Toyota 2012 Annual Report Download - page 64

TOYOTA ANNUAL REPORT 2012
Toyota Global Vision Changes for Making
Ever-Better Cars President
ʼ
s Message Medium- to Long-Term
Growth Initiatives Special Feature Management and Corporate Information Investor Information
Business and
Performance Review Financial Section
Management's Discussion and Analysis of Financial Condition and Results of Operations
vehicles in relation to abnormal engine noise or
idling due to engine valve springs that contained
some foreign materials. The affected vehicle
models included Crown, GS350/450h/460, IS350,
and LS460/600h/600hL, 275 thousand vehicles
were included in this recall.
In August 2010, Toyota announced in North
America the voluntary safety recall of certain
models of Toyota vehicles to address the check
engine illuminations and harsh shifting that may
result from improper manufacturing of some
Electronic Control Modules
(
ECMs
)
. The affected
vehicle models included Corolla and Matrix, 1,360
thousand vehicles were included in this recall.
In October 2010, Toyota announced in Japan
and other regions the voluntary safety recall
of certain models of Toyota and Lexus brands
ʼ
vehicles in relation to the connector terminal
that may fail due to the inflexibility of the material
of the fuel pump wiring harness and braking
performance that may gradually decline by brake
fluid leakage from the brake master cylinder. The
affected vehicle models included Crown, Crown
Majesta, Mark X, KlugerL, KlugerV, Harrier,
AlphardG, AlphardV, Avalon, Highlander, RX330,
GS300, GS350, IS250, IS350, and IS220D, 1,470
thousand vehicles were included in this recall.
In January 2011, Toyota announced in Japan
and other regions the voluntary safety recall
of certain models of Toyota and Lexus brands
ʼ
vehicles to address fuel leakage that may result
from improper manufacturing of engine fuel
pipe and fuel pump. The affected vehicle models
price of steel, precious metals, non-ferrous
alloys including aluminum, plastic parts and
other production materials and parts. In fiscal
2011, raw materials prices were on an increasing
trend; however, continued cost reduction efforts,
by working closely with suppliers, contributed to
the improvement in earnings by offsetting the
effects from price increase. These cost reduction
efforts related to ongoing value engineering and
value analysis activities, the use of common parts
resulting in a reduction of part types and other
manufacturing initiatives designed to reduce the
costs of vehicle production.
Cost of products sold increased by ¥14.3
billion, or 0.1%, to ¥15,985.8 billion during fiscal
2011 compared with the prior fiscal year. The
increase resulted from the ¥520.0 billion impact
of increase in vehicle unit sales and changes in
sales mix, ¥90.0 billion increase in miscellaneous
costs, and the ¥13.9 billion impact of increases
in parts sales, partially offset by the ¥584.9
billion favorable impact of fluctuations in foreign
currency translation rates, and the ¥180.0 billion
impact of cost reduction efforts. The increase
in miscellaneous costs was due mainly to the
¥30.0 billion increase in costs related to quality
initiatives, the ¥25.0 billion increase in research
and development expenses and the ¥5.2 billion
increase in labor costs. The increase in vehicle
unit sales and the changes in sales mix was due
to the automotive market recovery associated
included Noah, Voxy, RAV4L, RAV4J, Caldina,
Isis, Vista, Vista Ardeo, Opa, Premio, Allion, Gaia,
Nadia, WISH, Avensis, and Avensis Wagon, 1,343
thousand vehicles were included in this recall.
The net changes in fiscal 2010 and 2011 in
the accrual for the four recalls and other safety
measures that occurred in fiscal 2010 are shown
below.
Toyota expanded the coverage of a safety
campaign in North America for certain models
of Toyota and Lexus brands
ʼ
vehicles in relation
to floor mat entrapment of accelerator pedals
to include additional models, which was initially
announced in November 2009. In March 2011,
Toyota also expanded the safety campaign
coverage to include more models to heighten the
level of reassurance for customers. The vehicle
models involved were LX570, RAV4, and 4Runner.
with global economic turnaround.
Cost of financing operations decreased by ¥82.8
billion, or 11.6%, to ¥629.5 billion during fiscal 2011
compared with the prior fiscal year. The decrease
resulted from the ¥64.7 billion favorable impact
of fluctuations in foreign currency translation
rates, the ¥30.0 billion decrease in the provision
for residual value losses and the ¥6.4 billion
recognition of valuation gains on interest rate
swaps stated at fair value. The decrease in the
provision for residual value losses is attributable
to prices in the used vehicles markets remaining
at an unprecedented high level particularly in the
United States.
Selling, general and administrative expenses
decreased by ¥209.5 billion, or 9.9%, to ¥1,910.1
billion during fiscal 2011 compared with the prior
During fiscal 2011, continued cost reduction
efforts reduced operating costs and expenses
by ¥180.0 billion. The effect of cost reduction
efforts include the impact of fluctuation in the
Yen in millions
Year ended March 31,
2010 2011 2012
Balance at the
beginning of year
¥
—
¥ 56,600 ¥ 18,000
Accrual 89,000 13,100
(
1,500
)
Amounts paid
(
32,400
) (
51,700
)(
14,600
)
Balance at the end
of year ¥ 56,600 ¥ 18,000 ¥ 1,900
Cost Reduction Efforts
Cost of Products Sold
Cost of Financing Operations
Selling, General and Administrative Expenses
Yen in millions
2011 vs. 2010
Change
Changes in cost of financing operations:
Effect of fluctuation in foreign
currency translation rates ¥
(
64,700
)
Effect of increase in valuation gains
on interest rate swaps stated at fair
value
(
6,400
)
Effect of decrease in provision for
residual value losses
(
30,000
)
Other 18,342
Total ¥
(
82,758
)
0820
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