Toyota Motor Corporation (7203) Earnings Call Transcript & Summary

I am Yuta Tomikawa of Toyota Times. And we are having this important notice on short notice on Toyota Times and for this notice to information session, we have made it so that it will be a press conference as well, and thank you very much for these many media personnel to come to the venue. And also there are many connected remotely. Thank you very much. Just 1.5 hours ago, we have issued a press release. And at 2026, April 1, executive changes have been announced. And for the Representative Director and President, he will become the Vice Chairman, Chief Industry Officer, CIO, and Operating Officer, Kenta Kon, he will be assuming the position of President and CEO. And with this change, Sato-san here will be looking at the -- focusing on the whole car industry and Kon-san, he will be focusing more on the company of TMC. So this will be the new formation of the executive structure. Thank you very much for understanding, and we would have these gentleman to take a seat now to proceed.

And later on, we would like to receive questions from the floor as well, but please allow me to start with the first question. I'd like to ask Koji-san first -- Sato-san first. So why is it that Toyota decided to change to this new executive structure? And as a reason for your decision, can you explain?

Yes, thank you. So I'd like to say first that it was a short notice, but thank you so much for attending our Toyota Times interview -- live interview today and also many connected remotely, I appreciate this very much. So Tomikawa-san first asked about what is the purpose and what -- why we have made this decision to be -- for the executive change, I'd like to provide my explanation. For the purpose of this organizational change, it is to enable Toyota to fully address the management changes that it is now facing. So it is what we think of as a formation change. And for the various challenges that we have, the first management challenge we're facing is the need to enhance the company's earning power to support our future. Toyota in the past 2 years, we have been working on the foundation strengthening efforts. And from there, the environment surrounding us has pushed us to do a gear change, a gear change toward improving productivity and also to create ever better, more affordable vehicles. We find ourselves to have shifted into this phase. So that is the first management challenge and that we would also like to deal with this formation change. And also now the next challenge is to accelerate our industry collaboration. In order to maintain the international competitiveness for the car industry going forward, the whole industry should be united to advance our concrete collaboration initiatives and identify the pathways for Japan to remain competitiveness. In order to evolve vehicles in tandem with the social infrastructure, collaboration with partners beyond our industry is becoming key. In other words, for Toyota, more than before, the role that Toyota should play within the industry is becoming larger and more important than ever. And against this backdrop, the executive appointment meeting of Toyota has provided a proposal, and that proposal has been a trigger to examine the optimal organization structure for Toyota in light of the current management challenges we are facing. And based on this kind of discussions and deliberations, we determined that a change in the management team's formation is necessary for the future of Toyota and also for the industry. And with that, consequently, we have held the Board of Directors meeting and the Board approved these role changes today. So Kenta Kon, he will become the President and CEO and have a focus internally and drive the initiatives to enhance our company's earning power. That will be his role. And for Kon-san, current Operating Officer, he possesses strong expertise in accounting and finance. And most recently, as many of you know, he is the CFO of Woven by Toyota, and he has the perspective to look at TMC from the outside and has been leading cross-functional reforms across the organization. And we believe that in advancing the earning power initiatives, he will be able to leverage his strength to provide the strong leadership that we will need in advance -- to advance our initiatives. And for myself, I will become the Vice Chairman and also the Chief Industry Officer, CIO, and I will focus my efforts on the broader industry including the Japan Automobile Manufacturers Association and [ Keidanren ]. And I intend to be able to accelerate the pace of the collaboration. So I intend to be more active than ever on the ground on the front lines connecting Toyota with the industry. And for Toyota and at Toyota, what we believe is that we should work based on our roles and not our titles. This has been always the core of our communication. And since I became President, what was always on my mind is to maintain the speed of management and also to continue to take action. So this is the team management philosophy that our team, our Toyota executive team has always been valuing. We want to contribute to revitalize further the automotive industry and also Japan. And under this new formation, we want to fully carry out our respective roles. We sincerely ask for your continued understanding and support. Thank you.

So of course, as the new structure, you explained the new formation. And from this executive appointing meeting, when you received the proposal, what was your impression?

Well, honestly speaking, because I'm a human being. At that moment, I actually had a lot of thinking in myself because at JAMA, there was a discussion of selection of Chairman, and that discussion started in autumn and I was discussing with many top management. And because of several reasons, they have asked that Toyota could take the lead in JAMA. And this activity at JAMA and also the job of taking responsibility at Toyota, I was wondering if I could do both at the full scope. I was actually asking myself. But it is quite difficult also to speak up about this struggling point. And then there was this proposal from the executive appointment meeting. And then I was wondering if I could serve both of those roles in this formation. And I think this proposal was quite effective in terms of governance because from the third party's view, this position is quite overload. And then because of the proposal from this meeting, appointment meeting, I became very objective and then started to think that this is something that I should consider.

I see. So the Vice President of [ Keidanren ] and Vice Chairman of JAMA and also some of your works for the central government, you were quite busy. And you also were thinking you wanted to continue your president.

Of course, because I've been working at Gemba all along, and I love cars. And of course, the ---I always have been asking myself what the role should be to become a president because car making is something that you can stake your life for. And of course, some -- a part of me was really had this attachment to this. So that was a conflict and struggling point.

So Akio-san served as a President for 14 years, and your term was 3 years, is it too short?

Well, I knew you were going to ask this question. Well, honestly speaking, I think it is short. However, there are 2 points I wanted to -- I have in my mind. First of all, it's still 3 years, but it's already 3 years. When you think of the speed of the auto industry, it is not that lukewarm. In other words, the time frame in the past is completely different with this current 3 years. And when I became the President, Chairman, Akio when he asked me to become President, car making in 14 years of his presidency, it's still not complete. And then he wanted me to work together with him to complete this work for the finale and that was the starting point. And so Chairman Toyoda in -- at the end of January when he asked me to take some time for discussion. He said that he wanted to serve so that he can contribute to make Japan better. He sincerely talked about this, and that is the same Mr. Akio Toyoda, who said that we want to make Japan better. And so with his words, it really accelerated my decision. And another point is that, of course, the first player would always win. What I mean is that as a top management, I should not be the 'I' in the sentence. If I become the subject, then I would not be able to make the crystal clear solution because I want to do this and I want to do that. So I didn't want to be the subject in a sentence. It's not I, it's we. So when you think of that, there was a selection of Chairman at JAMA. And then if there are things that has to be done at this timing, although the 3 years was so short, but that is not the reason for anything.

So I thought you did something bad because it was so short 3 years. And I'm sure some of the attendants of this press conference are thinking about the same.

Yes. So honestly speaking, some of my friends texted me and ask me if I did something bad, what did you do? So to avoid any misunderstanding. There is no wrong doing I have to be clear about this. And like I said, there was a very positive forward looking discussion at the company. So please understand this. And then to all my friends, I have to tell them, not to send me weird text.

Is that your final answer?

There's no wrong doing, nothing.

So as was mentioned in the press release, it is not just the executive change in the 1st of April. But as of the shareholders' meeting in June this year, there's going to be announcements, and you are going to no longer be a Board member.

That is correct. There are 2 points to this. The first of which is that we are aware of the corporate governance code. And the way corporate governance should be is that -- so Toyota has been making efforts to improve the management, and we're going to be very much aware of that. BOD has to be participated all Board members and then they discuss seriously about how Toyota can win. So all the Board members are always present at the BOD meeting. And diversity of the BOD members and numbers of Board members are the important points for us to consider at TMC. And as I became the Vice Chairman, the general public, they are very cautious of titles, but at Toyota, that is not the case. So in one sense, from the viewpoint of corporate governance, we want to stick to what Toyota believes, and that is one reason. And second of all, what we try to do in the future. And if I have this role of Board member at Toyota, it might not always be helpful to wear that badge or hat for my future role because at JAMA, there are very cross-industrial topics. And then in some cases, we do agree with the whole -- overall topic, but there are some oppositions amongst some companies. And when that happens, if I'm wearing the hat of Toyota, then that could sound like a pressure -- peer pressure from Toyota. I was struggling all along. I tried to convince everyone to do something for industry. But if I am wearing a hat of Toyota, there remains to be seen how much understanding we can get from the peers. So I wanted to go back to scratch and I wanted to be the person who can connect all these passions and intentions of all the companies in the industries. Otherwise, it would not be possible to do a cross industry or the reform that is to be done in the industry. So that is another reason.

So Kon-san, thank you for waiting. This time, the role change, when and from who you were informed about this?

Yes. It was in middle of January when just like Sato-san said, there was an executive appointment meeting members that talked to me about this concept.

So what was your first impression about it?

Well, I am sorry for the executives, but I was so surprised. And I totally blacked out. And I think I listened very well to this story, but I don't really remember what I heard at that time. And as Sato-san said, those purpose and intention of this role change was explained by the executive who were in the same meeting to inform me, but I was like, wow.

So you were very surprised. You didn't think it would be you.

Yes, that is true.

Who did you think it would be?

I wasn't thinking about it so much because it was only 3 years.

That is correct. Kon-san, you used to be a Vice President. When you were Executive Vice President, did you think that you will be the President afterwards?

No, no, I wasn't thinking that either.

Then it's really like a big shock to you like the world collapsed.

Yes, you can say that.

So probably it was difficult for you to kind of hiding your motivation for your new role.

Yes, I think so, too. At this point of time today, it's not that I am foreseeing many things going forward and clearly thinking what are my plans to move forward. My honest feeling is that nothing is clear at this -- crystal clear at this point of time. And for what Sato-san has mentioned before me, it has -- it is also new things that I've learned today as I was listening to Sato-san. And also with Chairman, Sato-san and the other operating officers, I will continue to communicate with them and talk with them about -- and consult with them, what kind of direction we should move forward after April and what will be the formation of the management team. And now it's like Sato-san is going to be the captain of the national team, Japan national team. But for our club team Toyota that will be a -- we will be able to look at a larger scope and cover a larger scope, and that will also be something to consider as I take on this position of captain for the club team.

And your Woven by Toyota experience, do you think it will be helping you with your new role?

Yes, I think so. So as of now, I am in Woven by Toyota. I belong to Woven by Toyota. And this organization, we have relatively younger members, and this is a software development company. So we have a different culture like an agile development culture and the way of thinking is slightly different to TMC. Another thing is that this is also something Toyota should be focused on. But what we do at Woven by Toyota is that it is a company that we thoroughly have put importance on information sharing. The moment we talk about something, we try to go through many methods so that it will be shared with as much people as possible. Agile development requires that kind of a thorough information sharing. And that's also one thing. But it is close in distance probably to Toyota Motor Corporation, but we still are -- have a distance between at the same spot. I was in this company that was a little distance from TMC. And so this experience of looking at our from that position outside of Toyota, little distance from Toyota was very valuable for me. I was able to understand things I've never understood when I was inside of TMC. So there were things that I was impressed moving out of Toyota and seeing from the outside perspective, also things that I should change these things that is not really acceptable.

What is that -- I wanted to point -- I think that -- what was the negative point that you recognized?

Well, there's quite a lot actually, what I recognize that should -- that's not a good thing.

Well, as much as you can say, if you can share some of the things you recognize on the negative side.

I think that at Toyota people are really working very hard and with a strong mission. Each and every individual is working with a strong mission and also there is a lot of accumulation of the past experiences that we've had in the history. And -- but on the other hand, if we try to do something new, we tend to be bound by the past precedence and also the past formula try to be in line with how the things happened in the past. I think that's a tendency that TMC has. And of course, if we want to make improvements for the current business, it's a very important thing, important perspective. But if it's new challenge, something new that we're trying to do, we need to take a different perspective and a different approach that's what I thought from an outside perspective.

And so as President of TMC, how do you feel of that negative point out by Kon-san.

Well, I agree to what he said because I think there's many things you can only notice when you're outside the company, outside the organization, like sometimes we can tend to be bossy -- we may act bossy, I think you're trying to be very polite. But our company is a company that has a strong functional organization. We have strong functional capabilities and everyone is working very hard and they have no ill intents. But sometimes, we're not very good in having collaboration cross functionally. And like Kon-san has said, this Woven by Toyota is focused on agile development. And under -- from their perspective, from that environment, probably we are more kind of working in a standard way and having -- being siloed and so having that objective perspective in having that feeling that we need to change Toyota that is very important to move us forward. And Chairman Toyoda always says that since I'm from the development center R&D team, he says that you've always been nurtured in the Ivory Tower. So Kon-san will have a different perspective, and that is going to be very helpful for Toyota going forward.

And also Sato-san, for you, you have been visiting the Gemba very much, especially after Toyota experienced a certification issue. And is there anything that you want to succeed pass down to Kon-san relative to the Gemba activities?

Well, for the first year that I become a President -- well, my first year as President, I had tried to come up with concrete initiatives so that Toyota can transform into a mobility company. But at that time, we had the certification issue come out. And the advice I got from Chairman, Toyoda, was very simple and just one word. In these times, go to the Gemba, Sato. That was what he said. Very simple and very short. And I thought that because I was always at the Gemba doing development as an engineer, I thought I knew about the Gemba but once I followed his advice and went to the Gemba, I found out that I had no idea about the Gemba. For Toyota, in all plants, Gemba, all the development Gembas, everyone is working very, very hard. And there are these many, many invisible heroes at Toyota making achievements and giving out results. And I didn't know about all of these efforts in Toyota where everyone was devoting everything, all that they had and thought that I knew about Toyota's Gemba. So then what I thought is that if I can -- if I can help to make -- create an environment so that they can do something everyone wants to do, that probably that's my role. And it's going to be a little emotional. But in Shimoyama, there's a test course for Toyota. And my juniors at Shimoyama said that Sato-san, please come and drive our cars. So they would invite me, so I'll go and I drove the car -- tested cars for a full day. So that the people, the guys who's doing -- engage in the development projects, they really have shining bright eyes and they're fully putting -- having a lot of passion about developing cars. And when I became President, the message that I gave out was that I want to be a President that continues to make cars. And what I felt when I went to Shimoyama and met these young members who has these shiny eyes and enjoying and having so much passion for developing cars, I thought that what I want to do is to create that environment so that these people, these employees will be able to do fully on what they want to do. So when I think about helping others as an engineer, it's not for me to go in as one engineer and work together. I think my role is to create an environment for them to be able to do what they want to do. And Toyota, we're in this new position that we can't just think about ourselves. We have to think about the whole industry, about the country, the economic situation, the trade situation. All of this is all intertwined with what Toyota is doing. So thinking about that, at the beginning of this year, Chairman Toyota did the calligraphy, the New Year calligraphy and he wrote the word bar, which -- that Kanji character bar which means space. So I thought that, that bar or the space of Toyota is expanding and is changing. And I -- it was a trigger for me to think about what is the bar that I should be in. And that connected into the decision that I made for this executive change.

So you saw that those people, those he's and she's that were devoted and making cars and very passionate. So you thought that you should be able to help them and create that bar, create that space for them to excel. So you talked a little bit about car making. And Akido-san was an old man who loves to drive cars, and you were the guy that likes to make cars. So if we go in that style, then Kon-san, what kind of guy are you?

Well, I also do love cars. But right now, I'm in charge of finance and accounting. And so I -- what I always think about is in order -- I always think about money in creating a financial foundation so that we can make good cars and also profit -- money and profit and numbers is what I'm focused on.

So you're a guy who likes the money and numbers.

Yes, I guess, I'll say that I'm a guy who loves numbers. I'm a guy that loves money.

Well, but even if we save money, it's not that you want to keep that money for yourself. You're not the greedy type?

Well, yes, that's what I think. I'm not that greedy type that I think. But this time when I heard about this appointment proposal from the executive appointment meeting people. I met with Chairman Toyoda and he mentioned the name of Taizo Ishida. So he was the big treasury keeper, the safe keeper of Kiichiro. Yes, he was the great a [ bantle ] or consigliere in a certain sense to Kiichiro Toyoda. And Taizo Ishida, he was a person who was very much fixed on the financials, and he would not use any waste for penny. However, for the dreams that Kiichiro had, he would make courageous and bold decisions and make those big investments for Kiichiro's dream. And at Toyota, I believe that kind of way of thinking about money has not changed at Toyota. So I did say that I like and love money. But -- what I'm thinking of when I say I like money is I want to use money for the future of Toyota and also that money at Toyota is not something that we generated just by -- only by Toyota. And so we use -- we should use that money that we have for others as well for others in the industry, others in the country. And we are in a strong position to be able to do that, to use money for others. So that kind of a profit structure, that kind of a financial situation is something that we should -- that we should always be -- have attention on. And I believe that is why Chairman Toyoda has raised the name of Taizo Ishida, and I want to make my efforts in that way too.

In the press release, Toyota's one of the important theme is to improve the breakeven volume. And then in your New Year's remark Koji-san, you want this year to be an intentional pause year. So now you are in the execution stage, which would emphasize production. That means rather than increasing the production volume when you talk about productivity, you want to pay attention more to the quality aspect.

I think both because each unit of car, especially, we are asking customers to wait for delivery of cars that they've ordered and there are so many customers of such. And there are some constraints to production. Therefore, we want as many cars to be produced as possible and then deliver them to customers as fast as possible, and that is an important mission for us. On the other hand, as you mentioned to Tomikawa-san, quality when it comes to Toyota's revenue, we don't have any numerical target for our revenue. But no matter how the environment is harsh, we want to be a company who can incur revenue and we don't stop our business. We don't have to give up on some things to come up with revenues. And I think that is the revenue stream and the structure that our stakeholders are requesting for. And in order to maintain that, we want to reduce the breakeven volume points. In other words, even in a bad time, we want to hang in. And that is the kind of structure that we want to create as a company.

Yes. So unless you have an earning power -- well, unless we have earning power, we cannot do what we want to do. So earning power is important in order for us to achieve what we should do. So Kon-san, you were very humble and you're not trying to show your aspect of loving cars. And I have to say this. Kon-san and I had this minivan discussion before, Kon-san loves minivans.

Minivans?

Yes, he was so humble that he is not talking about it. But once he starts talking about minivans, then he would talk about the Noah and Voxy. I think he loves those models.

Minivans only?

Yes, minivan limited. So is this not good.

So at the Rally challenge, you were also participating in Kon-san and I actually was interviewing and then I asked you to compete. But -- so Rally and driving base, would you continue participating to these?

Well, just like before, I want to continue to drive cars. That's my intention.

Well, you make me feel better. So he is so good that I can't even compete against him. I'm going to pass the microphone to the audience soon. But so Koji-san, did you talk with Akio-san about this role change?

Yes. As I mentioned a little bit before, in January, I did discuss with Chairman, Toyoda, and we were saying that when we're trying to make Japan better, we do want to serve some roles. So it's a very simple thing. But the scope and -- that he's thinking and the Chairman's passion was so simple, and that was a strong message to me. In other words, he won't talk about the details of the formation change. You might think that he will give you detailed instruction, but not at all. It's much smaller than or fewer than before. But rather, he will give you this mainstream because he want to be instrumental in making Japan better. And then we've been talking about this industrial report, industrial contribution.

So this HR formation, is he involved at all?

Well, like I said, no, he's not involved. I'm sure he has opinions, but he was not involved in decision-making. At Toyota, we have the executive appointment meeting and the members of this meeting will discuss voluntarily, they have the authority to decide on -- or discuss and decide on this HR formation. So we have been reviewing the company structure. And then we became a company to have the committee with the auditors. And then now we have members for this executive appointment meeting, and that's where we start our activities from. From that timing, we started discussion of the to be picture. For example, in risk management, when there is something wrong with the existing CEO, how do we maintain the business and what should be the preparation that we have for successors. So that discussion started back then. And on this role change, when the decision was made at the end of last year that I would become the Chairman of JAMA. And at that time we started to discuss the details of this formation change. And then they got me involved in discussion and I made this decision. And ultimately, we all decided at BOD that we are going to propose this to the General Shareholders' Meeting.

So -- and as Kon-san was saying, what is Akido-san's impression?

Well, as Kon-san was saying that in each timing, there is an appropriate formation. And that kind of flexible management is always called for. And from the viewpoint of Chairman Toyoda, I think he is 69 years old, and he's going to turn 70 this year. And as he continues as the Chairman from now on, he said that there are 3 points that you want to focus on, and one of them is HR development. Under his leadership, learn the execution of management and so that we can have a more rich pool of human resource who are involved in the management, and that's going to be quite important. And this formation change will make Toyota stronger and if Toyota can continue to be strong, then that would be instrumental in making the industry stronger. That is the kind of thinking. I think he has against or at the backdrop of this HR change.

So you mentioned about 3 focuses. We are going to distribute this in Toyota Times podcast by the end of this month. So now we'd like to take questions and comments from the audience. [Operator Instructions] Since we have limited time, we'd like to limit one question each. If there are a little more time, I think we can come back and receive more questions. If you have any questions, please raise your hand. The person in the front, please.

Nikkei xTECH [indiscernible] is my name. And I want to ask about the direction of engineering development. And if it is irrelevant, I'm sorry, but the end-to-end autonomous driving technology, Tesla and the Chinese players have been accelerating their development effort. And for this kind of a trend, Toyota, the -- what is the current situation of the capabilities? And what will be your future policy to promote the development? Well, I want to understand what's -- how Kon-san views this topic.

Thank you very much for your question. Well, regarding autonomous driving, if I can expand the scope, it will be including Toyota's SDVs. Why does -- is Toyota engaged in developing SDVs. And when we think about this question, a little while ago, actually, there was a core direction that the Chairman, Toyoda showed to us and that was the target to achieve 0 traffic accidents. And it's not going to be an easy path to achieve that. But I believe that we are steadily moving along this path toward the target. And for companies like Tesla and other companies, they have been quite quick on working on an AI-based, ML-based type of autonomous system. There are early entrants in this area. And if the question is, is Toyota advanced in their level? But if that's not true, and there are many things that we can learn from these early players. But for Toyota, we have this 10 million of sales annually and also the 150 million UIOs. It means that there is a huge source of data that we can rely on. And therefore, we will be able to have a good speed in catching up. I think that will be a way to exert our strength. And also, there are the TSS, for example, that is something easy for the customers to accept and that can secure the safety for customers. So those will be something that will be quite close to customers. And then there will be the systems for -- more for the future, a complete autonomous system. We're working on all these ends.

So when Kon-san you have -- the reason why you were selected as a President, is it because the intention of Toyota to accelerate these technology development, including the autonomous driving system developments? Is there that kind of meaning behind your selection?

Well, if you can think -- comprehend in that way, I will be grateful if you interpret in that way. But for me, my understanding is that my main role is that for those kinds of technical development, for those who will be leading those efforts, there will be other engineering members. There's many engineers, talented engineers in our company. So the leaders will -- we have those leaders. And for my part, I will have -- my role is to create a good environment so that we can invest in those areas and also create an environment so that those engineers can try many options, not just to limit ourselves on one path, but to create an environment where we're able to test the various options and to be in a state where we can be durable in that kind of situation, too, meaning that we have a good profit structure. So having -- establishing this good profit structure, this foundation so that people can take courageous challenges will be my role.

Any other questions, please? Yes. This person in the front row.

This is [indiscernible] from NHK. I have a question to Kon-san. So at the background of this presidency change, you talked about how you want to improve the breakeven volume. And then at Toyota, in the past 10 years, this number has been improving, I think. What kind of challenges and issues do you have? And as a President, how are you going to lead the solution for this problem or for this challenge?

So we recognize the challenge, and we made announcement of the fiscal numbers and then breakeven numbers in the past 1 or 2 years have been increasing a little. There are some external reasons and also the price level is another factor. But no matter how bad it becomes, no matter how tough the environment, we want to have a structure in place so that we can hang in there. And that is something that we are all aware. And there are many factors like Sato-san said, the functional access without having the overall picture, if we accumulate, I think we were too conscious of the benefits of each function rather than having a big picture. So in that sense, we want to have more cross-functional awareness. And I think people are more conscious of this more than before. And as we made the interim report, we are now -- we have this theme of intentional pause e and Sato-san also talked about it. So we want to have more of a company-wide approach for this.

So going to the next person. Anyone who have any questions. The person in the back in the business suit. Nagai-san, please.

I'm Nagai from TV Tokyo. I have a question to President Sato. Earlier, you mentioned that it was a short 3 years. But in the past 3 years, as President, what were the things that you were able to accomplish? And on the other hand, in this short term of 3 years, that probably were things that you were not able to accomplish and probably there's things that you want to succeed to Kon-san. Can you talk a little bit about those?

Thank you for your question. Well, on things on a -- I don't think that there are any things that I need to do on a personal level. And like I said, the subject should not be I, but I should always be thinking from a we perspective. And we are now targeting to transform into a mobility company. And at the beginning -- at the starting line, we did say that we want to become a wealthy company, but what to do was very unclear. That was our starting line, and that was a starting line for the new management team. But in the past 3 years, we've tried to first take action. That was the consciousness that we had. And my feeling is that because we continue to take action, little by little, those concrete measures that we need to do, the initiatives is becoming more clear. And when we know what kind of action we need to take more clearer, then we know the challenges. And then if we know the challenges, we're able to make the changes necessary to overcome those challenges. So, I guess, this initial torque to start and move as toward a mobility company was probably ignited by the efforts in the past 3 years. Then what will I want to succeed and pass on to Kon-san for him to continue on. That is -- it will be all summarized in this word, let's make ever better cars. Taking this word and thinking about it with the whole company and seriously considering how we can achieve that because at the end, we're a car company, meaning that we have to have products that are attractive so that our customers would want to select our products. We are -- that is the center of our business. And currently, Toyota vehicles are being chosen and are being loved. And it is because of the past efforts. It's not the efforts of the 1, 2 years that have paid off because if you think about the car business lead time, the cars that you see in the market is tied -- those models that I was working as an engineer in the company 10 years ago, those are finally bearing fruit right now in the market. So if we want to think 10 years in the future from here, then we want to make our efforts and sow the seeds now so that a decade later, people will say that Toyota has ever better cars. And that means that Toyota's most important part that we continue to pursue ever-better cars. And so the seeds for the future is very important. But I don't have to say this to Kon-san because I think he is well aware of this point, and he'll continue on.

Thank you very much. Any other questions, please? Okay. The second person from here. The person in the center.

My name is [indiscernible] from [ Nikkan Gendai ] newspaper. I have a question to Kon-san. So under presidency of Sato, I think the team management and also evolution and the inheritance was the theme. I do understand that some of the things are not too clear yet. But because of your financial background, including the next management structure, what will be your management policy that you want to focus on?

So team management is something that you mentioned, and this will stay the same. Executive members, we have the Presidents and Divisional -- Chief Officers and all these executive members are there at Toyota. We don't have one super man. We are working to make Toyota and Japan better altogether, and that kind of style is going to stay the same. And as Sato-san just said, making ever-better cars, that theme or the mission will stay also the same. There is no person at Toya who will not be involved in this mission. So we will all work together, thinking hard how we can make ever-better cars and how we can transform into a mobility company, how can we provide better mobility to society. We would all think together and then each one of us take action respectively. I think that is the gist of our team management, and we will stick to that.

Let's go on to the next person. The woman there.

I'm Sato from TV Asahi. So it was suddenly you decided to hold this press conference and you had no initial plan. But what is the reason why at the last minute you decided to hold this kind of a conference setting?

Well, we need to do a timely disclosure regarding this content that we have decided. And today, this matter has been resolved at our BOD meeting. Therefore, since immediately after this resolution has made today, the timely disclosure was made, and therefore, we created this opportunity to provide an explanation from ourselves. I think that just by issuing a press release, there will be thoughts of us and the background behind this decision that will not be understood fully. And we wanted to have an opportunity to convey our thoughts as well. That is why we use the setting of Toyota Times to hold this kind of opportunity. And also in just -- apart from just having a one-sided communication, we wanted to put importance on an open style communication. That is how we came up with this setup. Thank you.

Okay. Next, this gentleman in the center.

[indiscernible] Toshiba. My name is Atsumi. So you talked about HR development is one of the most important point for Toyota. And I have a question to both of you. Recently, I think you have been working to recover the uniqueness of Toyota. You want to, I think, continue this Toyota uniqueness so that they would not become like a regular company. And how do you -- what's your impression on this theme for Sato-san, looking back to your tenure and also Kon-san for your presidency from April 1 onwards.

Well, I will not pretend that I know everything because this is something -- a question that I've been asking myself all along. I've always asked what's the unique point about Toyota? I don't have the correct answer. But for someone other than myself or for the smiles of customers, as long as we have such colleagues at Toyota, I think it is important to have that kind of thinking at Toyota. And we have a Toyota preset. And then we have this thinking of always be faithful to your duties and thereby contribute to the company and to overall good. So that means we have to execute and then contribute to the society, and that is how we can have a meaning in our work. And that is always in my mind, and that should be in our mind to look back to what you're doing because when you are trying very hard, subject of the sentence tend to become yourself and you become self-centered, but that will narrow down your perspective and then you might digress from what Toyota should do and I interpret that as to be a warning.

I quite agree with what Sato-san said. For someone other than myself, that's how we started. And that is the weaving machine at the TICO or loom that we started to work at TICO. So this passion at the founding time has to be executed. So I don't have any correct answer. I think that is one of the big theme. And another point which was also mentioned before is that so Chairman used the word bar or place or space. And I think this is also correct. At Gemba and Odaiba or the sales front, we have to keep the focus on those words of places. And outside of those bar -- outside of those places, we don't make decisions or prioritize things. Anything that happens at those places or bar, we have to pay attention and take actions. I think that's the uniqueness of Toyota. That is what I think right now, and that's the mission I was given. And I will try to create such a bar for everyone else. That's the focus for me.

Then maybe we can have 1 or 2 more from the floor and then go to the online members. I can't see very well from here. The person on that side. Please go ahead.

I'm [ Yao ] from Nikkei newspapers. And I also want to ask Kon-san a question. So most recently, for the TOB of TICO project is being continuing. And you are Toyota Fudosan Board member as well. And now you're going to become a representative Director of TMC. So for this point, will there be any concerns of the conflict of interest? And also going forward, for Toyota Fudosan's Board member position, what is going to be done? Is there going to be a change in your role? That will be my question.

First of all, for TICO's TOB, I have not participated in any of the decision-making at Toyota Motor Corporation. And there is an information blockade for -- from between TMC and myself. So as an offer, as an acquirer from Toyota Fudosan, I am participating in this transaction. And even with this role change this time that we announced today, we are going to have good management of the conflict of the interest for this TICO transaction, and this will not change. Therefore, for -- in the position of Toyota Fudosan, we are now in the period of TOB as an offer. And for this transaction, I will continue to be participating from the Board member position of Toyota Fudosan.

Okay. We now like to take questions from the online participants. Mr. Hashimoto of the external affairs will handle this Q&A. So if you have questions for those remote participants, [Operator Instructions]. Okay. So [ Hans-san ] from Automotive News. [Operator Instructions]

I'm Hans from Automotive News. Is it okay to ask in Japanese. I made a mistake. Can I ask in English. I made a big mistake.

Yes, please go ahead.

I like English better. Can I ask a question about the idea of maybe changing the focus of the top management at Toyota. We might think of Sato-san as a car guy, engineer focused on ever-better cars. And we might think of Kon-san as a money numbers person focused on future profits. What does this change of leadership, say about the focus of Toyota's priorities for this new world of the automotive industry with all the change coming in from China, from autonomous driving, from software and AI, is fun to drive being, I guess, maybe taking a backseat to things like profitability numbers and the need for new kinds of technologies?

So I think I will start to respond to your question first. For the ever-better car making and also the contribution to the industry happiness for all and for these kinds of purposes and targets that Toyota has even though the leadership and formation will change, those will not change. I think rather it will be that those purposes and targets will be further strongly be promoted. I think it's a formation that we will be able to enhance the efforts to achieve those purposes. So I did say that I'm a person that will be focused on money and numbers, but that means that, that vision that we have, the target purpose that we have, Toyota will be able to fully focus on those purposes. It doesn't mean that we just focus on a narrow minded money side. That will not be our assess -- we don't assess things just for money or numbers. That's not what I meant. It's about being prepared for the -- creating the future so that the money can be invested for the future for our stakeholders. So the way we use money should be something that we feel the warmth of humans, the body temperature of humans. That is how I want to handle the money at Toyota with the human warmth. And that is how I've thought of money from the past, and that will not change going to the future.

Thank you very much, Hans-san. And I'd also like to add a little bit of comment myself too. For me, I think it's the opposite, as you said. I think the focus of fun-to-drive is going to be more and more enhanced. And the reason why I say that is because, for example, if it is myself, and if you think about the many engineers, when we think about fun-to-drive. From our perspective, we think fun-to-drive is more kind of equivalent to engineering. But like what Kon-san has said earlier, fun-to-drive and ever-better care making, there will not be anyone who is unrelated to fun-to-drive in every-better car making at Toyota. I think that was a very important point from Kon-san because there -- from many angles, there will be many ways on people to get involved in making ever-better cars. And if we have the leader, Kon-san is the leader, there will be more people that will be looking at the same direction. Maybe some people will have thinking that if you're in accounting and finance, HR division, all of these works are always definitely been related to the ever-better car making, and that is what the communication message will be from a leader like Kon-san and I think that will light the passion inside of many, many people outside of the engineer community. So I think that our endeavor for ever-better car making and fun-to-drive will be even more boosted. That's how I feel.

Thank you for your question, Han-san. We would like to move to the next question. Tanigawa-san from Car Watch, please. [Operator Instructions]

This is Tanigawa from Car Watch. Can you hear me? So I think you're going to be more focused on the Keidanren, also JAMA's role, but the issue here is tariff and regional assets, and I'm sure there are many challenges. What is the first point that you're going to start and more focused on? If you know your focus, please let us know. Another question is that in mid of January, you were informed about it. And in the beginning of January, you mentioned that you want to be a referee in between Akio Toyoda and Mr. Nakashima, but who is going to take this role now?

So do you want me to show the video of this referee? And we can start from there. Okay. So let's start from the second question.

Well, DR members made this, but its process with AI, and I look like such an evil person. Yes, Kon-san is going to do this. Please, would you?

Yes, we changed the facial expression.

Yes, I like this better. Okay, it is not to show that we have a conflict inside TMC. This passion of making ever-better cars I think is multidirectional. There is -- we're not fixing the approach of making cost to one. Each one has its own passion, and that's what's being shown here. So Sato trying to create this environment, I am actually watching this conflict with happiness with the funnel. I like this, and I hope that we can change this person to Kon-san and then this distribute this -- and on your first question, actually, we couldn't hear the first part.

As the Chairman of JAMA and also Vice President of [ Keidanren ] what will be your first thing to start. And what is the biggest challenge that you think is in front of you?

Thank you for that question. Yes, in case of JAMA, there are 7 challenges that's in front of you -- in front of us and how seriously can we tackle this. When they selected the Chairman, we had a huge discussion with the top management of the member companies. And then I think we have a common understanding unless we go through changes in the industry, then this auto industry that Japan has always been cherished as the critical industry will no longer serve its role. And then the sense of crisis actually is common. So those competition amongst the company's industry, we have to look at it from the big picture and then take specific actions. That is the kind of determination we have to have, and I think that's the consensus. So I'm not going to mention specific names, but Toyota and Honda, the error is not the time -- it is not the time to do things differently amongst 2 OEMs. I shouldn't just mention Honda. I should just mention all the OEMs, [ Matsuda ] and Nissan. That's my understanding. So challenges. The social implementation is the goal, and then we are going to come up with the team to execute them and how to implement them and what are the choke points if it's not implemented, what kind of things that we need to overcome to tackle them. We will be very specific unlike before where we have this regular meeting and discussion and then set direction. Unless we take actions, we won't be able to drill this blueprint. So my work, I think, is to draw a specific picture.

I think we passed the 1 hour time. So I'll just check on what kind of comments that we see on our social media. And there are some questions so we can end with these social media comments. So the President, even if the structure changes, I hope that if -- even if it changes, the ever-better car making if it continues, it's okay. So I think this is okay. And Sato-san, I was waiting the next MR2 coming out next-generation MR2 coming out. Accounting and finance background. So Toyoda will only be thinking about money and more so initiatives. It's not going to be continued. Now this part, we don't have to worry. And Kon-san you have good voice very good way of speaking, good President. So you're already receiving comments. Now cost management, cost control is going to become more tough. Will it? I think so. So if you need to be careful Taizo Ishida was a person that will not waste money, but use words important. I guess that's going to be our policy. And the final question. I want to -- the MC to ask how the Celica is going to turn out. This is a question from the car fan. So maybe we can ask Sato-san, Koji-san first. You're then -- or we can ask Kon-san, what is your expectation Kon-san? What will happen? Kon-san about Celica.

Well, I understand that this car has strong expectations. And I am the generation who enjoyed watching the movie, take me to skiing. And there, the Celica GT-Four, [ GR-Four ] that came out has always been a car that I -- a model that I admired. I'm in that generation. So. Sato-san, Nakajima doesn't really say this real thing like we're going to do or we're going to stop. He never -- they never let me know the true situation. So I assume that development is progressing, that's my assumption for now. So I have to confess, I don't know the details about this development project.

Well, I guess, these kinds of good car making, ever-better car making will continue.

Right when a good car and ever-better car is being developed, it's not about responding to the instructions from a company and giving specific instructions. We don't develop ever-better cars in that way. It's about passion. As long as there is passion and that fire up passion in this company, I don't think we have to be worried.

So I was asking from a perspective from MC. But now here my question is from a perspective of one independent employee of Toyota. So the future of Toyota is can we be assured that it's okay? So one each.

Well, in today's conference -- press conference, I think we were able -- I hope that I was able to show the real atmosphere or the real kind of relations that we have at Toyota. At Toyota, the management team, even if we change the formation, we are a company that can continue to be steadily grounded on our core and focused on our core. So this is a kind of company that we are now, and I hope that you will continue to have high expectations to us, and we'll make our full effort to be able to respond to your expectations. We're okay.

And Kon-san please listen to the employee's voice. Is Toyota okay going forward?

Yes. we are okay. And from another perspective, from stakeholder, I would like to be stakeholders -- have stakeholders be confident to say that Toyota is okay. It doesn't have to be now, but if -- even if it's a little while later, I would want to make my efforts so that all stakeholders will say that Toyota is okay.

Thank you very much I'm sure that there's many much more questions that you wanted to ask. But with this, I'd like to end the Q&A session. So please rise and thank you very much, everyone. We will end our press conference here. And after this, we are going to go into the photo session. Everyone, please be reassured you'll be able to take a photo after this. Both of them will go behind the screen for a while, but will come back so that we will -- can have a photo session. [Statements in English on this transcript were spoken by an interpreter present on the live call.]