no assurance that Toyota
will be able to develop sales techniques and
distribution networks that effectively adapt to
changing customer preferences or changes
in the regulatory environment in the major
markets in which it operates. Toyota
ʼ
s inability to
maintain well-developed sales techniques and
distribution networks may result in decreased
sales and market share and may adversely affect
its financial condition and results of operations.
In the highly competitive automotive industry,
it is critical to maintain and develop a brand
image. In order to maintain and develop a
brand image, it is necessary to further increase
customers
ʼ
confidence by providing safe,
high-quality products that meet customer
preferences and demand. If Toyota is unable
to effectively maintain and develop its brand
image as a result of its inability to provide
safe, high-quality products or as a result of the
failure to promptly implement safety measures
such as recalls when necessary, vehicle unit
sales and/or sale prices may decrease, and as a
result revenues and profits may not increase as
expected or may decrease, adversely affecting
its financial condition and results of operations.
Toyota purchases supplies including parts,
components and raw materials from a number
of external suppliers located around the world.
For some supplies, Toyota relies on a single
supplier or a limited number of suppliers,
whose replacement with another supplier
may be difficult. Inability to obtain supplies
from a single or limited source supplier may
result in difficulty obtaining supplies and may
restrict Toyota
ʼ
s ability to produce vehicles.
Furthermore, even if Toyota were to rely on a
large number of suppliers, first-tier suppliers
with whom Toyota directly transacts may in
turn rely on a single second-tier supplier or
limited second-tier suppliers. Toyota
ʼ
s ability to
continue to obtain supplies from its suppliers
in a timely and cost-effective manner is subject
to a number of factors, some of which are not
within Toyota
ʼ
s control. These factors include
the ability of Toyota
ʼ
s suppliers to provide a
continued source of supply, and Toyota
ʼ
s ability
to effectively compete and obtain competitive
prices from suppliers. A loss of any single or
limited source supplier or inability to obtain
supplies from suppliers in a timely and
cost-effective manner could lead to increased
costs or delays or suspensions in Toyota
ʼ
s
production and deliveries, which could have an
adverse effect on Toyota
ʼ
s financial condition
and results of operations.
The worldwide financial services industry is
highly competitive. Increased competition in
automobile financing may lead to decreased
margins. A decline in Toyota
ʼ
s vehicle unit
sales, an increase in residual value risk due
to lower used vehicle price, an increase in the
ratio of credit losses and increased funding
costs are factors which may impact Toyota
ʼ
s
financial services operations. If Toyota is unable
to adequately respond to the changes and
competition in automobile financing, Toyota
ʼ
s
financial services operations may adversely
affect its financial condition and results of
operations.
Toyota depends on various information
technology networks and systems, some of
which are managed by third parties, to process,
transmit and store electronic information,
Toyota's ability to market and distribute
effectively is an integral part of Toyota

s
successful sales.
Toyota's success is significantly impacted by
its ability to maintain and develop its brand
image.
Toyota relies on suppliers for the provision
of certain supplies including parts,
components and raw materials.
The worldwide financial services industry
is highly competitive.
Toyota

s operations and vehicles rely
on various digital and information
technologies.
Risk Factors
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Contents
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Other Management and Corporate Data
Corporate PhilosophyR&D and Intellectual Property
Corporate Governance
Management Team
Risk Factors