Toyota Motor Corporation (7203) Earnings Call Transcript & Summary

Thank you very much for joining us despite the short notice. We really appreciate your participation. We would like to start the joint press conference by Isuzu Motor Company, Hino Motor Company and Toyota Motor Corporation. First, let me introduce the people on the stage today. The Representative Director and President of Isuzu Motor Company, Masanori Katayama; Representative Director and President of Hino Motor Company, Yoshio Shimo; Representative Director and President of Toyota Motor Corporation, Akio Toyoda. So ladies and gentlemen, first of all, Toyoda will make remarks explaining...

Akio Toyoda is my name. Hello, everyone. I would like to talk about the significance of the partnership by our 3 companies. I have long been having discussions with President Shimo of Hino about strengthening collaboration within the Toyota Group. In recent corporate growth, we have Daihatsu with whom we have in common passenger cars, so it was easy to create synergistic effect with Daihatsu in car making. On the other hand, commercial vehicles are a go-it-alone business of Hino, making it difficult to find a connection with Toyota's car making, which is centered on passenger cars. However, the situation has drastically changed due to the CASE revolution. In particular, it is difficult to popularize electrified vehicles, unless they are promoted together with infrastructure. The introduction of the first generation Mirai fuel cell vehicle made me realize this. I think that is a good example of knowing after having tried. Instead of thinking from a manufacturer's perspective of, we should make this kind of car, we came to think about things from a user's perspective of, what should we do so that people will use CASE technology? And this led me to see a clear direction for partnership with Hino. What we are now being called upon to do is refine CASE technologies and disseminate them. To achieve that, I arrived at the notion that it is important to implement such technologies through commercial vehicles in unison with infrastructure. And there was one more thing viewed from a user's perspective, shippers use both Hino and Isuzu trucks. If Hino and Isuzu work together, we would be able to face 80% of Japan's commercial vehicle customers and come to know their reality. And if we use Toyota's CASE technologies, we may be able to solve many of those customers' difficulties. Thinking so, I consulted President Katayama of Isuzu. To build an ever better mobility society, it is becoming more important, not to only compete but also cooperate. This partnership could not be realized even if any one of our 3 companies were missing. By utilizing the strength of 3 companies, I think we can help many of our transportation colleagues on-site. This desire to help will also be linked to our hopes for the reconstruction of Tohoku. Since the Great East Japan earthquake, I have [ builded ] Tohoku every year in March. That's because I have thought all along that what I can do is never forget about that disaster. This year marks the 10th anniversary of the earthquake disaster, so I was wondering which site I should visit. As I was thinking about it, I was given an opportunity to visit Namie town in Fukushima Prefecture, which is advancing initiatives for the future. On site, I was able to talk with Fukushima Governor, Uchibori and Namie mayor, Yoshida about their thoughts on reconstruction. One project has advanced since then. Isuzu and Hino fuel cell trucks are carrying goods using green hydrogen produced in Namie town, and will contribute to the realization of uniform waste-free delivery by linking make, transport and use, using connected technology. Together with everyone in Fukushima, we will make the work of transport people easier and propose new lifestyles to people on the use end. We are now living in an uncharted era in which we can foresee the right direction. In such an environment, you first have to try, and from there, you can see what's working next and try again. Toyota has survived so far by doing so again and again. This time, engaging more in the transportation front line are 3 companies we all work together and try first. We have just stood at the starting point. Please look forward to the efforts of our 3 companies as we attempt to get moving from a user's perspective, centered on where the action is taking place. Thank you.

Next speaker is Mr. Shimo.

I'm Shimo, the President of Hino Motors. First of all, I feel that this new framework has made a full secure step towards solving challenging issues our customers and the society are facing. Through my contact with the people in the field transportation, I have had a strong aspiration to solve problems they faced. From the standpoint, I have always discussed with President Toyoda of a partnership between Toyota and Hino. I also discussed Mr. Katayama whether we could collaborate together beyond a position as rival companies in order to solve the problems that our customers in transportation and the drivers are faced with. Based upon this background, it is my great pleasure to start this new partnership of 3 companies. Let me tell you about the real situation on-site of the transportation industry. At present, there are more than 60,000 transportation logistics companies in Japan. Every day, they load trucks with goods, transport and delivery them. Though it is such hard labor, they are working diligently to deliver each important parcel, surely to people who are waiting for them. We at Hino Motors share the same view points as our customers who are working hard in the center of lifeline transportation, and we were engaged in many initiatives to solve problems. However, the environment surrounding transportation and logistics is getting severer. And if this continues, someday, it may become impossible to deliver goods. The first challenge is shortage of drivers. It is hard to find a person who wants to become a driver. Being a driver is extremely hard job because of accident risk, long working hours and numerous other work required aside from driving in the long distance transportation. Drivers have dispensed almost the same amount of time or longer for nondriving duties. For example, nonuniform mixed packages have to be manually loaded for 2 hours, then they drive for 5 hours to reach the destination where when he has to work to -- 1 hour to the cargo reception time. Then after the good inspection and unloading take another 2 hours. In the city area driver, delivery drivers workload is continuously increasing because of e-commerce, which demands much more small parcels delivered at designated time. Also, the cargo volume [ project ], according to the season and time of the day. And the third challenge is this -- next challenge is this transport efficiency, and sometimes there is no goods to transport on the way back. And at present, loading efficiency is less than 50%. And the third challenge is the carbon neutral. Reducing carbon dioxide emission in transportation sector in Japan is necessary for Japan to achieve carbon neutrality. It is not sufficient to just electrify trucks, which are the tools for work. Unless we can realize why this produce of easy-to-use electric vehicles where costs are controlled, we can reduce CO2 emission. As I mentioned, improving transportation efficiency is another very important factor to reduce CO2 emission in transportation sector toward achieving carbon neutrality. These challenges emerge as a result of higher demand and expectation toward transportation from the society. But it is the fact that we have no proposed comprehensive solution to these problems. To solve these problems, I believe there are a lot of areas where we can cooperate beyond company domain. Collaboration in connected platform among companies enables reduction of waiting time for trucks and improves loading efficiency. Through this new partnership, many transportation operators will be able to use electrified vehicles. Then more important is, if these problems are solved, jobs in transportation sector become more attractive to recruit more people to work in this sector, including drivers. We would like to see goods delivered when people want them to bring smiles to their lives. To achieve this goal, we will aim at logistics reform openly with all the stakeholders involved in transportation and logistics.

I shall call upon Mr. Katayama.

Thank you. I am Katayama from Isuzu. Over the past 6 years, since I was inaugurated as the President of this company, I was asking myself what this company stands for as we experienced different situations day in and day out. And my conclusion is, the company stands for the power and attitude of generating innovation for the society. The auto industry faces a big wave of CASE, and therefore, innovation is imperative. We don't have much more time to -- time left. And the national strategy for green growth requires innovation from all industries, including energy and manufacturing. It's a pretty colossal challenge. A delay in transformation in one sector can distort the harmony of the whole. It's a pretty delicate structure. As a commercial vehicle manufacturer, we have to fulfill our responsibility, and we have in identifying opportunities for innovation. And certainly partnership with Cummins and Volvo Group came out of that passion of mine. As we run the company, I was given this opportunity to talk with Mr. Toyoda and Mr. Shimo about our customers, society and monozukuri manufacturing, and that discussion triggered this partnership. Hino remains our biggest competitor. We compete with each other globally, day in and day out, that will never change. However, at the foundation of that competition is a shared passion for better logistics and better society. Toyota is a passenger car manufacturer. But then the difference between passenger cars and commercial vehicles are irrelevant when it comes to the passion for the better society and better Japan. Since its foundation, Toyota gave birth to countless number of innovations. TPS in manufacturing, hybrid and fuel cell vehicles in electrification and the list goes on. Hino understands commercial vehicles the best. And Toyota has the massive technology and execution power of technologies, which can be applied to light-duty trucks. Three companies hooked together, we can create innovation to overcome this large tide of CASE to be able to offer our customers more useful light duty trucks and solutions. Now let me touch upon the technology partnership. First of all, about electrification of commercial vehicles. Carbon neutrality is a major challenge for the entire Japanese industry, not only the automotive sector. Logistics operators as well as other customers who want to reduce their carbon footprint ask us about electrification of the vehicles EVs and FCVs have many challenges, including cost reduction and infrastructure. Three companies this time around decided to work together for electrifying and using FCs or light-duty trucks to reduce vehicle cost. And the social implementation in Fukushima will help us also engage with the society and customers. The next is the connected technologies. The labor shortages as well as increased burden on drivers for redeliveries and freight handling workload, digitalization is required also to meet the new needs, emerging needs of transport. And that calls for the -- our effective response to [ digital transformation]. Waste-less trucks and efficient trucks will contribute to carbon neutrality as well, and connected technologies will be a major part of it. We will [ likely ] be connected to Hino and Toyota's platform. We will solicit for other partners to join us in order to build the commercial connected foundation to help solve our customers' challenges. We will offer various logistics solutions going forward, and we will be open in our partnerships for any like-minded partners. Toyota and Isuzu signed a capital alliance agreement for Cross Holding, This is a part of Toyota's ongoing efforts to make brands or find like-minded partners. This alliance will be able to support our joint development of technologies. Thank you very much.

Now at the center, we would like to move on to the Q&A session, and we will procure the layup on this stage. So please give us a moment for that, and those people on the stage, please come down from [ the stage ]. Now we would like to start the question-and-answer session. And for Q&A session, Hiroki [ Nakashima ], Representative Director and President of Commercial Japan Partnership Technologies, the company to be newly established. He's also the President of [ CB ] company President of the Toyota Motor Corporation. First of all, from the audience who are here today. And after that, we would like to invite those people participating online to ask questions. [Operator Instructions] Now the Transportation Economic Newspaper, Mr. [indiscernible], please.

In relation to this initiative, I would like to know your passion and also deep thoughts from Toyota, Hino and Isuzu. And around what time or when users will be able to use more electrified vehicles? So if you have some yardstick about the achievement and accomplishment of this project, I would appreciate that coming from anybody.

So may I start response? The members present here today on the stage includes President of TMC, the President of Hino, and also Isuzu, as well as the President of a new company, but also the Chairman of Japan Automobile Manufacturers Association, the Vice Chairman and also the President of a large vehicle of JAMA, and in fighting with the COVID-19, the automotive industry has always been wanting to be the driver -- driving force of this reconstruction for this. And as a yardstick of that, we refer to 5.5 million people being moved. Together with the commercial advertisement, we worked together with the industry. Out of this 5.5 million people, those people engaged in the logistics industry is about half of that. And in that half of that, since around October last year, from the Prime Minister, the declaration was made for carbon neutrality to be achieved by Japan. And within JAMA, we raised voices that let's work together so that we can achieve our neutrality here in Japan. And about 90% of the logistics here in Japan relies on trucks. And as I mentioned, about 2.7 million people are engaged in that logistics. Out of 5.5 million people engaged in automotive industry, that represents about 50%, half of that in terms of the number of units, compared with passenger cars, commercial vehicles unit volume is quite slow. But in terms of the distance traveled, in terms of the number of units owned, about 20% is commercial vehicles. However, in terms of the distance traveled about 40% of that is accounted for by commercial vehicles. From the viewpoint of carbon neutrality, the commercial vehicles in carbon footprint is about 77 million tons per year, and so that accounts for about 50% of the carbon footprint. Trying to achieve carbon neutrality, if efforts are made by the entire automotive industry, the commercial vehicles and that domain of the automotive industry must have deep engagement. Otherwise, we will not be able to find solutions to achieve the carbon neutrality. As was mentioned by Mr. Katayama, the challenges and difficulties facing the logistics industry relates to the -- a large variety of products of small quantities and very difficult working environment and that negative spiral is working in reality. That's the reality of this logistics and transportation industry. With the joint planning, we would like to change that negative spiral, with 3 companies working together at the heart of that and with us 3 establishing a new company, if they can come about and produce improvement, that would be the best that we can expect for it.

From the Isuzu's perspective, allow me to respond to that question. The partnership with those 3 companies, in terms of the conventional framework is something that people would not come up with at all. But as I mentioned in my earlier presentation, as an undercurrent, that is to say our passion to benefit the society and serve the society and also the responsibility that we feel strongly, we do see that there is the shared passion amongst 3 companies. And when I thought of that, we came to realize that issues that cannot be resolved only by commercial vehicle manufacturers could be brought to the solution. That is to say, there is the added value that can be found by 3 companies working together. And what Isuzu must do as a commercial vehicle manufacturer, must produce innovation. And that sort of innovation, the power to generate innovation, can be found by these 3 companies working together. So we have a very aggressive feeling that we really want to pursue this further. That's all from me. Thank you.

So let me give you my thoughts on this. First of all, as I already touched upon in my speech just now, logistics industry sector faced with great challenges and problems. And after the corona pandemic, we keenly felt that in a more specific way, conventionally the we used to think in terms of a manufacturer, we wanted to just develop a good product and good service in CASE at Hino a year ago also, the next logics, Japan was launched to work with the different partner companies. That is where that we do the logistics, and I got to know more about what's happening in the field. There are lots of more things we have to do comprehensively because just taking up the issue of data in reality, it's not really fully connected data system yet. Vehicles and then, of course, it's the underframe as well as the cargoes and drivers, all these factors need to be integrated as one, to develop this fully -- full-fledged secure and safe logistics. Some small things have to be solved. Big issues have to be solved. There are lots of issues we have to face. Mr. Katayama and I, the President CEOs of these commercial vehicle companies, especially the heavy-duty trucks, and we've been discussing different challenges we face. Just 2 of us could not make a step towards. But now the Toyota does have the CASE technology as a platform, then we can work together to make more contribution to solve this grand problem. As Mr. Katayama mentioned earlier, that this is a brand-new step forward. As President, we made the first step now but we'd like to involve all the stakeholders in this transportation and logistics industries so that we can solve those problems one by one steadily. That is initiative to challenge. Carbon neutrality is a grand goal we'd like to achieve as Mr. Toyoda mentioned that in the logistics, the 40% of CO2 emission comes from that -- the vehicles, so we feel responsible to try to solve that problem as well in that sense.

Thank you. We would like to entertain the next question. [ Mr. Kamisawa ] of [indiscernible] please.

Yes, I'm [ Kamisawa ]. Three companies decided to work together, what's the aim or goal? Toyota already has a relation with Hino, but now you are partnering with Isuzu. One time you dissolved the relation, but now you again are partnering with Isuzu again. So what was your thought before? And now you have new partnerships, so how did your thought evolve and change over the years?

Yes, we have had the relationship with Isuzu for many years because when Isuzu had a partnership -- the equity partnership with GM, that was dissolved in 2006. So that's when we started to have a partnership with Isuzu at that time. Because we are the passenger car manufacture and Isuzu was the commercial vehicle maker and Isuzu was strong in the diesel engine development, so that we try to develop jointly the small diesel engines together. So that was a common situation -- that was a win-win project. That was our focus at that time, but we didn't really identify the specific projects much. And then we decided to sort of split and then find our own way. But then EV became a new common ground for us. Again, the common research and development could take place. So after dissolving the capital -- the partnership, and after relieving those burdens from us, we now had a common ground of trying to create a better mobility-based society and then ever better cars. That's where we had enhanced dialogue between us and Isuzu. Then, of course, together with Hino for some time, you, of course, we had a cooperation because there's a significance in value that Hino is a member of Toyota Group and together within Hino and Shimo and other leaders, we'll be talking about the partnerships. Of course, the Hino and Isuzu are sort of competitors because that they are the commercial vehicle manufacturers. But even though we have common value of trying to build a better car and a better mobility [indiscernible], we couldn't find the good common grounds. But as I mentioned in my speech earlier that, we used to just have the viewpoints of the manufacturer. We have to change it to pay more respect to the user standpoint. 5.5 million people will be influenced by our initiative. And carbon neutrality has been identified as a grand goal and responsibility for us that we have to be accountable. So everyone should offer our own strength and think in terms of the user standpoint and viewpoint. That is -- has become the new start or restart of our relationship with Isuzu. Do you have anything to add, Shimo-san?

Well, thank you as you have heard from Mr. Toyoda, it is very true in terms of what happened. In August 2018, we dissolved our equity partnership. At that time, 2 companies had very frank and candid discussion about that. And as you have heard from Mr. Toyoda, unfortunately, we did not find valuable business relationship, so there was a mismatch between our businesses and the capital relationship. And we both understood the irrelevance of that and therefore, we dissolved that relationship that time. But it was quite valuable that we were able to have that candid discussion because that left us with opportunities to tie up with Toyota again in the future. And then in terms of electrification, Toyota has been talking to us in many opportunities running up to this partnership that we are announcing today. So we did have that relationship in terms of capital alliance. But other than that, we have built a very good relationship. Disregard of that partnership or alliance, now Hino and Isuzu partnership makes perfect sense for our customers because many of our customers use both vehicles. 80% of the market is covered by these 2 companies. They are more from the perspective of our customers. Certainly, this partnership of Isuzu and Hino will make sense in revolutionizing the logistics business overall. I believe our customers will appreciate this partnership. There may be areas where only Hino or only Isuzu can solve some challenges, probably because of the usabilities as well as the systems integration. However, as you heard from Mr. Toyoda, we did have opportunities to talk with Mr. Shimo. But because of the rivalry between these 2 companies, we were rather reluctant to form a formal relationship. But now Toyota came in as a -- for this type of a tie-up that you're hearing about today.

Thank you. So the objectives of those 3 companies probably are targeting the Japanese market. You have alliance with Volvo. So will there be any demarcation of the difference in roles to be played by those different clients in terms of the involvement of Toyota?

Well, if I may share my understanding, Isuzu, in the area of heavy-duty trucks has a very good relationship with Volvo and [indiscernible] is a partner of Hino and heavy-duty trucks. The areas that we are talking about would be medium-sized and smaller trucks as well as vans and pickup trucks, that's the difference. And from that perspective, we've been talking about electrification. But passenger cars would be the B2C business. But then the commercial vehicles are closely connected with infrastructure, largely a B2B business model. Vans and pickup trucks in passenger car segments are largely built by B2C type of a business model, which can then however, capitalize the infrastructure, which is built based on B2B business. And B2B is a business model which deeply involves infrastructure, so they have knowledge in building that infrastructure. And CASE is a technology -- a set of technology, which were largely developed for passenger cars. Can they be applied to commercial vehicles? Not very easily. Therefore, we decided to work together so that CASE technologies can also be utilized in the B2B business models as well. Earlier, we were talking, before this conference, and there was a very good example of co-creation of values. One of my employees come from a family of large logistics company in the local areas, and his -- this company uses trucks from these 2 companies. And in front of me, it was very easy to observe the relationship of competition. If these 2 companies stand with each other, there will be only competition. However, with me involved in the relationship, there is a sense of cooperation that can be shared amongst 3 of us. So that's what we are aiming to achieve in this partnership.

Thank you. Then I'd like to move on to the next question. Mr. [ Naoto Ikeda ], please?

[ Naoto Ikeda ], a freelance journalist. Those 3 companies holding this joint press conference. And with respect to electrification, I'm sure there must be the opportunity for joint usage among others. It's easier to imagine what's going to happen. But in the area of connectivity, you mentioned earlier that 40% of vehicles on-road here in Japan of distance traveled is covered by those 3 companies. If that is the case, that means on the common platform, the data using Toyota as a DCM could be captured and gathered. If that is the case, the largest amount of big data in the world can be collected by these 3 companies. Using such a huge amount of data, and you said the important -- talked about the importance of a user's perspective, what sort of new services are going to be produced? So just 1 or 2 examples would suffice. If you could just refer to your model case, that will make it much easier for us to understand.

So both of you as well as the President of a new company. Mr. Katayama, please first.

All right. First of all, with respect to the connected technology or connectivity, from the customers of yours, since we still have our own system and your system is different from Hino's system and as I mentioned earlier, customers want to use one single system. So we're going to develop a single platform through this joint activity. So from the customer's perspective, it will appear that at long last, Hino and Isuzu are going to offer us a single platform. And in relation to that, various services and applications that commercial vehicle manufacturers can offer is quite limited. But against that, Toyota could offer many contents. And combining that, would bring about a unimaginative advantage. And customers referring to connectivity in a very critical viewpoint, that is to say, how to achieve digital transportation on the part of customers. And that's a very important topic in the logistics industry. And despite that, if the platform for commercial vehicles is different would cause difficulties, as one example, as Mr. Shimo mentioned earlier, right now, the loading efficiency of trucks is less than 50%. That's the reality we see today. So to enhance loading efficiency can be brought about by connected technology and also the connectivity of rigged components by monitoring that. And if 3 companies' strength can be applied to that, we can accomplish what our customers decide at this point. I mean there are newer things that we would like to do, and customers would demand Isuzu, Toyota and Hino, and 3 companies jointly moving forward, they will be asking 3 of us to do that. So to have those framework and having this sort of partnership is really exciting.

If I may just add one point, just about the operation management and enhanced efficiency, very important. And in addition to that, currently, the greatest difficulty facing logistics operator is -- relates to safety. In relation to safety, for instance, looking at the current transportation and traffic conditions, as you mentioned, using big data offered by Toyota, Hino and Isuzu, we can see the conditions of transportation. And if a certain thing is clearly identified by data, probably, those logistics, operators can avoid most congested areas. And therefore, the usage of big data for logistics industry to achieve safety and security, which have not been accomplished in the past will be made possible going forward.

[ Nakajima ], in charge of new company, and allow me to add my response to that. As was mentioned by 3 Presidents, the data coming from trucks, we can gather over times. And also by combining that by data coming from passenger cars manufactured by Toyota, the trucks used by customers and also the sales and marketing operations using that huge, big data, we would like to provide a solution to the difficulties facing customers. That's what we are aiming at in the new company. We are the company for planning, but what is important is for us to engage the actual front line of customers' operations, to feel the difficulty facing the companies. In essence of the difficulties, how can we combine that or match that with the connectivity technology? That's what we are aiming at. And actually to be engaged in the front line of operations to be a part of the solution is something that this new company is aiming at, and we would like to accomplish that in this 3 company partnership.

So we'd like to now entertain the next question. Mr. [ Saka ] [indiscernible] Saka-san, please?

I'm [ Saka ]. I have one question. With regard to commercial vehicle 2021 summit for the green strategy of the commercial vehicle is decided by the Japanese government. Mr. Toyoda, you are the [ German ] President as well. So -- and you now have Vice President, [indiscernible] and Chair of the Committee as well. So from that standpoint, what is a likely scenario of this government project? And then what kind of recommendation proposal do you want to make to the government? Because now you have launched this new partnership and what will be the -- your -- the effectiveness in achieving that, the government goal as well?

We are engaging the real management of the business, real products, and we are creating the jobs for the employees as well. Regardless of the commercial vehicle or the passenger car, the industry. In order to manage our industry, we are supported by many people and many stakeholders. So in that sense, we have to be specific, we have to try different things. And lots of things are learned through practicing and implementing through trials. So the government will make rules, and we'd like to make proposal accordingly to the government. As I said in my speech as well, Namie town in Fukushima, the green hydrogen, the demonstration plant exists. So we'd like to make use of the plant in Fukushima Prefecture have got 300,000 population cities. Those 3 big cities in Fukushima Prefecture, 300,000. So in Japan, there are lots of this size, midsized cities across Japan, this size of 300,000 population. That is kind of the good typical size of the city, and where the people after living, what should be the idea of the mobility? And what should be the basic unit through implementing this project in Namie town? Specifically, we would like to reconvert that into more the implementation program from just the demonstrations program so that maybe the desirable rules are like this. And to achieve the carbon neutrality, maybe renewable energy should be allocated more and allowed more to that kind of a place where the people are challenging this new platform. So we are managing realistically our own companies and hiring people and implementing the business. So our tax and realities should be conveyed accurately to the government officials at the proper timing so that we can create a better mobility-based society, and we'd like to make further contribution to that regard. As you asked, that the 2030 or the mid-2030 for the commercial vehicles, the Japanese government is trying to identify the future scenario. So we would like to provide the accurate technology information and the fact and the voices of customers to be conveyed to the government officials as well. I don't -- we don't know the final picture of that. But it may be equivalent to the passenger car level? Or you have to think of international competitive edge as well. Japan should not really suffer from some -- the regulation and so on. So this new partnership is quite significant in that regard as well because the commercial vehicle needs to be electrified. And the passenger of car companies accumulated this technology so far, but there's some lagging behind in our case. We have to be realistic. Another point is the commercial vehicle is actually used in many diversified ways. So there's no such thing as one. The commercial vehicle and energy is used in different ways. It's not just simply operating in this commercial vehicle. So around the mid-2030s, what should be the milestone in upcoming 5 years is a crucial period to maybe the implementable technology should be chosen in the upcoming 5 years. Though at our [ CGIP ], we'll consider different technologies. Just one technology will not give the better solution or there's no such kind of fear. So that's the [ CGIP ] should implement all these technologies and make choices from many options in the upcoming 5 years. Based upon that, we have to think of the possible -- the mass production because of the commercial product, you have to design it and it takes 4, 5 years. So we have to start this initiative right now because Japanese government policy is that by the 2035 that the commercial vehicle should achieve such tie-up, and we have to be accountable. So we'd like to make good use of this new company to achieve this goal.

So let me add, frankly speaking, toward achieving carbon neutrality in the world of B2B world, the most important thing is that it's something that is usable by the customer. In reality, even though it's the electrified vehicle, and it should be -- there should be ease of use for the users. So realistically, we have to lower the cost first. And secondly, in this new partnership initiative, we should try to identify some common grounds. If something comes commonly used the technology in thing. Then, of course, the specific product and brand might become the area of competition amongst us. But that's very important. Depending upon the exact use by the particular sector of customers, we have to identify the proper road map toward the 2035 and involving the Japanese government as well. So that's what we are trying to do.

So in conjunction, the commercial vehicle and the passenger car -- of course, infrastructure will be so important for your new company, are you going to consider the infrastructure as well? CASE technologies, your focus. But for the infrastructure, are you going to be very active to make a plan related to infrastructure or hold the new company?

Of course, it should be widely used as a case technology platform, as Mr. Shimo said, that the cost reduction is crucial. And then it should be achieved the ease of use for the customers. That shareholder should be our primary responsibility first. On the other hand, in Fukushima Prefecture, the demonstration will take place first but -- even though it takes time. There are existing retail shops and some of the convenient shops and other places and goods are always [indiscernible] delivered to those shops and other places. Maybe the green, the fuel like hydrogen-based Isuzu trucks should be used to transport. If we have a certain such mass -- critical mass achieved, then it will reduce the infrastructure investment like the hydrogen as a supply recharging station. So the social implementation and societal implementers very important in order for our big CASE technology to be applied.

Thank you very much. Now I'd like to ask those people who are participating online to ask questions. [Operator Instructions] Mr. [ Garo Okazaki ], you have the floor.

I'm [ Garo Okazaki ], a motor journalist, a freelance. As I was listening to you, this is going to be a all Japan effort, which is wonderful. Now you did not mention too many specifics, which I am sure will be talked about going forward. But when it comes to small [ load ] deliveries, redeliveries as well as patchy schedules, you see many trucks which are parked, which can be also used as boxes to store delivered goods. But then you need infrastructure and software systems, and you also have to involve lots of freight forwarders. For example, Hydrogen Value Chain Association is formed by 88 companies. So those delivery companies may be interested in what you're doing or are they? How many of them are interested? And also, the model cases of using trucks as lockers, sort of storage for the delivered goods. Are there any specific examples that you can share with us, which helps me draw more concrete picture of what you're trying to achieve?

Thank you very much for your question. Well, at Board meetings of those companies, collaboration of these 3 companies were decided upon and timely disclosure is now being made to many concrete projects. Going forward, concrete ideas will come up, as [ Okazaki-san ] mentioned. And I'm sure [ Okazaki-san ], you have many interesting ideas as well, and we would like to hear you. And we also have media representatives from our logistics sectors. And through the articles that you write, I hope many logistics operators will read about it and realize that they are part of that 5.5 million people, and decide to have some ownership of the projects which can come up with this alliance on the part of the users. Three of us as well as this venture company must move quick enough in order not to receive criticisms from their customers and other stakeholders. But certainly, the communication related to that would be very much valued going forward. I hope I answered your question. Thank you.

Thank you very much, that was [ Okazaki-san ]. Let us move on to the next question. [Operator Instructions] Mr. Hans Greimel, please? Please start your question. Hans-san?

I'm curious, can you tell us about the synergies between passenger cars from Toyota and the commercial vehicles at the companies? How difficult is it to get synergies? And what are the difficulties between passenger cars and commercial vehicles? And EV strategy for commercial vehicles. For a long time, Toyota has talked about fuel cells being the best technology for commercial vehicles, especially big commercial vehicles. Is this showing a change in the strategy? And the final question would be, what is your prediction for autonomous -- autonomous commercial vehicles? When will we see autonomous driving fleets of trucks from your companies like in such as platooning or other geo fenced situations?

[Foreign Language]

First of all, with respect to the passenger cars and commercial vehicles, if you look at the individual vehicles, it's very difficult to generate synergies effect. That's the reason why I and Mr. Hino continue to talk about and discuss over many years. But that was from the carmakers manufacturer's perspective. But when it comes to the users' perspective in the autonomous area, both the passenger cars and commercial vehicles will be driven simultaneously. And how can we realize safe and secure transportation? Must be considered in conjunction with infrastructure. So that's where we are faced with. We are now working on the Woven City, and in the completely new road, we have decided the basic unit for roads and we manufacture vehicles that will be driven on the roads on urban city. What we are trying to do with these 3 companies relates to hydrogen value chain or in various parts of Japan, using hydrogen, there are many projects underway at the moment. But unfortunately, we are still at this stage of demonstration testing. However, with these 3 companies working together in the concrete project rather than just demonstration project, we would like to bring that into the implementation of those technologies, how practical and how sustainable those efforts will be is something that we would like to think in conjunction with the case technology. And once we can reach that level, we'll be able to generate better synergy. The second question or is it the third question? With respect to the FCV, we're not saying that FCV is the best. Toyota is the full line manufacturer of the electrified vehicles. Why do we call ourselves the full line electrified vehicle manufacturer? Why is it good? First of all, the manufacturer has the ability and financial capability of realizing that. And of course, the regulation changes the market conditions, but what is important, even in that context is for the market and customers to choose specific electrified vehicles. What do they choose? So even if -- no matter what electrified vehicle is chosen by the customers, we have to aim at practical usage and also the sustainability. Right now, the subsidies are given for those electrified vehicles. But if those electrified vehicles are viable only with some subsidies, it is not sustainable. And therefore, through concrete projects with those 3 companies working together, we would like to offer the good opportunity to finalize what vehicles are chosen by the market and the customers.

That completes the questions coming from the participants online. Thank you.

There may be other people wanting to ask a question, so since -- I would like to identify one more person from the audience, Mr. Osada of [indiscernible] newspaper, please. Mr. Osada, please?

Earlier, you have made different comments and responses, and I'm sure it was covered. But let me repeat. For this conference, I was listening to your speeches, the CASE technology should be -- implemented in the society, which has become so important to implement that CASE technology now. And I got that feel from all of your words, in other words, and after the corona pandemic, you are now emphasizing CASE. And CASE has been allocated for many years. But the good solution was not really found yet. But now 3 companies are trying to form a new partnership, as Mr. Katayama mentioned, the carbon neutrality has to be achieved, the social issues, which have to be solved. But you've be lagging behind in a way, in that implementation. And when you feel you should not hinder this progress of Japanese society. So I really felt sincere -- the intention of all of you, but what is a likely impact upon the society? You have to be open to recruit your partners, new partners. To what extent do you want to expand your scope of partnership? How do you implement this technology platform in the future? How you want to find a partner? How you want to form a new partner? So I'd like to hear your intention, your feeling in that sense?

Well, as you raised the question, and I agree -- in fact, you mentioned the 3 companies are now the partners. And for the sake of the customers and for the sake of society, we have to overcome all these -- the challenges, the CASE is our challenge for the automotive companies. But for customers' standpoint, the industrial -- the transformation necessary, like digital transformation. Those are the challenges we have to face. So in order to realize our goals. We as a commercial vehicles, maybe we can create a new receptacle to try to identify a solution. You referred to synergy earlier. So far, conventionally, there have been a logistics and transportation industry and commercial vehicles were used there. And then in terms of relation with the passenger car, the synergy used to be difficult in the past situation. But now we are in the CASE society and then the digital transformation becomes in its [ proof, it's strong ]. Is there any barrier among all these different segments? No. We have to create the synergy, that's our aim. And then, of course, we have to improve the society, and we -- there's a mounting energy to try to do that, momentum accumulating. [indiscernible] is already there created by Toyota. There are lots of hints and ideas. So by societal implementation by us. I think -- finally, of course, we have to achieve the mass production. But before that, I think there's lots of ways to do the societal implementation. After that, many customers would ask us, why don't you try this and that? And we will naturally nurture new partners in that sense.

Well, we work in the real field where customers do have pain points. And tri-party alliance is a major step forward resolving such pains. Can we resolve all of those pain points, though? Do we know every single pain point of our customers? Probably not. So as a team, we will continue to strive and understand the customer pain points and challenges. We want our customers to tell us what their pain points are so we will remain open so that we can share the pains, the challenges as a team. Thank you for your question.

Mr. Toyota?

Well, I didn't really understand your question. What you were looking for?

Well, social implementation, has been mentioned. Of course there is a background where you have to seek social implementation. But 2 companies which were rivals, competitors, they have to work together now?

Well, we have to think of 5.5 million people altogether, and we made a declaration that we are all aligned. Under COVID-19, this time around last year, everything stopped, we all stayed home. And overseas, even before that, they experienced lockdowns, a lot of that. As you look at cities and townships, you don't see movement of people or cars or goods. Now logistics is so brisk before that. And the absence of that really reduced the total energy of the society. So the automotive industry has to come up with some standards for reconstruction. And those people who are working so hard in the field have to cope, and customers began purchasing cars through online. And that all -- those activities all drove reconstruction. Still, there were silos for motorcycles, passenger cars and heavy-duty trucks. But then we have to look at that from this 5.5 million people's perspectives, and carbon neutrality involves suppliers not only OEMs. All of us put together, we have to do something, and we have to make sure we make those 5.5 million people involved in this sector, all happy. And JAMA was so serious about doing that. Each company has its own strength and prowess, and those strength put together in energy, growth and strategy, we can certainly play a central role because vehicles can drive those things. And people depend on this auto industry to lead the way for the industrial policies as well as the utilization of green energy. As we think about that, we will continue to come up with new proposals for mobility as well. So all of them have the background. We are here today together. They remain competitors, and they will continue to do so. But they also can work together in some areas where users are the most interested in. Logistic sector is experiencing a negative spiral at this point in time, and we may want to -- we may want -- sometimes can turn that negative spiral around although we do not have the solutions now, but with the upcoming innovations and new technologies, we will be able to make a difference. I hope to solicit support from all of you. Thank you very much.

I think it is time that we have to close this event, and thank you very much for your participation. We truly appreciate your active participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]