Toyota 2013 Annual Report Download - page 39

Toyota Global Vision President’s Message Launching a New Structure Special Feature Review of Operations
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Highlights
Management and
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ANNUAL REPORT 2013
Risk Factors
fuel economy, the amount of time required for innova-
tion and development, pricing, customer service and
fi nancing terms. Increased competition may lead to
lower vehicle unit sales, which may result in a further
downward price pressure and adversely affect
Toyota’s fi nancial condition and results of operations.
Toyota’s ability to adequately respond to the recent
rapid changes in the automotive market and to main-
tain 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.
The worldwide automotive industry is highly volatile.
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 tech-
nologies. As Toyota’s revenues are derived from sales
in markets worldwide, economic conditions in such
markets are particularly important to Toyota. In Japan,
while there continues to be some signs of weakness,
the economic environment is gradually recovering. In
the United States, economic conditions are moder-
ately recovering due to factors such as increased
Operational and other risks faced by Toyota that
could signifi cantly infl uence the decisions of inves-
tors are set out below. However, the following
does not encompass all risks related to the opera-
tions of Toyota. There are risk factors other than
those given below. Any such risk factors could
infl uence the decisions of investors. The forward-
looking statements included below are based on
information available as of June 24, 2013, the fi ling
date of Form 20-F.
쏋 Industry and Business Risks
The worldwide automotive market is
highly competitive.
The worldwide automotive market is highly competi-
tive. 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
intensifi ed amidst diffi cult 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 indus-
try reorganization. Factors affecting competition
include product quality and features, safety, reliability,
consumer spending. However, in Europe, the
economic environment continues to remain stagnant
due to the ongoing sovereign debt crisis, and the rate
of economic growth is slowing down in emerging
economies. Such shifts in demand for automobiles is
continuing, and it is unclear how this situation will tran-
sition in the future. Toyota’s fi nancial condition and
results of operations may be adversely affected if the
shifts in demand for automobiles continues or
progresses further. Demand may also be affected by
factors directly impacting vehicle price or the cost of
purchasing and operating vehicles such as sales and
fi nancing incentives, prices of raw materials and parts
and components, cost of fuel and governmental regu-
lations (including tariffs, import regulation and other
taxes). Volatility in demand may lead to lower vehicle
unit sales, which may result in downward price pres-
sure and adversely affect Toyota’s fi nancial condition
and results of operations.
Toyota’s future success depends on its ability to
offer new innovative competitively priced products
that meet customer demand on a timely basis.
Meeting customer demand by introducing attractive
new vehicles and reducing the amount of time
required for product development are critical to auto-
motive 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 chang-
ing customer preferences and demand is more funda-
mental to Toyota’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 avail-
able 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 imple-
ment capital expenditures at the level and times
planned by management. Toyota’s inability to develop
and offer products that meet customers’ 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’s fi nancial condition and results of operations.
R&D and Intellectual Property Corporate Philosophy Corporate Governance Management Team Risk Factors [1 of 3]