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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
Notes to Consolidated Financial Statements
interests would be required, Toyota takes
dealership assets or personal assets, or both,
as additional security. If a dealer defaults, Toyota
has the right to liquidate any assets acquired and
seek legal remedies.
Toyota also makes term loans to dealers for
business acquisitions, facilities refurbishment,
real estate purchases and working capital
requirements. These loans are typically secured
with liens on real estate, other dealership assets
and/or personal assets of the dealers.
Toyota classifies wholesale and other dealer
loan receivables portfolio segment into three
classes of wholesale, real estate and working
capital, based on the risk characteristics
associated with the underlying finance receivables.
A receivable account balance is considered
impaired when, based on current information
and events, it is probable that Toyota will be
unable to collect all amounts due according
to the terms of the contract. Factors such as
payment history, compliance with terms and
conditions of the underlying loan agreement and
other subjective factors related to the financial
stability of the borrower are considered when
determining whether a loan is impaired. Impaired
finance receivables include certain nonaccrual
receivables for which a specific reserve has been
assessed. An account modified as a troubled
debt restructuring is considered to be impaired.
A troubled debt restructuring occurs when an
account is modified through a concession to a
borrower experiencing financial difficulty.
Accounts are restored to accrual status only when
interest and principal payments are brought
current and future payments are reasonably
assured. Receivable balances are written-off
against the allowance for credit losses when it
is probable that a loss has been realized. Retail
receivables class and finance lease receivables
class are not placed generally on nonaccrual
status when principal or interest is 90 days or
more past due. However, these receivables are
generally written-off against the allowance for
credit losses when payments due are no longer
expected to be received or the account is 120 days
contractually past due, whichever occurs first.
Toyota classifies retail receivables portfolio
segment into one class based on common risk
characteristics associated with the underlying
finance receivables, the similarity of the credit
risks, and the quantitative materiality.
Toyota acquires new vehicle lease contracts
originated primarily through dealers. The
contract periods of these primarily range from
2 to 5 years. Lease contracts acquired must
first meet specified credit standards after which
Toyota assumes ownership of the leased vehicle.
Toyota is responsible for contract collection and
administration during the lease period.
Toyota is generally permitted to take
possession of the vehicle upon a default by the
lessee. The residual value is estimated at the
time the vehicle is first leased. Vehicles returned
to Toyota at the end of their leases are sold by
auction.
Toyota classifies finance lease receivables
portfolio segment into one class based on
common risk characteristics associated with the
underlying finance receivables and the similarity
of the credit risks.
Toyota provides wholesale financing to qualified
dealers to finance inventories. Toyota acquires
security interests in vehicles financed at
wholesale. In cases where additional security
All classes of wholesale and other dealer
loan receivables portfolio segment are placed
on nonaccrual status when full payment of
principal or interest is in doubt, or when principal
or interest is 90 days or more contractually past
due, whichever occurs first. Collateral dependent
loans are placed on nonaccrual status if collateral
is insufficient to cover principal and interest.
Interest accrued but not collected at the date
a receivable is placed on nonaccrual status is
reversed against interest income. In addition, the
amortization of net deferred fees is suspended.
Interest income on nonaccrual receivables is
recognized only to the extent it is received in cash.
As of March 31, 2011 and 2012, finance receivables on nonaccrual status were as follows:
As of March 31, 2011 and 2012, finance receivables past due over 90 days and still accruing were as
follows:
Wholesale and other dealer loan receivables
portfolio segment
Finance lease receivables portfolio segment
Yen in millions
U.S. dollars in millions
March 31, March 31,
2011 2012 2012
Retail ¥ 2,633 ¥ 2,822 $ 34
Finance leases 1,136 958 12
Wholesale 6,722 5,485 67
Real estate 14,437 11,736 143
Working capital 272 37 0
¥ 25,200 ¥ 21,038 $ 256
Yen in millions
U.S. dollars in millions
March 31, March 31,
2011 2012 2012
Retail ¥ 23,734 ¥24,263 $ 295
Finance leases 4,484 7,674 94
¥ 28,218 ¥ 31,937 $ 389
0820
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