Edgar Filing: TOYOTA MOTOR CORP/

ANNUAL REPORT

As filed with the Securities and Exchange Commission on June 24, 2013

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 31, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-14948

TOYOTA JIDOSHA KABUSHIKI KAISHA

(Exact Name of Registrant as Specified in its Charter)

TOYOTA MOTOR CORPORATION

(Translation of Registrant’s Name into English)

Japan

(Jurisdiction of Incorporation or Organization)

1 Toyota-cho, Toyota City

Aichi Prefecture 471-8571

Japan

+81 565 28-2121

(Address of Principal Executive Offices)

Kenichiro Makino

Telephone number: +81 565 28-2121

Facsimile number: +81 565 23-5800

Address: 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan

(Name, telephone, e-mail and/or facsimile number and address of registrant’s contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of Each Class:		Name of Each Exchange on Which Registered:
American Depositary Shares*		The New York Stock Exchange
Common Stock**

*	American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing two shares of the registrant’s Common Stock.

**	No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the U.S. Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 3,167,428,668 Shares of Common Stock (including 82,399,279 Shares of Common Stock in the form of American Depositary Shares) as of March 31, 2013

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes x No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934: Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

TABLE OF CONTENTS


ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1

ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1

ITEM 3.	KEY INFORMATION	1

3.A	SELECTED FINANCIAL DATA	1
3.B	CAPITALIZATION AND INDEBTEDNESS	4
3.C	REASONS FOR THE OFFER AND USE OF PROCEEDS	4
3.D	RISK FACTORS	4

ITEM 4.	INFORMATION ON THE COMPANY	8

4.A	HISTORY AND DEVELOPMENT OF THE COMPANY	8
4.B	BUSINESS OVERVIEW	8
4.C	ORGANIZATIONAL STRUCTURE	50
4.D	PROPERTY, PLANTS AND EQUIPMENT	51

ITEM 4A.	UNRESOLVED STAFF COMMENTS	52

ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	52

5.A	OPERATING RESULTS	52
5.B	LIQUIDITY AND CAPITAL RESOURCES	84
5.C	RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES	87
5.D	TREND INFORMATION	90
5.E	OFF-BALANCE SHEET ARRANGEMENTS	90
5.F	TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS	91
5.G	SAFE HARBOR	92

ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	93

6.A	DIRECTORS AND SENIOR MANAGEMENT	93
6.B	COMPENSATION	100
6.C	BOARD PRACTICES	100
6.D	EMPLOYEES	101
6.E	SHARE OWNERSHIP	102

ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	103

7.A	MAJOR SHAREHOLDERS	103
7.B	RELATED PARTY TRANSACTIONS	104
7.C	INTERESTS OF EXPERTS AND COUNSEL	104

ITEM 8.	FINANCIAL INFORMATION	104

8.A	CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION	104
8.B	SIGNIFICANT CHANGES	105

ITEM 9.	THE OFFER AND LISTING	105

9.A	LISTING DETAILS	105
9.B	PLAN OF DISTRIBUTION	106
9.C	MARKETS	106
9.D	SELLING SHAREHOLDERS	106
9.E	DILUTION	106
9.F	EXPENSES OF THE ISSUE	106

ITEM 10.	ADDITIONAL INFORMATION	106

10.A	SHARE CAPITAL	106
10.B	MEMORANDUM AND ARTICLES OF ASSOCIATION	106
10.C	MATERIAL CONTRACTS	112
10.D	EXCHANGE CONTROLS	112


10.E	TAXATION	113
10.F	DIVIDENDS AND PAYING AGENTS	119
10.G	STATEMENT BY EXPERTS	119
10.H	DOCUMENTS ON DISPLAY	119
10.I	SUBSIDIARY INFORMATION	120

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	120

ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	121

12.A	DEBT SECURITIES	121
12.B	WARRANTS AND RIGHTS	121
12.C	OTHER SECURITIES	121
12.D	AMERICAN DEPOSITARY SHARES	122

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	123

ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	123

ITEM 15.	CONTROLS AND PROCEDURES	123

ITEM 16.	[RESERVED]	124

ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	124

ITEM 16B.	CODE OF ETHICS	124

ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	124

ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	126

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	126

ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	126

ITEM 16G.	CORPORATE GOVERNANCE	127

ITEM 16H.	MINE SAFETY DISCLOSURE	129

ITEM 17.	FINANCIAL STATEMENTS	130

ITEM 18.	FINANCIAL STATEMENTS	130

ITEM 19.	EXHIBITS	131

As used in this annual report, the term “fiscal” preceding a year means the twelve-month period ended March 31 of the year referred to. All other references to years refer to the applicable calendar year, unless the context otherwise requires. As used herein, the term “Toyota” refers to Toyota Motor Corporation and its consolidated subsidiaries as a group, unless the context otherwise indicates.

In parts of this annual report, amounts reported in Japanese yen have been translated into U.S. dollars for the convenience of readers. Unless otherwise noted, the rate used for this translation was ¥94.05 = $1.00. This was the approximate exchange rate in Japan on March 31, 2013.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Written forward-looking statements may appear in documents filed with the Securities and Exchange Commission, or the SEC, including this annual report, documents incorporated by reference, reports to shareholders and other communications.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as the information is identified as forward looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. Toyota relies on this safe harbor in making forward-looking statements.

Forward-looking statements appear in a number of places in this annual report and include statements regarding Toyota’s current intent, belief, targets or expectations or those of its management. In many, but not all cases, words such as “aim”, “anticipate”, “believe”, “estimate”, “expect”, “hope”, “intend”, “may”, “plan”, “predict”, “probability”, “risk”, “should”, “will”, “would”, and similar expressions, are used as they relate to Toyota or its management, to identify forward-looking statements. These statements reflect Toyota’s current views with respect to future events and are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those which are anticipated, aimed at, believed, estimated, expected, intended or planned.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ from those in forward-looking statements as a result of various factors. Important factors that could cause actual results to differ materially from estimates or forecasts contained in the forward-looking statements are identified in “Risk Factors” and elsewhere in this annual report, and include, among others:

(i) changes in economic conditions and market demand affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe, Asia and other markets in which Toyota operates;

(ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro, the Australian dollar, the Russian ruble, the Canadian dollar and the British pound, and interest rates fluctuations;

(iii) changes in funding environment in financial markets and increased competition in the financial services industry;

(iv) Toyota’s ability to market and distribute effectively;

(v) Toyota’s ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management;

(vi) changes in the laws, regulations and government policies in the markets in which Toyota operates that affect Toyota’s automotive operations, particularly laws, regulations and government policies relating to vehicle safety including remedial measures such as recalls, trade, environmental protection, vehicle emissions and vehicle fuel economy, as well as changes in laws, regulations and government policies that affect Toyota’s other operations, including the outcome of current and future litigation and other legal proceedings, government proceedings and investigations;

(vii) political and economic instability in the markets in which Toyota operates;

(viii) Toyota’s ability to timely develop and achieve market acceptance of new products that meet customer demand;

(ix) any damage to Toyota’s brand image;

(x) Toyota’s reliance on various suppliers for the provision of supplies;

(xi) increases in prices of raw materials;

(xii) Toyota’s reliance on various digital and information technologies;

(xiii) fuel shortages or interruptions in electricity, transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold; and

(xiv) the impact of natural calamities including the negative effect on Toyota’s vehicle production and sales.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A SELECTED FINANCIAL DATA

You should read the U.S. GAAP selected consolidated financial information presented below together with “Operating and Financial Review and Prospects” and Toyota’s consolidated financial statements contained in this annual report.

U.S. GAAP Selected Financial Data

The following selected financial data have been derived from Toyota’s consolidated financial statements. These financial statements were prepared in accordance with U.S. GAAP.


	Year Ended March 31,
	2009			2010			2011			2012			2013			2013
	(in millions, except share and per share data)
Consolidated Statement of Income Data:
Automotive:
Revenues	¥	18,564,723		¥	17,197,428		¥	17,337,320		¥	16,994,546		¥	20,419,100		$	217,109
Operating income (loss)		(394,876	)		(86,370	)		85,973			21,683			944,704			10,045
Financial Services:
Revenues		1,377,548			1,245,407			1,192,205			1,100,324			1,170,670			12,447
Operating income (loss)		(71,947	)		246,927			358,280			306,438			315,820			3,358
All Other:
Revenues		1,184,947			947,615			972,252			1,048,915			1,066,461			11,339
Operating income (loss)		9,913			(8,860	)		35,242			42,062			53,616			570
Elimination of intersegment:
Revenues		(597,648	)		(439,477	)		(508,089	)		(560,132	)		(592,039	)		(6,294	)
Operating income (loss)		(4,101	)		(4,181	)		(11,216	)		(14,556	)		6,748			72
Total Company:
Revenues		20,529,570			18,950,973			18,993,688			18,583,653			22,064,192			234,601
Operating income (loss)		(461,011	)		147,516			468,279			355,627			1,320,888			14,045
Income (loss) before income taxes and equity in earnings of affiliated companies		(560,381	)		291,468			563,290			432,873			1,403,649			14,925
Net income (loss) attributable to Toyota Motor Corporation		(436,937	)		209,456			408,183			283,559			962,163			10,230
Net income (loss) attributable to Toyota Motor Corporation per share:
Basic		(139.13	)		66.79			130.17			90.21			303.82			3.23
Diluted		(139.13	)		66.79			130.16			90.20			303.78			3.23
Shares used in computing net income (loss) attributable to Toyota Motor Corporation per share, basic (in thousands)		3,140,417			3,135,986			3,135,881			3,143,470			3,166,909			—
Shares used in computing net income (loss) attributable to Toyota Motor Corporation per share, diluted (in thousands)		3,140,417			3,135,998			3,135,915			3,143,470			3,167,155			—


	Year Ended March 31,
	2009		2010		2011		2012		2013		2013
	(in millions, except per share and numbers of vehicles sold data)
Consolidated Balance Sheet Data (end of period):
Total Assets:	¥	29,062,037	¥	30,349,287	¥	29,818,166	¥	30,650,965	¥	35,483,317	$	377,281
Short-term debt, including current portion of long-term debt		6,317,184		5,497,997		5,951,836		5,963,269		6,793,956		72,237
Long-term debt, less current portion		6,301,469		7,015,409		6,449,220		6,042,277		7,337,824		78,020
Toyota Motor Corporation shareholders’ equity		10,061,207		10,359,723		10,332,371		10,550,261		12,148,035		129,166
Common stock		397,050		397,050		397,050		397,050		397,050		4,222
Other Data:
Dividends per share	¥	100.0	¥	45.0	¥	50.0	¥	50.0	¥	90.0	$	0.96
Number of vehicles sold
Japan		1,944,823		2,162,418		1,913,117		2,070,799		2,278,796		—
North America		2,212,254		2,097,374		2,031,249		1,872,423		2,468,804		—
Europe		1,061,954		858,390		795,534		797,993		799,085		—
Asia		904,892		979,651		1,255,016		1,326,829		1,683,578		—
Other*		1,443,433		1,139,329		1,313,123		1,283,885		1,640,401		—

Worldwide total		7,567,356		7,237,162		7,308,039		7,351,929		8,870,664		—

*	“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

Dividend Information

Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend. Although Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to the resolution of its board of directors, Toyota’s board of directors recommends the payment of year-end dividends to shareholders and pledgees of record as of March 31 in each year. Year-end dividends are usually paid to the shareholders immediately following approval of the dividends at the general shareholders’ meeting, normally around the middle of June of each year. In addition to these year-end dividends, Toyota may pay interim dividends in the form of cash distributions from its distributable surplus to shareholders and pledgees of record as of September 30 in each year by resolution of its board of directors. Toyota normally pays the interim dividend in late November.

In addition, under the Corporation Act of Japan (the “Corporation Act”), dividends may be paid to shareholders and pledgees of record as of any record date, other than those specified above, as set forth in Toyota’s articles of incorporation or as determined by its board of directors from time to time. Toyota’s articles of incorporation also permit Toyota to pay dividends, in addition to interim dividends mentioned in the preceding paragraph, by a resolution of its board of directors. Toyota has incorporated such a provision into its articles of incorporation in order to enable a flexible capital policy. Under the Corporation Act, dividends may be distributed in cash or (except in the case of interim dividends mentioned in the preceding paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.

The following table sets forth the dividends declared by Toyota for each of the periods shown. The periods shown are the six months ended on that date. The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate for Japanese yen on the last date of each period set forth below.


	Cash Dividends per Share
Period Ended	Yen		U.S. dollars
September 30, 2008		65.0		0.61
March 31, 2009		35.0		0.35
September 30, 2009		20.0		0.22
March 31, 2010		25.0		0.26
September 30, 2010		20.0		0.24
March 31, 2011		30.0		0.36
September 30, 2011		20.0		0.25
March 31, 2012		30.0		0.36
September 30, 2012		30.0		0.38
March 31, 2013		60.0		0.63

The payment and the amount of any future dividends are dependent on the amount of Toyota’s future earnings, its financial condition and other factors, including statutory restrictions on the payment of dividends.

Toyota deems the benefit of its shareholders as one of its priority management policies, and it continues to work to improve its corporate structure to realize sustainable growth in order to enhance its corporate value. Toyota will strive to continue to pay stable dividends aiming at a consolidated dividend payout ratio of 30% while giving due consideration to factors such as business results for each term, investment plans and its cash reserves. In order to successfully compete in this highly competitive industry, Toyota plans to utilize its internal funds for the early commercialization of next-generation environment and safety technologies, giving priority to customer safety and reliability. Considering these factors, an annual dividend of 90 yen per share was paid for fiscal 2013, consisting of a year-end dividend of 60 yen per share and an interim dividend of 30 yen per share.

In fiscal 2013, Toyota did not repurchase its own shares, excluding shares constituting less than one unit that were purchased by Toyota upon request. Since Toyota began repurchasing shares in fiscal 1997, the cumulative number of shares repurchased as of the end of March 2013 was 736.98 million shares at a total cost of ¥2,868.8 billion. The following table shows the approximate number of shares repurchased and the approximate cost of repurchase of those shares for each of the periods indicated:


	Year Ended March 31,
	2009	2010		2011		2012		2013
Number of shares repurchased	15 million		0		0		0		0
Amount paid	¥73 billion		0		0		0		0

Toyota’s future share repurchases will be influenced by factors such as Toyota’s future earnings and financial position. For a further discussion of Toyota’s share repurchases, please see “Purchases of Equity Securities by the Issuer and Affiliated Purchasers”.

Exchange Rates

In parts of this annual report, yen amounts have been translated into U.S. dollars for the convenience of investors. Unless otherwise noted, the rate used for the translations was ¥94.05 = $1.00. This was the approximate exchange rate in Japan on March 31, 2013.

The following table sets forth information regarding the noon buying rates for Japanese yen in New York City as announced for customs purposes by the Federal Reserve Bank of New York expressed in Japanese yen per $1.00 during the periods shown. At the end of May 2013, the noon buying rate was ¥100.83 = $1.00. The average exchange rate for the periods shown is the average of the month-end rates during the period.


Fiscal Year Ended or Ending March 31,	At End of Period		Average (of month-end rates)		High		Low
			(¥ per $1.00)
2009		99.15		100.85		110.48		87.80
2010		93.40		92.49		100.71		86.12
2011		82.76		85.00		94.68		78.74
2012		82.41		78.86		85.26		75.72
2013		94.16		83.26		96.16		77.41
2014 (through May 31, 2013)		100.83		99.18		103.52		92.96


Month Ended	High		Low
	(¥ per $1.00)
December 31, 2012		86.64		81.86
January 31, 2013		91.28		86.92
February 28, 2013		93.64		91.38
March 31, 2013		96.16		93.32
April 30, 2013		99.61		92.96
May 31, 2013		103.52		97.28

Fluctuations in the exchange rate between the Japanese yen and the U.S. dollar will affect the dollar equivalent of the price of the shares on the Japanese stock exchanges. As a result, exchange rate fluctuations are likely to affect the market price of the American Depositary Shares (“ADSs”) on the New York Stock Exchange (“NYSE”). Toyota will declare any cash dividends on shares in Japanese yen. Exchange rate fluctuations will also affect the U.S. dollar amounts received on conversion of cash dividends.

Exchange rate fluctuations can also materially affect Toyota’s reported operating results. In particular, a strengthening of the Japanese yen against the U.S. dollar can have a material adverse effect on Toyota’s reported operating results. For a further discussion of the effects of currency rate fluctuations on Toyota’s operating results, please see “Operating and Financial Review and Prospects — Operating Results — Overview — Currency Fluctuations”.

3.B CAPITALIZATION AND INDEBTEDNESS

Not applicable.

3.C REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

3.D RISK FACTORS

Industry and Business Risks

The worldwide automotive market is highly competitive.

The worldwide automotive market is highly competitive. Toyota faces intense competition from automotive manufacturers in the markets in which it operates. Although the global economy is gradually recovering, competition in the automotive industry has further intensified amidst difficult overall market conditions. In addition, competition is likely to further intensify in light of further continuing globalization in the worldwide automotive industry, possibly resulting in further industry reorganization. Factors affecting competition include product quality and features, safety, reliability, fuel economy, the amount of time required for innovation and development, pricing, customer service and financing terms. Increased competition may lead to lower vehicle

unit sales, which may result in a further downward price pressure and adversely affect Toyota’s financial condition and results of operations. Toyota’s ability to adequately respond to the recent rapid changes in the automotive market and to maintain its competitiveness will be fundamental to its future success in existing and new markets and to maintain its market share. There can be no assurances that Toyota will be able to compete successfully in the future.

The worldwide automotive industry is highly volatile.

Each of the markets in which Toyota competes has been subject to considerable volatility in demand. Demand for vehicles depends to a large extent on social, political and economic conditions in a given market and the introduction of new vehicles and technologies. As Toyota’s revenues are derived from sales in markets worldwide, economic conditions in such markets are particularly important to Toyota. In Japan, while there continues to be some signs of weakness, the economic environment is gradually recovering. In the United States, economic conditions are moderately recovering due to factors such as increased consumer spending. However, in Europe, the economic environment continues to remain stagnant due to the ongoing sovereign debt crisis, and the rate of economic growth is slowing down in emerging economies. Such shifts in demand for automobiles is continuing, and it is unclear how this situation will transition in the future. Toyota’s financial condition and results of operations may be adversely affected if the shifts in demand for automobiles continues or progresses further. Demand may also be affected by factors directly impacting vehicle price or the cost of purchasing and operating vehicles such as sales and financing incentives, prices of raw materials and parts and components, cost of fuel and governmental regulations (including tariffs, import regulation and other taxes). Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect Toyota’s financial condition and results of operations.

Toyota’s future success depends on its ability to offer new innovative competitively priced products that meet customer demand on a timely basis.

Meeting customer demand by introducing attractive new vehicles and reducing the amount of time required for product development are critical to automotive manufacturers. In particular, it is critical to meet customer demand with respect to quality, safety and reliability. The timely introduction of new vehicle models, at competitive prices, meeting rapidly changing customer preferences and demand is more fundamental to Toyota’s success than ever, as the automotive market is rapidly transforming in light of the changing global economy. There is no assurance, however, that Toyota will adequately and appropriately respond to changing customer preferences and demand with respect to quality, safety, reliability, styling and other features in a timely manner. Even if Toyota succeeds in perceiving customer preferences and demand, there is no assurance that Toyota will be capable of developing and manufacturing new, price competitive products in a timely manner with its available technology, intellectual property, sources of raw materials and parts and components, and production capacity, including cost reduction capacity. Further, there is no assurance that Toyota will be able to implement capital expenditures at the level and times planned by management. Toyota’s inability to develop and offer products that meet customers’ preferences and demand with respect to quality, safety, reliability, styling and other features in a timely manner could result in a lower market share and reduced sales volumes and margins, and may adversely affect Toyota’s financial condition and results of operations.

Toyota’s ability to market and distribute effectively is an integral part of Toyota’s successful sales.

Toyota’s success in the sale of vehicles depends on its ability to market and distribute effectively based on distribution networks and sales techniques tailored to the needs of its customers. There is no assurance that Toyota will be able to develop sales techniques and distribution networks that effectively adapt to changing customer preferences or changes in the regulatory environment in the major markets in which it operates. Toyota’s inability to maintain well-developed sales techniques and distribution networks may result in decreased sales and market share and may adversely affect its financial condition and results of operations.

Toyota’s success is significantly impacted by its ability to maintain and develop its brand image.

In the highly competitive automotive industry, it is critical to maintain and develop a brand image. In order to maintain and develop a brand image, it is necessary to further increase customers’ confidence by providing safe, high-quality products that meet customer preferences and demand. If Toyota is unable to effectively maintain and develop its brand image as a result of its inability to provide safe, high-quality products or as a result of the failure to promptly implement safety measures such as recalls when necessary, vehicle unit sales and/or sale prices may decrease, and as a result revenues and profits may not increase as expected or may decrease, adversely affecting its financial condition and results of operations.

Toyota relies on suppliers for the provision of certain supplies including parts, components and raw materials.

Toyota purchases supplies including parts, components and raw materials from a number of external suppliers located around the world. For some supplies, Toyota relies on a single supplier or a limited number of suppliers, whose replacement with another supplier may be difficult. Inability to obtain supplies from a single or limited source supplier may result in difficulty obtaining supplies and may restrict Toyota’s ability to produce vehicles. Furthermore, even if Toyota were to rely on a large number of suppliers, first-tier suppliers with whom Toyota directly transacts may in turn rely on a single second-tier supplier or limited second-tier suppliers. Toyota’s ability to continue to obtain supplies from its suppliers in a timely and cost-effective manner is subject to a number of factors, some of which are not within Toyota’s control. These factors include the ability of Toyota’s suppliers to provide a continued source of supply, and Toyota’s ability to effectively compete and obtain competitive prices from suppliers. A loss of any single or limited source supplier or inability to obtain supplies from suppliers in a timely and cost-effective manner could lead to increased costs or delays or suspensions in Toyota’s production and deliveries, which could have an adverse effect on Toyota’s financial condition and results of operations.

The worldwide financial services industry is highly competitive.

The worldwide financial services industry is highly competitive. Increased competition in automobile financing may lead to decreased margins. A decline in Toyota’s vehicle unit sales, an increase in residual value risk due to lower used vehicle price, an increase in the ratio of credit losses and increased funding costs are factors which may impact Toyota’s financial services operations. If Toyota is unable to adequately respond to the changes and competition in automobile financing, Toyota’s financial services operations may adversely affect its financial condition and results of operations.

Toyota’s operations and vehicles rely on various digital and information technologies.

Toyota depends on various information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, including sensitive data, and to manage or support a variety of business processes and activities, including manufacturing, research and development, supply chain management, sales and accounting. In addition, Toyota’s vehicles may rely on various digital and information technologies, including information service and driving assistance functions. Despite security measures, Toyota’s digital and information technology networks and systems may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers, computer viruses, breaches due to unauthorized use, errors or malfeasance by employees and others who have or gain access to the networks and systems Toyota depends on, service failures or bankruptcy of third parties such as software development or cloud computing vendors, power shortages and outages, and utility failures or other catastrophic events like natural disasters. Such incidents could materially disrupt critical operations, disclose sensitive data, interfere with information services and driving assistance functions in Toyota’s vehicles, and/or give rise to legal claims or proceedings, liability or regulatory penalties under applicable laws, which could have an adverse effect on Toyota’s brand image and its financial condition and results of operations.

Financial Market and Economic Risks

Toyota’s operations are subject to currency and interest rate fluctuations.

Toyota is sensitive to fluctuations in foreign currency exchange rates and is principally exposed to fluctuations in the value of the Japanese yen, the U.S. dollar and the euro and, to a lesser extent, the Australian dollar, the Russian ruble, the Canadian dollar and the British pound. Toyota’s consolidated financial statements, which are presented in Japanese yen, are affected by foreign currency exchange fluctuations through translation risk, and changes in foreign currency exchange rates may also affect the price of products sold and materials purchased by Toyota in foreign currencies through transaction risk. In particular, strengthening of the Japanese yen against the U.S. dollar can have an adverse effect on Toyota’s operating results.

Toyota believes that its use of certain derivative financial instruments including foreign exchange forward contracts and interest rate swaps and increased localized production of its products have reduced, but not eliminated, the effects of interest rate and foreign currency exchange rate fluctuations. Nonetheless, a negative impact resulting from fluctuations in foreign currency exchange rates and changes in interest rates may adversely affect Toyota’s financial condition and results of operations. For a further discussion of currency and interest rate fluctuations and the use of derivative financial instruments, see “Operating and Financial Review and Prospects — Operating Results — Overview — Currency Fluctuations”, “Quantitative and Qualitative Disclosures About Market Risk”, and notes 20 and 21 to Toyota’s consolidated financial statements.

High prices of raw materials and strong pressure on Toyota’s suppliers could negatively impact Toyota’s profitability.

Increases in prices for raw materials that Toyota and Toyota’s suppliers use in manufacturing their products or parts and components such as steel, precious metals, non-ferrous alloys including aluminum, and plastic parts, may lead to higher production costs for parts and components. This could, in turn, negatively impact Toyota’s future profitability because Toyota may not be able to pass all those costs on to its customers or require its suppliers to absorb such costs.

The downturn in the financial markets could adversely affect Toyota’s ability to raise capital.

Should the world economy suddenly deteriorate, a number of financial institutions and investors will face difficulties in providing capital to the financial markets at levels corresponding to their own financial capacity, and, as a result, there is a risk that companies may not be able to raise capital under terms that they would expect to receive with their creditworthiness. If Toyota is unable to raise the necessary capital under appropriate conditions on a timely basis, Toyota’s financial condition and results of operations may be adversely affected.

Political, Regulatory, Legal and Other Risks

The automotive industry is subject to various governmental regulations.

The worldwide automotive industry is subject to various laws and governmental regulations including those related to vehicle safety and environmental matters such as emission levels, fuel economy, noise and pollution. In particular, automotive manufacturers such as Toyota are required to implement safety measures such as recalls for vehicles that do not or may not comply with the safety standards of laws and governmental regulations. In addition, Toyota may, in order to reassure its customers of the safety of Toyota’s vehicles, decide to voluntarily implement recalls or other safety measures even if the vehicle complies with the safety standards of relevant laws and governmental regulations. Many governments also impose tariffs and other trade barriers, taxes and levies, or enact price or exchange controls. Toyota has incurred, and expects to incur in the future, significant costs in complying with these regulations. If Toyota launches products that result in safety measures such as recalls, Toyota may incur various costs including significant costs for free repairs. Furthermore, new legislation or changes in existing legislation may also subject Toyota to additional expenses in the future. If Toyota incurs significant costs related to implementing safety measures or meeting laws and governmental regulations, Toyota’s financial condition and results of operations may be adversely affected.

Toyota may become subject to various legal proceedings.

As an automotive manufacturer, Toyota may become subject to legal proceedings in respect of various issues, including product liability and infringement of intellectual property. Toyota may also be subject to legal proceedings brought by its shareholders and governmental proceedings and investigations. Toyota is in fact currently subject to a number of pending legal proceedings and government investigations. A negative outcome in one or more of these pending legal proceedings could adversely affect Toyota’s financial condition and results of operations. For a further discussion of governmental regulations, see “Information on the Company — Business Overview — Governmental Regulation, Environmental and Safety Standards” and for legal proceedings, please see “Information on the Company — Business Overview — Legal Proceedings”.

Toyota may be adversely affected by natural calamities, political and economic instability, fuel shortages or interruptions in social infrastructure, wars, terrorism and labor strikes.

Toyota is subject to various risks associated with conducting business worldwide. These risks include natural calamities; political and economic instability; fuel shortages; interruption in social infrastructure including energy supply, transportation systems, gas, water, or communication systems resulting from natural hazards or technological hazards; wars; terrorism; labor strikes and work stoppages. Should the major markets in which Toyota purchases materials, parts and components and supplies for the manufacture of Toyota products or in which Toyota’s products are produced, distributed or sold be affected by any of these events, it may result in disruptions and delays in the operations of Toyota’s business. Should significant or prolonged disruptions or delays related to Toyota’s business operations occur, it may adversely affect Toyota’s financial condition and results of operations.

ITEM 4. INFORMATION ON THE COMPANY

4.A HISTORY AND DEVELOPMENT OF THE COMPANY

Toyota Motor Corporation is a limited liability, joint-stock company incorporated under the Commercial Code of Japan and continues to exist under the Corporation Act. Toyota commenced operations in 1933 as the automobile division of Toyota Industries Corporation (formerly, Toyoda Automatic Loom Works, Ltd.). Toyota became a separate company on August 28, 1937. In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation of today. As of March 31, 2013, Toyota operated through 509 consolidated subsidiaries and 206 affiliated companies, of which 56 companies were accounted for through the equity method.

See “— Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s principal capital expenditures and divestitures between April 1, 2010 and March 31, 2013 and information concerning Toyota’s principal capital expenditures and divestitures currently in progress.

Toyota’s principal executive offices are located at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan. Toyota’s telephone number in Japan is +81-565-28-2121.

4.B BUSINESS OVERVIEW

Toyota primarily conducts business in the automotive industry. Toyota also conducts business in finance and other industries. Toyota sold 8,871 thousand vehicles in fiscal 2013 on a consolidated basis. Toyota had net revenues of ¥22,064.1 billion and net income attributable to Toyota Motor Corporation of ¥962.1 billion in fiscal 2013.

Toyota’s business segments are automotive operations, financial services operations and all other operations. The following table sets forth Toyota’s sales to external customers in each of its business segments for each of the past three fiscal years.


	Yen in millions
	Year Ended March 31,
	2011		2012		2013
Automotive	¥	17,322,753	¥	16,964,378	¥	20,378,762
Financial Services		1,173,168		1,071,737		1,150,042
All Other		497,767		547,538		535,388

Toyota’s automotive operations include the design, manufacture, assembly and sale of passenger cars, minivans and commercial vehicles such as trucks and related parts and accessories. Toyota’s financial services business consists primarily of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles. Toyota’s financial services also provide retail leasing through the purchase of lease contracts originated by Toyota dealers. Related to Toyota’s automotive operations is its development of intelligent transport systems (“ITS”). Toyota’s all other operations business segment includes the design and manufacture of prefabricated housing, information technology related businesses including an e-commerce marketplace called GAZOO.com, and sales promotions for KDDI communication related products (predominantly the au brand).

Toyota sells its vehicles in approximately 170 countries and regions. Toyota’s primary markets for its automobiles are Japan, North America, Europe and Asia. The following table sets forth Toyota’s sales to external customers in each of its geographical markets for each of the past three fiscal years.


	Yen in millions
	Year Ended March 31,
	2011		2012		2013
Japan	¥	6,966,929	¥	7,293,804	¥	7,910,456
North America		5,327,809		4,644,348		6,167,821
Europe		1,920,416		1,917,408		2,003,113
Asia		3,138,112		3,116,849		4,058,629
Other*		1,640,422		1,611,244		1,924,173

*	“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

During fiscal 2013, 25.7% of Toyota’s automobile unit sales on a consolidated basis were in Japan, 27.8% were in North America, 9.0% were in Europe and 19.0% were in Asia. The remaining 18.5% of consolidated unit sales were in other markets.

The Japanese economy as a whole suffered significant damage as a result of the Great East Japan Earthquake that occurred on March 11, 2011, including the ensuing tsunami and nuclear incident in Fukushima Prefecture.

After the earthquake, Toyota temporarily suspended operations at its domestic and overseas factories due to damage to social infrastructure including energy supply, transportation systems, gas, water and communication systems caused by the earthquake, shortages of parts from suppliers, and damage sustained by some subsidiaries of Toyota in regions adjacent to the disaster zone. Toyota was able to achieve full normalization of production and begin its recovery from the disaster sooner than initially anticipated. Toyota is working to minimize the negative impact on production and company activities that may result from the disaster’s effect on infrastructure, including potential electricity shortages as a result of suspended operations at nuclear power plants throughout Japan.

In addition, with regard to the series of product quality related issues that began in early 2010, in March 2010, Toyota established a Special Committee for Global Quality to thoroughly investigate the cause of the product quality issues and review all of Toyota’s processes, including design, production, sales, service, and human resource development. Toyota believes it is making steady and solid improvements in these regards.

Building on the work of the Special Committee for Global Quality, each region is implementing comprehensive improvements to the company’s operations and strengthening the company’s quality improvement activities.

Further, in order to obtain objective third-party evaluation, in July 2010, Toyota obtained a report concerning Toyota’s quality-assurance review-and-improvement measures from the Union of Japanese Scientists and Engineers and external experts recommended by the union. This report evaluated the preventative measures undertaken by Toyota in response to the series of product quality related issues it experienced beginning in early 2010, such as strengthening analysis of customer information and human resource development, and indicated places where these measures should be deepened in order to bring about further improvement. Toyota has received the evaluation with humility, and is making efforts toward further improvements.

Through the quality control approach described above, Toyota and its officers and employees will unite to do their best to make customer safety their first emphasis, ensure that thorough quality control is a constant element of their work, strengthen quality control infrastructure and cultivate customers’ trust. For further details concerning recalls and other safety measures, see “Operating and Financial Review and Prospects — Operating Results — Results of Operations — Fiscal 2013 Compared with Fiscal 2012 — Operating Costs and Expenses”.

The Worldwide Automotive Market

Toyota estimates that annual worldwide vehicle sales totaled approximately 82 million units in 2012.

Automobile sales are affected by a number of factors including:

•

social, political and economic conditions,

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introduction of new vehicles and technologies, and

•

costs incurred by customers to purchase and operate automobiles.

These factors can cause consumer demand to vary substantially from year to year in different geographic markets and in individual categories of automobiles.

The global economy in fiscal 2013 recovered gradually, with recovery in the United States and strong growth in investment and consumption in the emerging markets, especially in Asia, despite downward pressure stemming from the European sovereign debt crisis. The automotive industry was also impacted by this trend. In 2012, markets in emerging countries continued to grow. In developed countries, markets in the United States recovered, increasing by more than 10% compared to the previous year, and the market in Japan increased significantly from the previous year due to the government’s eco-car subsidy program, despite continuing signs of weakness in the overall Japanese economy. European markets fell below the previous year’s levels due to the sluggish economy that resulted partly from the fiscal austerity measures enacted to address the sovereign debt crisis in Europe.

Toyota expects the automotive market to grow in the medium- to long-term driven principally by the growth in resource-rich markets and the emerging markets. Global competition is severe, as competition in compact and low-price vehicles intensifies, and technological development and development of new products become more frequent with a heightened global awareness of the environment.

In 2012, China, Europe, North America, Asia, Central and South America, and Japan were the world’s largest automotive markets. The share of each market across the globe, which Toyota estimates based on the available automobile sales data in each country and region information, was 24% for China, 22% for Europe, 21% for North America (20% excluding Mexico and Puerto Rico), 10% for Asia, 8% for Central and South America, and 7% for Japan. In China, new vehicle sales increased to approximately 19.4 million units. In Europe, new vehicle sales decreased to approximately 18.2 million units. In North America, new vehicle sales increased

to approximately 17.2 million units. In Asia (including India but excluding Japan and China), new vehicle unit sales increased to approximately 9.0 million units. In Central and South America, new vehicle sales increased to approximately 6.2 million units. In Japan, total new vehicle unit sales (including mini-vehicles) increased to approximately 5.4 million units.

The worldwide automotive industry is affected significantly by government regulations aimed at reducing harmful effects on the environment, enhancing vehicle safety and improving fuel economy. These regulations have added to the cost of manufacturing vehicles. Many governments also mandate local procurement of parts and components and impose tariffs and other trade barriers and price or exchange controls as a means of creating jobs, protecting domestic producers or influencing their balance of payments. Changes in regulatory requirements and other government-imposed restrictions can limit an automaker’s operations. These regulations can also make it difficult to repatriate profits to an automaker’s home country.

The development of the worldwide automotive market includes the continuing globalization of automotive operations. Manufacturers seek to achieve globalization by localizing the design and manufacture of automobiles and their parts and components in the markets in which they are sold. By expanding production capabilities beyond their home markets, automotive manufacturers are able to reduce their exposure to fluctuations in foreign exchange rates as well as to trade restrictions and tariffs.

Since 2000, various transactions have promoted consolidation within the global automotive industry. There are various reasons behind these transactions including the need to respond to the excessive global capacity in the production of automobiles, the need to reduce costs and improve efficiency by increasing the number of automobiles produced using common vehicle platforms and by sharing research and development expenses for environmental and other technology, the desire to expand a company’s global presence through increased size and the desire to expand into particular segments or geographic markets. Recently these have included global business alliances and investments between manufacturers.

Toyota believes that its research and development initiatives, particularly the development of environmentally friendly new vehicle technologies, vehicle safety and information technology, provide it with a strategic advantage.

Toyota’s ability to compete in the global automotive industry will depend in part on Toyota’s successful implementation of its business strategy. This is subject to a number of factors, some of which are not in Toyota’s control. These factors are discussed in “Operating and Financial Review and Prospects” and elsewhere in this annual report.

Toyota Global Vision

In March 2011, Toyota unveiled its “Toyota Global Vision” corporate outline for the future, which serves not only to give direction to Toyota employees around the world, but also to convey such direction to customers and to the public at large. Toyota will work to achieve sustained growth through the realization of the following ideals which are parts of the Vision:

“The safest and most responsible ways of moving people”

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Safety is Toyota’s highest priority, and Toyota will continue to provide world-class safety.

•

Toyota will also continue to contribute to environmental quality and to human happiness by using leading environmental technology and by deploying that technology in a growing line of vehicle models. At the same time, Toyota will work through the provision of products, sales and services that exceed customer expectation to offer a rewarding experience for customers.

“Enriching lives around the world”

•

Toyota has been consistently true to its founding spirit of serving society through conscientious manufacturing, and it will continue working in that spirit to contribute to enhance the quality of life wherever it has operations.

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Toyota will strive to continue contributing to economic vitality wherever it has operations by generating stable employment and by participating in mutually beneficial business relationships with dealers and suppliers. It will also strive to continue to actively engage in initiatives for human resources development and the promotion of cultural activities of its host communities.

“Lead the way to the future of mobility”

•

Toyota will lead the industry in technological development that will spawn next-generation mobility. For example, it will explore possibilities in personal mobility and in the convergence of information technology for automobiles and “smart grids” for optimizing energy generation and consumption. Toyota will strive to offer products and services that match the needs in each market.

•

Toyota will strive to advance environmental technology and develop low-carbon technologies and technologies for maximizing safety through interaction with the transport infrastructure to lay a foundation for sustainable and amenable future mobility.

“Our commitment to quality, constant innovation”

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Toyota is committed to providing quality vehicles that are highly reliable and driven with a sense of safety and reliability.

•

Toyota will constantly reinvent itself and continue to engage in cutting-edge technology development. Toyota will work towards offering vehicles around the world that address the needs of today and of tomorrow at affordable prices.

“Continued awareness for the Earth and environment”

•

Toyota will continue to work towards minimizing environmental impact in its manufacturing and other operations, and products.

•

With an emphasis on environmental awareness, Toyota will in its operations work towards energy conservation, reduction in carbon dioxide emission, efficient use of resources such as recycling, and human resource development and production methods that allow for coexistence with nature.

“Exceed expectations and be rewarded with a smile”

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Everyone at Toyota will continuously maintain a sense of gratitude to customers and will strive to earn smiles with products and services that are stimulating and inspiring and exceed customer expectation.

“There is always a better way”

•

All Toyota employees will share the recognition that there is always a better way and share a commitment to continuous improvement, which are fundamental to The Toyota Way.

“Meet challenging goals by engaging the talent and passion of people”

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Toyota will nurture a corporate culture where teamwork and individual creativity thrive and where people will approach their work with pride and passion.

•

Toyota will honor the spirit of diversity in recruiting, training and promoting capable individuals around the world. Human resources development at Toyota will continue to promote the transfer of the company’s monozukuri spirit of conscientious manufacturing and related skills and know-how from one generation to the next.

As for our future business environment, the world economy is expected to benefit from ongoing moderate recovery in the U.S. and a pickup in the pace of economic expansion in emerging countries. Europe, meanwhile, still faces the risk of economic stagnation due to the sovereign debt crisis and other factors, though a gradual bottoming out is anticipated. The Japanese economy is expected to move gradually towards recovery supported by the effect of the policy package and monetary policy. However, slowing down of overseas economies is still downside risk of the Japanese economy.

In this severe business environment, the Toyota group as a whole is responding to changes flexibly and is progressing steadily toward the realization of the Toyota Global Vision announced in March 2011. We will continue to review the structure for realizing sustainable growth and achieving competitiveness, and the Toyota group as a whole will make greater efforts to address the following:

First, we will further promote the Toyota New Global Architecture (“TNGA”), the way we will fundamentally reconsider work procedures, in order to launch attractive products globally and in a timely manner. For the Toyota brand, we intend to plan and develop overwhelmingly competitive next-generation cars in advanced countries, and to develop and introduce good products at affordable price that are trusted by customers in various usage environments in emerging countries. For the Lexus brand, we intend to establish the image as a global premium brand that hails from Japan. Furthermore, we intend to bring competitive units promptly.

Second, we intend to flexibly overcome business and management environmental changes. We will promote new business such as environmental and energy solutions that will lead the next generation and make strategic preparations for future business activities in next emerging countries. To better implement these efforts, we intend to improve the foundations for speedy decision-making and encourage appropriate control of fixed costs.

Third, we intend to proceed with constant activities toward the achievement of sustainable growth. In addition to pursuing quality improvement, we intend to further strengthen our innovative cost-reduction and profit-improvement activities throughout the company and promote further human resource development for enhancement of our global competitiveness. Activities to improve business continuity in the event of large-scale disasters will also be promoted and established.

Based on these efforts, Toyota will contribute to realize “enriching lives of communities” through providing “ever-better cars” that exceed customer expectations. This is expected to encourage more customers to purchase Toyota cars and thereby lead to the establishment of a stable business base. By perpetuating this good cycle, we will aim to realize sustainable growth and enhance corporate value. In addition, through full observance of corporate ethics such as compliance with applicable laws and regulations, Toyota will fulfill its social responsibilities by carrying out its Corporate Social Responsibility (CSR).

Automotive Operations

Toyota’s revenues from its automotive operations were ¥20.4 trillion in fiscal 2013, ¥17.0 trillion in fiscal 2012 and ¥17.3 trillion in fiscal 2011.

Toyota produces and sells passenger cars, minivans and commercial vehicles such as trucks. Toyota Motor Corporation’s subsidiary, Daihatsu Motor Co., Ltd. (“Daihatsu”), produces and sells mini-vehicles and compact cars. Hino Motors, Ltd. (“Hino”), also a subsidiary of Toyota Motor Corporation, produces and sells commercial vehicles such as trucks and buses. Toyota also manufactures automotive parts, components and accessories for its own use and for sale to others.

Vehicle Models

Toyota’s vehicles (produced by Toyota, Daihatsu and Hino) can be classified into two categories: hybrid vehicles and conventional engine vehicles. Toyota’s product line-up includes subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and specialty cars, recreational and sport-utility vehicles, pickup trucks, minivans, trucks and buses.

Hybrid Vehicles

The world’s first mass-produced hybrid car was Toyota’s Prius. It runs on an efficient combination of a gasoline engine and motor. This system allows the Prius to travel more efficiently than conventional engine vehicles of comparable size and performance. The hybrid design of the Prius also results in the output of 75% less emission than the maximum amount allowed by Japanese environmental regulations. Toyota views the Prius as the cornerstone of its emphasis on designing and producing eco-friendly automobiles. As of the end of March 2013, the total number of Toyota’s hybrid vehicles sold was 5.097 million units.

In May 2008, Toyota introduced the hybrid version of the Crown, which is the signature model of the Toyota brand, in Japan. In April 2009, the Lexus RX450h, which is the fully-remodeled Lexus RX400h, was successively introduced in Japan, North America and Europe. The Prius, of which 3.181 million units have been sold (as of the end of March 2013) since it was first introduced in 1997 and whose name has become synonymous with hybrid vehicles, underwent its second full model change in May 2009. The hybrid vehicles HS250h and SAI were introduced in July 2009 and December 2009, respectively. In December 2009, Toyota began leasing the Prius plug-in hybrid equipped with a lithium ion battery targeted at certain corporate users including electrical power companies. In January 2011, the Lexus hybrid vehicle CT200h was also introduced. Further, Toyota introduced the Prius a (Prius Alpha) wagon in May 2011 and is planning further ways to enhance the Prius series lineup. Furthermore, Toyota has strengthened its hybrid lineup by introducing hybrid versions of the Camry in September 2011, the Alphard and the Vellfire in November 2011, the compact hybrid vehicle Aqua in December 2011, the Prius plug-in and the fully remodeled GS450h in January 2012, the Yaris HV in May 2012, ES300h in July 2012, the Auris HV in November 2012 and the Avalon HV and the fully remodeled Crown HV in December 2012. Toyota anticipates strong growth in the hybrid vehicles area and will continue to introduce new models.

Toyota began limited sales of a fuel cell hybrid vehicle in Japan and the United States in December 2002. In June 2005, Toyota’s new fuel cell hybrid passenger vehicle became the first in Japan to acquire vehicle type certification under the Road Vehicles Act, as amended, on March 31, 2005, by Japan’s Ministry of Land, Infrastructure, Transport and Tourism. Leases for the vehicle began in July 2005. By 2007, Toyota was able to make improvements to start-up and cruising distance at temperatures below freezing, which were technological challenges. Toyota has made advances by solving technological issues such as the above and has been working towards the practical use of such solutions.

Toyota aims to continue its efforts to offer a diverse line-up of hybrid vehicles, enhance engine power while improving fuel economy and otherwise work towards increasing the sales of hybrid vehicles.

Conventional Engine Vehicles

Subcompact and Compact

Toyota’s subcompact and compact cars include the four-door Corolla sedan, which is one of Toyota’s best selling models. The Yaris, marketed as the Vitz in Japan, is a subcompact car designed to perform better and offer greater comfort than other compact cars available in the market, with low emissions that are particularly attractive to European consumers. In Japan, Toyota introduced the micropremium iQ in November 2008, the remodeled Passo in February 2010, the remodeled Ractis in November 2010, the remodeled Vitz in December 2010, the remodeled Corolla Axio/Fielder in May 2012, the remodeled Porte and its variant, the Spade, in July 2012 and the remodeled Auris in August 2012. In India and other markets, Toyota introduced the Etios. In addition, Toyota is planning to introduce the AGYA, which is designed and manufactured by Daihatsu.

Mini-Vehicles

Mini-vehicles are manufactured and sold by Daihatsu. Daihatsu manufactures mini-vehicles, passenger vehicles, commercial vehicles and auto parts. Mini-vehicles are passenger cars, vans or trucks with engine displacements of 660 cubic centimeters or less. Daihatsu sold approximately 650 thousand mini-vehicles and 189 thousand automobiles on a consolidated basis during fiscal 2013. Daihatsu’s largest market is Japan, which accounted for approximately 80% of Daihatsu’s unit sales during fiscal 2012. From 2011, Toyota began to sell some mini-vehicles manufactured by Daihatsu under the Toyota brand.

Mid-Size

Toyota’s mid-size models include the Camry, which has been the best selling passenger car in the United States for fifteen of the past sixteen calendar years (from 1997 to present) and also for the last eleven consecutive years. The Camry was fully remodeled in August 2011. Camry sales in the United States for 2012 were approximately 405 thousand units (including Camry hybrids). In addition, Toyota’s other mid-size models include (i) the REIZ for the Chinese market, (ii) the Avensis, which was remodeled in November 2008 for the European market, and (iii) the Mark X, which was remodeled in October 2009 for the Japanese market.

Luxury & Large

In North America, Europe, Japan and other regions, Toyota’s luxury lineup consists primarily of vehicles sold under the Lexus brand name. Lexus passenger car models include the LS, the GS, the ES, the HS, the IS, the CT, and the LFA. Lexus models also include the LX, the GX, and the RX sold as luxury sport-utility vehicles in the United States. Toyota commenced sales of its luxury automobiles in Japan under the Lexus brand in August 2005. As of March 31, 2013, the Lexus brand lineup in Japan includes the LS, the GS, the HS, the IS, the CT, the RX, and the LFA. The Toyota brand’s full-size luxury car, the Avalon, was remodeled in October 2012, and the Crown was remodeled in December 2012. Toyota also sells the Century limousine in Japan.

Sports and Specialty

In the United States Toyota sells the Scion tC, a sports model targeted at young drivers. In December 2010, Toyota introduced the LFA model under the Lexus brand as the high-performance sports model, and in April 2012, Toyota introduced the 86 (called Scion FR-S in the U.S.), a compact sports car with a front-mounted engine and rear-wheel drive.

Recreational and Sport-Utility Vehicles and Pickup Trucks

Toyota sells a variety of sport-utility vehicles and pickup trucks. Toyota sport-utility vehicles available in North America include the Sequoia, the 4Runner, the RAV4, the Highlander, the FJ Cruiser and the Land Cruiser, and pickup trucks available are the Tacoma and Tundra. The Tacoma, the Tundra, the Highlander and the Sequoia are manufactured in the United States. Toyota also offers three types of sport-utility vehicles under the Lexus brand, including the LX, the GX, and the RX. Toyota also manufactures the RX and RAV4 models in Canada. Toyota’s pickup truck, the Hilux, has been the best selling model of all Toyota cars sold in Thailand. In December 2008, Toyota introduced the new Venza in North America. The fully remodeled RX was introduced in 2009. In North America, the fully remodeled RAV4 was introduced in December 2012.

Minivans and Cabwagons

Toyota offers several basic models for the global minivan market. Its largest minivan, the Alphard was remodeled in May 2008 in Japan at the same time that the Vellfire was introduced. In addition, the Corolla Verso was introduced in December 2008 in Europe, and the Wish was remodeled in April 2009 in Japan. Toyota’s other minivan models include, in Japan, the Hiace, the Regius Ace, the Estima, the Noah, the Voxy, the Sienta, the Isis and, in North America, the Sienna.

Trucks and Buses

Toyota’s product lineup includes trucks (including vans) up to a gross vehicle weight of five tons and micro-buses, which are sold in Japan and in overseas markets. Trucks and buses are also manufactured and sold by Hino, a subsidiary of Toyota. Hino’s product lineup includes large trucks with a gross vehicle weight of over eleven tons, medium trucks with a gross vehicle weight of between five and eleven tons, and small trucks with a gross vehicle weight of up to five tons. As of fiscal 2013, Hino maintains a large share of the large truck market in Japan. Hino’s bus lineup includes medium to large buses used primarily as tour buses and public buses, small buses and micro-buses. Toyota and Hino maintain a large share of the small bus (including micro-buses) market in Japan.

Product Development

New cars introduced in Japan during fiscal 2013 and thereafter include the 86, Pixis Epoch and Spade. Remodeled cars in Japan during fiscal 2013 and thereafter include the Corolla Axio/Fielder, IS, Porte, Auris and Crown. New vehicles developed during fiscal 2013 and thereafter and introduced outside of Japan include the ES300h, Avalon HV and FR-S introduced in the United States, and the ES300h, IS300h, Auris HV and GT86 introduced in Europe. Remodeled cars outside of Japan during fiscal 2013 and thereafter include the ES, IS, Avalon and RAV4 in the United States, and the Auris and RAV4 in Europe.

In addition, the IMV product lineup based on the IMV project to optimize global manufacturing and supply systems is a lineup of strategic multipurpose vehicles produced from a single platform to meet market demand. The IMV product lineup includes, as of May 31, 2013, the Hilux, Fortuner, and Innova, one or all of which are available in all regions except for Japan.

Markets, Sales and Competition

Toyota’s primary markets are Japan, North America, Europe and Asia. The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market for the periods shown. The vehicle unit sales below reflect vehicle sales made by Toyota to unconsolidated entities (recognized as sales under Toyota’s revenue recognition policy), including sales to unconsolidated distributors and dealers. Vehicles sold by Daihatsu and Hino are included in the vehicle unit sales figures set forth below.


	Year Ended March 31,
	2009					2010					2011					2012					2013
	Units		%			Units		%			Units		%			Units		%			Units		%
Market
Japan		1,944,823		25.7	%		2,162,418		29.9	%		1,913,117		26.2	%		2,070,799		28.2	%		2,278,796		25.7	%
North America		2,212,254		29.2			2,097,374		29.0			2,031,249		27.8			1,872,423		25.5			2,468,804		27.8
Europe		1,061,954		14.0			858,390		11.9			795,534		10.9			797,993		10.8			799,085		9.0
Asia		904,892		12.0			979,651		13.5			1,255,016		17.2			1,326,829		18.0			1,683,578		19.0
Other*		1,443,433		19.1			1,139,329		15.7			1,313,123		17.9			1,283,885		17.5			1,640,401		18.5

Total		7,567,356		100.0	%		7,237,162		100.0	%		7,308,039		100.0	%		7,351,929		100.0	%		8,870,664		100.0	%

*	“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

The following table sets forth Toyota’s vehicle unit sales and market share in Japan, North America, Europe and Asia on a retail basis for the periods shown. Each market’s total sales and Toyota’s sales represent new vehicle registrations in the relevant year (except for the Asia market where vehicle registration does not necessarily apply). All information on Japan excludes mini-vehicles. The sales information contained below excludes unit sales by Daihatsu and Hino, each a consolidated subsidiary of Toyota. Vehicle unit sales in Asia do not include sales in Pakistan.


	(Thousands of Units)
	Fiscal Year Ended March 31,
	2009			2010			2011			2012			2013
Japan:
Total market sales (excluding mini-vehicles)		2,894			3,184			2,975			3,067			3,242
Toyota sales (retail basis, excluding mini-vehicles)		1,331			1,535			1,407			1,396			1,570
Toyota market share		46.0	%		48.2	%		47.3	%		45.5	%		48.4	%

	(Thousands of Units)
	Calendar Year Ended December 31,
	2008			2009			2010			2011			2012
North America:
Total market sales		16,294			12,705			14,058			15,417			17,153
Toyota sales (retail basis)		2,537			2,053			2,008			1,880			2,360
Toyota market share		15.6	%		16.2	%		14.3	%		12.2	%		13.8	%

Europe:
Total market sales		21,212			18,314			18,368			19,074			18,171
Toyota sales (retail basis)		1,141			905			808			820			838
Toyota market share		5.3	%		4.9	%		4.4	%		4.3	%		4.6	%
Asia:
Total market sales		5,567			5,951			7,430			7,861			8,986
Toyota sales (retail basis)		809			779			991			1,055			1,487
Toyota market share		14.5	%		13.1	%		13.3	%		13.4	%		16.5	%

Japan

Japan is one of the leading countries with respect to technological advancements and improvements and will continue to demonstrate such strength. Toyota strives to earn customer satisfaction by introducing products distinctive of Japan’s manufacturing ability such as value-added products including Lexus models, hybrid vehicles, vehicles with 3-seat rows and mini-vehicles. Toyota’s consolidated sales in the Japanese market in fiscal 2013 was 2,279 thousand units, an increase of 208 thousand units in comparison with the previous year. Toyota endeavors to secure and maintain its large share of and position atop the Japanese market. Toyota held a domestic market share (excluding mini-vehicles) on a retail basis of 47.3% in fiscal 2011, 45.5% in fiscal 2012 and 48.4% in fiscal 2013.

Although Toyota’s principle is to conduct production in regions where there is demand, it considers Japan to be the source of its good manufacturing practices. Toyota supports its operations worldwide through measures such as the development of new technologies and products, low-volume vehicles to complement local production, production of global vehicle models which straddle multiple regions, and supporting overseas factories. In Japan, Toyota is implementing flexible production based on market needs, in order to support its large share of domestic sales.

In January 2011, Central Motor Co., Ltd., Toyota’s subsidiary, began production at its Tohoku plant, implementing innovative production technology that realizes cost reductions. The Tohoku plant produces compact vehicles such as the Yaris sedan and the Corolla Axio. In addition, Kanto Auto Works, Ltd. became a wholly-owned subsidiary of Toyota in January 2012. In July 2012, Toyota integrated Central Motor Co., Ltd.,

Kanto Auto Works, Ltd. and Toyota Motor Tohoku Corporation to establish Toyota Motor East Japan, Inc. as a new company. This integration is intended to enable Toyota Motor East Japan, Inc. to design, develop, and produce globally competitive compact cars, manufacture auto parts, and support Toyota’s overseas operations. Toyota has established three domestic production bases, which are Tokai, Kyushu, and Tohoku regions.

In January 2012, Toyota Auto Body Co., Ltd. became a wholly-owned subsidiary of Toyota. Toyota Auto Body Co., Ltd. is primarily responsible for integrating the planning, development, and production of minivans, commercial vehicles, SUVs, etc.

Since Toyota formed an alliance with Fuji Heavy Industries, Ltd. (“FHI”) in 2005, Toyota and FHI have utilized each other’s resources in development and production such as moving some of Toyota’s production to FHI’s North American production center operated by Subaru of Indiana Automotive, Inc. In April 2008, in order to create synergy and to further strengthen competitiveness, Toyota, Daihatsu and FHI agreed on the following three points: (1) Toyota and FHI will jointly develop a compact rear-wheel-drive sports car that will be marketed by both Toyota and FHI, (2) Toyota will provide FHI with a compact car on an original equipment manufacturing basis (“OEM”) and (3) Daihatsu will supply FHI with mini-vehicles and an FHI version of the Daihatsu Coo compact car on an OEM basis. In order to promote a smooth cooperation, FHI transferred 61 million FHI shares owned by FHI to Toyota in July 2008. As a result of this transfer, Toyota owns 16.5% of FHI issued shares.

In Japan, there are five major domestic manufacturers, five specialized domestic producers and a growing volume of imports from major United States and European manufacturers. The prolonged economic slump in the Japanese economy and the recent increases in environmental awareness have also shifted consumer preference towards more affordable automobiles such as compact and subcompact vehicles and towards utility vehicles such as mini-vans. For more than 40 years, Toyota has maintained its position as the largest automobile manufacturer in Japan. Every year since fiscal 1999, Toyota, excluding Daihatsu and Hino, has achieved a market share (excluding mini-vehicles) of over 40%, reflecting in part the success of the introduction of new models for subcompact and compact cars, mini-vans and sedans. In August 2005, Toyota launched the Lexus brand in Japan and achieved a record top market share of 24.8% in the luxury market in fiscal 2012. Toyota aims to further distinguish the Lexus brand by continuing to attract new and affluent customers including customers that typically had purchased imported vehicles.

North America

The North American region is one of Toyota’s most significant markets. While the automotive market struggled in the aftermath of the financial crisis beginning in 2008, Toyota has since reorganized its production structure and made improvements to its product lineup. In addition, Toyota is actively working to promote increased local operations independence in North America, in accordance with the Toyota Global Vision, announced in 2011.

In the North American region, of which the U.S. is the center, Toyota has a wide product lineup (excluding large trucks and buses), and sold 2,469 thousand vehicles on a consolidated basis in fiscal 2013. This represents approximately 28% of Toyota’s total unit sales on a consolidated basis. The U.S., in particular, is the largest market in the North American region, accounting for 89% of the retail sales of Toyota in such region. Currently, due to the recovery from shortages in parts and components resulting from the effects of the Great East Japan Earthquake and the floods in Thailand, sales figures for fiscal 2013 were 131.9% of those in the previous fiscal year.

Toyota commenced sales of the first-generation Prius hybrid model in North America in 2000. The Prius became Toyota’s best selling model behind the Corolla and Camry, having gained particular support among customers concerned with the environment. Toyota introduced the first hybrid model under the Lexus brand, the RX400h, and the Highlander hybrid in 2005. Toyota began sales of the HS250h in 2009 and the CT200h and Prius V in 2011. Further, Toyota continued expanding its hybrid models with the introduction of models such as the Prius C, ESh and Avalon HV in 2012.

Since the introduction of the LS and ES models under the premium brand model, Lexus, in the United States in 1989, Toyota has expanded its Lexus sales with models including the GS, IS and RX, etc. In 2012, Toyota introduced the all-new GS and ES models, and unit sales reached 244 thousand units. Toyota is planning to further increase sales through the introduction of the new IS model in 2013.

Toyota is continuing to revise its production in North America in response to changes in market conditions. Toyota discontinued the joint production of the Tundra in its Indiana and Texas plants, and designated the Texas plant as the sole production facility for the Tundra in November 2008. Also in November 2008, Toyota’s Kentucky plant commenced production of the new Venza model, and a decision was made to commence production of the Lexus ES350 for sale in the North America market starting by summer of 2015. At the Indiana plant, local production of the Highlander began in October 2009 and in 2013, Toyota plans to increase production capacity at the plant to coincide with the shift to the next generation model. Toyota also plans to increase production capacity of auto parts at its automatic transmission plant in West Virginia and engine plants in Kentucky and Alabama to meet the expanded production capacities of vehicles in the U.S. The new Woodstock plant in Canada commenced production of the RAV4 in November 2008 and the production capacity at the Woodstock plant increased from 150 to 200 thousand units per year in January 2013. Also, Toyota plans to commence production of the RX450h hybrid model at its Cambridge plant by the beginning of 2014.

On the other hand, due to the termination of the NUMMI joint venture with GM in the middle of 2009, Toyota ceased placing orders for the Tacoma and Corolla with NUMMI and production was stopped at the NUMMI plant in April 2010. Equipment utilized in the production of the Tacoma model was transferred to the Texas plant, where production of the Tacoma began in July 2010. The Corolla was produced and supplied by the Cambridge plant in Canada, and finished vehicles were exported into North America from the Takaoka plant and Kanto Auto Works, Ltd. in Japan. Starting October 2011, Toyota, instead of importing from Japan, has begun production of the Corolla at its Mississippi plant. Furthermore, in November 2012, Toyota came to an agreement with Mazda Motor Corporation under which Toyota-brand light vehicles for sale mainly in North America will be produced at Mazda’s new plant.

As for Toyota’s vehicle development in North America, the Toyota Technical Center spearheads the design, planning, and evaluation of vehicles and parts as to their ability to meet customer needs. As a measure towards local self-reliance, Toyota plans to increase the number of staff present at the Center, and will continue to promote self-reliance towards producing even better cars in the future.

Europe

While the outlook for the future remains unclear in light of the ongoing European sovereign debt crisis, and competition continues to intensify, Toyota has expanded its lineup of hybrid models and has entered into supply agreements with BMW and PSA for diesel engines and light commercial vehicles, respectively. In addition, Toyota is actively promoting production and sales measures that meet local demand by reevaluating its sales network periodically and strengthening its value chain including used car dealerships, after-sales services and finance and insurance services.

In 2012, as a result of the economic downturn in Southern European countries such as Spain and Italy, European market performance fell short of the previous year.

Despite sluggish sales in Western Europe, the overall unit sales in 2012 exceeded the previous year’s figures due to sales increases in Russia. Toyota aims to further increase its market share with the expansion of its product lineup. Consolidated European sales of Toyota in fiscal 2013 was 799 thousand units, up 0.1% from fiscal 2012.

Toyota has in the past increased local production in response to sales growth, establishing Toyota Motor Manufacturing (UK) Ltd. (“TMUK”) in 1992, Toyota Motor Manufacturing Turkey Inc. in 1994 and Toyota Motor Manufacturing France S.A.S. in 2001 as vehicle supply factories to Europe. Further, in 2005, Toyota Peugeot Citroën Automobile was formed as a result of a joint venture with PSA Peugeot Citroën, allowing for the expansion of local production. However, in response to the downturn of the market resulting from the economic crisis in Europe, Toyota promptly reduced personnel and made adjustments to its plant operations. In addition, in light of the current levels of demand in the United Kingdom, TMUK limited its production to one production line

at its Burnaston plant. TMUK plans to reopen the second production line based on the direction of the market. To increase the utilization rate of these factories, Toyota plans to transfer the production of the Corolla from Japan to TMMT and begin exporting the TMMF Yaris to North America in 2013.

Toyota opened Toyota Motor Manufacturing Russia in 2007 as a base for its manufacturing operations in the Russian market, where future growth is expected. A two-shift production system started in September 2012 and the production capacity was increased from 20,000 units to 50,000 units per year. In addition, Toyota commenced contract assembly of SUVs by Sollers Bussan in Vladivostok in the spring of 2013. Toyota announced officially to plan to commence complete knock down, or CKD, production of SUVs in Kazakhstan beginning in the spring of 2014.

Toyota’s principal European markets are Germany, France, the United Kingdom, Italy, Spain and Russia. Toyota’s principal competitors in Europe are Volkswagen, Ford, Renault, Opel and Peugeot, as well as Korean manufacturers Hyundai and Kia, who have made significant expansions in the region.

Asia

In light of the importance of the Asian market that is further expected to grow in the long term, Toyota aims to build an operational framework that is efficient and self-reliant as well as a predominant position in the automotive market in Asia. Operating income for Asia in fiscal 2013 increased compared to fiscal 2012 due to the increase in sales and the impact of cost reduction activities. Sales were strong, particularly in Thailand, Indonesia and the Philippines, in the fourth quarter. Toyota has responded to increasing competition in Asia by making strategic investments in the market and developing relationships with local suppliers. Toyota believes that its existing local presence in the market provides it with an advantage over new entrants to the market and expects to be able to promptly respond to demand for vehicles in the region.

In this region, Toyota plans to further strengthen and solidify its business foundations by improving its product line-up, expanding local procurement, and increasing production capacities. For example, Toyota began producing IMV models (the Hilux, Fortuner and Innova) in Thailand, Indonesia, India, the Philippines and Malaysia in fiscal 2005 and in Vietnam in fiscal 2006. Furthermore, with increased production capacity, the Thailand plant now produces IMV models (the Hilux and Fortuner) for sale outside of Asia, including in Australia and in the Middle East, and has contributed greatly to the expansion of Toyota’s automotive business. Furthermore, as part of Toyota’s efforts to expand business going forward, Toyota Motor Thailand Co., Ltd., Toyota’s vehicle production base in Thailand, commenced production of the Camry hybrid in May 2009 and Prius in November 2011. Toyota also plans to start operation of its second Gateway plant in the autumn of 2013, which will increase production capacity by 80 thousand units, and will increase production capacity in Thailand to 770 thousand units. In India, Toyota has expanded its business by constructing a second plant with an annual production capacity of 70 thousand units, Toyota has also commenced production and sales of the Etios compact model designed specifically for the Indian market in December 2010. Furthermore, Toyota increased production capacity in India during 2012 and 2013 to 210 thousand units. Toyota began exporting the gasoline-fueled model of the Etios to South Africa from India in April 2012. Moreover, Toyota commenced operation of a second plant in Karawang, Indonesia, at the beginning of 2013 in order to meet the diverse customer needs and the expanding market. Toyota plans to increase the initial production capacity of 70 thousand units per year to 120 thousand units per year by the beginning of 2014. In addition, in 2012 Toyota began production and sales of the Camry hybrid in Taiwan, to accommodate the spread of environmentally-friendly vehicles. In light of the Korea-USA FTA conclusion, moreover, Toyota has begun sales of the U.S. produced Camry in Korea since January 2012.

Consolidated Asian sales of Toyota vehicles in fiscal 2013 was 1,684 thousand units, up 26.9% from fiscal 2012. In 2012, Toyota had a market share in Asia of 16.2% and achieved annual retail unit sales of approximately 1,443 thousand vehicles. Increased sales in robust economics primarily in Thailand and Indonesia contributed to the growth in the Asian market.

Toyota’s principal Asian markets are Thailand, Indonesia, India, Malaysia and Taiwan.

China

Toyota has been conducting its operations in China through joint ventures, and its success in producing products that meet local demands and in establishing its sales and service network has significantly contributed to Toyota’s profits. Based on the firm business foundation that it has established, Toyota is conducting its operations with the aim of promoting further growth and increasing profitability through further development of its sales and service network and expansion of its product lineup.

In China, Toyota has been conducting joint ventures with two major partners. First, with respect to the joint venture with China FAW Group Corporation, since Toyota first launched the Vios through the joint venture in 2002, Toyota has been producing and selling nine car models in China, including the Land Cruiser Prado, Land Cruiser, Corolla, Crown, REIZ, Coaster, RAV4 and Prius. With regard to increasing production capacity, in May 2007, Toyota commenced production of the new Corolla on the second line of the Tianjin Teda plant, which has an annual production capacity of 200 thousand units, and commenced production of the RAV4 on the same line in March 2009. Toyota is currently constructing a new factory in Changchun, China, where Toyota began producing the Corolla in May 2012 with an annual production capacity of 100 thousand units. Guangzhou Toyota Motor Co., Ltd., a joint venture between Toyota and Guangzhou Automobile Group Co., Ltd., commenced production of the Camry in May 2006 with an annual production capacity of 100 thousand units on a single shift basis and, by late 2006, it expanded its annual production capacity to 200 thousand units on a double shift basis. In addition, it commenced production of the Yaris in May 2008, and the second Guangzhou line commenced production of the Highlander in May 2009 and the E’z in June 2011. In 2014, Toyota plans to open a plant in Changshu in Jiangsu, China for the production of the CVT.

Total vehicle sales in the Chinese market increased 3% from 18.79 million in 2011 to 19.43 million in 2012. In this market, Toyota’s sales in 2012 were 850 thousand vehicles. In the locally produced passenger vehicle market (total of approximately 13.6 million units), Toyota’s sales were 750 thousand units, for a market share of 6%. In the 2012 market, favorable conditions in the less-than-1.6 liter market continued, and the SUV market expanded as a result of customers’ value diversification. However, Toyota’s sales in 2012 saw a decrease for the first time, resulting in a 5% decrease compared to the previous year, due to the impact of the political conflict between Japan and China which arose in September 2012. As for Toyota’s distribution network, Toyota has been expanding the distribution network for locally produced vehicles in cooperation with Chinese joint venture partners under Tianjin FAW Toyota Motor Co., Ltd. and Guanqi Toyota Motor Co., Ltd., and for imported vehicles, Toyota has also been expanding primarily the Lexus brand sales network. Toyota plans to further increase sales by expanding the number of dealers and the product lineup for both locally produced and imported vehicles, particularly inland. In addition, as the market in China develops, Toyota plans to promote the so-called “Value Chain” businesses such as used cars, services, financing and insurance.

South and Central America, Oceania, Africa and the Middle East

Consolidated sales of Toyota vehicles in fiscal 2013 in South and Central America, Oceania, Africa and the Middle East (collectively, the “Four Regions”) was 1,640 thousand units, an increase of 27.8% from fiscal 2012. The increase was due to factors such as the strong sales of IMV models. The core models in this region are global models such as the Corolla, IMV (the Hilux) and Camry, which are designed to satisfy regional demands, while keeping production costs down by using common platforms and core parts and components with vehicle models in other regions. Furthermore, with respect to production, Toyota Motor Corporation Australia Ltd., Toyota’s vehicle production base in Australia, commenced production of the Camry hybrid in December 2009. In addition, in order to increase production of IMV models, Toyota expanded the annual production capacity of its Argentina factory from 70 thousand units to 90 thousand units during the second half of 2011. In order to expand business in Brazil, Toyota constructed a new factory in Sorocaba with an annual production capacity of 70 thousand units, and in September 2012, began production and sales of the compact vehicles introduced to the Indian market. Further, Toyota began local production of the Fortuner in Egypt in April 2012.

In these regions, which are expected to become increasingly important to Toyota’s business strategy, Toyota aims to develop new products which meet the specific demands of each region, increase production and further promote sales.

Toyota’s principal markets in the Four Regions are Brazil in South and Central America, Australia in Oceania, South Africa in Africa and Saudi Arabia in the Middle East.

Production

Toyota and its affiliated companies produce automobiles and related parts and components through more than 50 overseas manufacturing companies in 27 countries and regions besides Japan. Toyota’s major manufacturing facilities include plants in Japan, the United States, Canada, the United Kingdom, France, Turkey, Thailand, China, Taiwan, India, Indonesia, South Africa, Australia, Argentina and Brazil. Daihatsu brand vehicles are produced at 4 factories in Japan and 3 manufacturing companies in 3 other countries, including Indonesia and Malaysia. Hino brand vehicles are produced at 2 factories in Japan and 9 manufacturing companies in 9 countries, including Indonesia and Thailand. For a listing of Toyota’s principal production facilities, see “Information on the Company — Property, Plants and Equipment”.

In promoting a sustainable growth strategy, establishing a system capable of providing optimal supply of products in the global market is integral to Toyota’s strategy. In May 2010, Toyota announced its production strategy aimed at achieving an optimal supply system in the global market. For example, Toyota will increase its local production capacities to meet a wide range of growing customer demands in a timely manner in emerging countries such as China and India. On the other hand, in developed countries with mature markets, Toyota will reconsider production models to respond to changes in market demand and establish a flexible and efficient production system that can withstand currency fluctuations. In 2012, 75.4% of Toyota vehicles sold in overseas markets were manufactured in overseas plants by Toyota and its unconsolidated affiliated companies. In 2012, approximately 75.3% of Toyota vehicles sold in North America were produced in North America. Of the vehicles sold in Europe in 2012, approximately 58.5% were produced in Europe. In fiscal 2013, Toyota produced on a consolidated basis approximately 4,276 thousand vehicles in Japan and approximately 4,422 thousand vehicles overseas, compared to approximately 3,940 thousand vehicles in Japan and approximately 3,495 thousand vehicles overseas in fiscal 2012.

The following table shows the worldwide vehicle unit production by Toyota for the periods shown. These production figures do not include vehicles produced by Toyota’s unconsolidated affiliated companies. The sales unit information elsewhere in this annual report includes sales of vehicles produced by these affiliated companies. Vehicles produced by Daihatsu and Hino are included in the vehicle production figures set forth below.


	Year Ended March 31,
	2009		2010		2011		2012		2013
Units Produced		7,051,032		6,809,440		7,169,721		7,435,781		8,698,454

Toyota closely monitors its actual units of sale, market share and units of production data and uses this information to allocate resources to existing manufacturing facilities and to plan for future expansions.

See “— Capital Expenditures and Divestitures” for a description of Toyota’s recent investments in completed plant constructions and for a description of Toyota’s current investments in ongoing plant constructions.

The Toyota Production System

Toyota pioneered the internationally recognized production system known as the “Toyota Production System”. The Toyota Production System is based on Toyota’s own concepts of efficient production of only necessary and quality products and efficient cost reduction, and has the following two principal elements:

•

“Just-in-Time”, and

•

“Jidoka”.

Just-in-Time is an approach in which necessary parts and components are manufactured and delivered in just the right quantity in a timely manner just as they are needed. This allows Toyota to maintain low levels of inventory while maintaining operating efficiency.

Jidoka is a production concept which involves immediate stop of work when problems arise in the production line in order to stop the production of defective items from being passed on to subsequent stages of the process, and therefore making quality assurance an inherent part of the production process. To achieve this, Toyota’s equipment is designed to detect and highlight abnormalities and to stop whenever abnormalities occur. Toyota also authorizes its machine operators and other members of its production team to stop production whenever they note anything suspicious. This helps Toyota to build quality into the production process by avoiding defects and preventing the waste that would result from producing a series of defective items.

Toyota believes that the Toyota Production System allows it to achieve mass-production efficiencies even in high-mix low-volume production. This belief gives Toyota the flexibility to respond to changing consumer demand without significantly increasing production costs. While the Toyota Production System remains the basis of Toyota’s automobile production, the system has been expanded for use in Toyota’s parts production, logistics and customer service activities as well.

Through the Toyota Production System, issues are identified and analyzed at the actual site, the entire production process is made visible, and production efficiency as well as product quality are improved through the application of measures to address the sources of problems. As one method to implement these measures, Toyota utilizes sophisticated information technologies to improve each step of its vehicle development process, from product planning to commencement of mass-production. These technologies are intended to enhance flexibility, simplification, quality, cost competitiveness, and speed. Specifically, detailed virtual assembly and other simulations of manufacturing processes are conducted on computer for a new vehicle or new production equipment/systems before a prototype is made. An actual prototype is made only after defects and related issues have been identified and resolved by computer simulation, thereby minimizing the time required for rebuilding prototypes and significantly shortening the time required before starting mass production. Moreover, this system is used to prepare virtual factories and other visual aids in order to facilitate training and communication at overseas plants and enable the efficient transfer of necessary technology and skills.

In order to strengthen manufacturing and promote localization of overseas production, Toyota established the Global Production Center (“GPC”) in July 2003 as a development and training center for global human resources. The GPC is intended to introduce local managers to the Toyota methodology, allowing them to train their subordinates with the local management. GPC develops simple, easy-to-understand and efficient training systems for the development of explicit knowledge. One characteristic of the GPC is that managers and supervisors, new hires and experienced workers can all receive common skill training. GPC’s training system involves a pre-training phase where trainees learn basic skills and discover the skills that they must acquire through image training. This is followed by various steps, from basic skill training, elemental task training, to standard task training, which is a sure method of training. The fruits of this training method are reduced training time, higher levels of achievement and the efficiency of training. Since January 2006, Toyota has opened regional GPCs in North America, Europe and Asia. In each region, Toyota commenced courses where trainees from each department are trained by local trainers to become trainers themselves.

With the aim of enhancing its competitive edge in “self-manufacturing”, Toyota, since 2001, has been developing and implementing the “simple and user-friendly operation systems & facilities that can be handled by anyone, anywhere”. Toyota is developing its innovative production system, facilities and processing technologies and is currently promoting it at a global level.

Distribution

Toyota’s automotive sales distribution network is the largest in Japan. As of March 31, 2013, this network consisted of 281 dealers employing approximately 34 thousand sales personnel and operating approximately 4.7 thousand sales and service outlets. Toyota owns 15 of these dealers and the remainder are independent.

Toyota believes that this extensive sales network has been an important factor in its success in the Japanese market. A large number of the cars sold in Japan are purchased from salespersons who visit customers in their homes or offices. In recent years, however, the traditional method of sales through home visits is being replaced by showroom sales and the percentage of automobile purchases through showrooms has been gradually increasing. Toyota expects this trend to continue, and accordingly, plans to improve its sales activities such as customer reception and meticulous service at showrooms to increase customer satisfaction.

Sales of Toyota vehicles in Japan are conducted through four sales channels — “Toyota”, “Toyopet”, “Corolla” and “Netz”. In addition, Toyota introduced the Lexus brand to the Japanese market in August 2005, and currently distributes the Lexus brand vehicles through a network of 172 sales outlets in order to enhance its competitiveness in the domestic luxury automobile market. The following table provides information for each channel as of March 31, 2013.


	Dealers
Channel	Toyota Owned		Independent		Total		Market Focus
Toyota		4		45		49	Luxury channel for Toyota brand vehicles
Toyopet		4		48		52	Leading channel for the medium market
Corolla		4		70		74	Volume retail channel centering on compact models
Netz		3		103		106	Sales channel targeting customers with new values for the 21^st century

Brand					Sales Outlets		Market Focus
Lexus						172	Premium brand

Outside Japan, Toyota vehicles are sold through approximately 170 distributors in approximately 170 countries and regions. Through these distributors, Toyota maintains networks of dealers. The chart below shows the number of Toyota distributors as of March 31, 2013 by country and region:


Country/Region	Number of Countries		Number of Distributors
North America		3		5
Europe		36		30
China		1		4
Asia (excluding China)		17		12
Oceania		17		14
Middle East		17		16
Africa		53		45
Central and South America		31		42

Improve Efficiency

Toyota is working on the following to create a structure allowing for efficient development, production and sales that can respond flexibly to changes in the external environment:

•

working with suppliers to dramatically increase the efficiency of development,

•

creating a production structure that can better withstand fluctuations in demand and currency exchange rates, and

•

strengthening sales capabilities in line with local conditions.

Toyota also plans to improve profitability and enhance operating efficiency by continuing to pursue aggressive cost reduction programs, including:

•

improving product development and production efficiencies through the re-integration and improvement of vehicle platforms and power trains and through the development of electronic platforms which organize electronic devices of vehicles as a package and standardize electronic structure and infrastructure,

•

implementing Ryohin-Renka Cost Innovation (“RR-CI”) activity, which aims at the elimination of waste in all processes from design to production while ensuring the reliability and safety of each part,

•

applying advanced information technologies to improve efficiency throughout the product development and production processes,

•

increasing the focus on global purchasing opportunities, standardization and modularization to optimize purchasing from suppliers,

•

streamlining production systems, and

•

improving the efficiency of domestic and international distribution.

Toyota is further improving production efficiency by installing more versatile equipment and systems, modifying vehicle body designs to allow for a greater variety of models on each production line and sharing more parts among vehicles, not simply among different models, but also among different platforms.

Toyota continues to focus on reducing costs and improving efficiency through various measures. One of these measures is the reduction in the number of platforms used in vehicle production. Platforms are the essential structures that form the base of different vehicle models. By using a common platform for the production of a greater number of models, Toyota believes that it will be able to decrease the substantial expenditures required to design and develop vehicles. In addition, Toyota believes that it will be able to achieve the scale benefits of producing larger volumes per platform, thereby reducing manufacturing cost per vehicle.

In April 2012, Toyota announced a new development framework, the TNGA, which reconciles sweeping advances in product appeal with cost reductions. The new framework sets forth an architecture that incorporates not only the three fundamental vehicle functions of moving, turning and stopping, but also ergonomics such as driving position as well as freedom of design. Toyota plans to efficiently develop cars with high basic-performance attributes by developing module parts based on this architecture. The TNGA provides for handling multiple models simultaneously in grouped development projects that will increase the sharing of parts and core vehicle components. This sharing, carried out in cooperation with suppliers, will result in lowered costs, thereby allowing developmental manpower and funds to be divided between R&D to meet consumer preferences and R&D to meet regional needs, resulting in further product improvement.

By April 2013, Toyota established systems to rapidly promote the TNGA and reevaluated the way it does business from the ground up. Toyota plans to continue to produce high-quality, profitable and attractive cars.

Enhancing Vehicle Functionality and Intelligent Transport Systems — Realizing a Smart Mobility Society

Toyota is striving to enhance vehicle functionality that will increase the attractiveness of vehicles and the excitement of driving. Toyota is also working in various ways to realize enhanced transport systems that are safer, more environmentally friendly and comfortable through ITS, Toyota’s comprehensive initiative regarding people, cars and the driving environment. Today, automobiles are not just a means of transport, but are also expected to play additional roles in people’s lives and society. Toyota will continue to face this challenging goal and aim to innovate technology that will lead to an enriched lifestyle that offers people peace of mind in a smart mobility society where vehicles will manifest new kinds of value-added and attractive functions and features that are closely connected to all aspects of human activity and life as a part of smart communities worldwide.

Enhancing Vehicle Functionality — Information service functions.

To Toyota, enhancing vehicle functionality means advancing information service functions that integrate vehicles with telecommunication systems, and driving assistance functions that use communication technologies and sensing technologies to create vehicles with intelligent features. Information service

functions can improve the convenience and enrich the driving experience by means of information communication technologies, which add new functions “connected” to the basic vehicle functions of “running, turning and stopping”. Examples include the following:

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Advanced car navigation systems are equipped with functions such as displaying maps and detailed information about the car parking space and the VICS (Vehicle Information and Communication System) that provides real-time information about road traffic such as congestion, accidents, traffic restrictions and parking. These car navigation systems play an important role in providing drivers with various types of information on safety, smooth traveling, comfort and convenience.

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G-BOOK is the latest information network service that merges the latest network technologies and car multimedia, prior to the arrival of the ubiquitous network society. G-BOOK provides various types of information useful for driving a car as well as safety and security services that detect unusual conditions in the vehicle, which supports a lifestyle using automobiles anytime and anywhere through a network. In 2005, Toyota started G-BOOK ALPHA and G-Link that is a telematics service exclusive to Lexus, which added various features including the traffic congestion forecast service. In 2007, Toyota launched G-BOOK mX, which has matured as a comprehensive telematics service and is built on the proven reliability and security of G-BOOK with the addition of services allowing drivers to use more convenient navigation systems such as “Map-on-Demand” — the world’s first technology for automatically updating map data and “Probe Communication Traffic Information” that provides drivers with highly precise information on traffic congestion.

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HELPNET emergency call service is an emergency notification system that transmits necessary information such as the vehicle location either automatically or through the touch of a button in the event of a traffic accident or medical emergency. It immediately contacts police and fire departments through the HELPNET Operation Center. This system is integrated into G-BOOK and G-Link to improve the quality of services. HELPNET shortens the time taken to report following an emergency situation, which contributes to decreasing the number of traffic accident fatalities and reducing the level of impact, preventing secondary disasters and easing traffic congestion.

In addition to the above, Toyota also operates a Japanese-language website, GAZOO.com. The name “Gazoo” originates from the Japanese word gazo meaning images. Gazoo was established as a membership Internet service linking Toyota, its national dealer network and Gazoo members, and has provided information on new and used Toyota vehicles and related services as well as online shopping capabilities. As an interactive portal for automobiles, in addition to information on Toyota vehicles, Gazoo currently provides information on other automobile companies and also offers a rich blogging feature. In addition, Gazoo features GAZOO Racing and GAZOO Mura, through which customers can experience the enjoyment that cars offer, to further complement its content line-up. In October 2008, Toyota introduced the new Internet-based service GAZOO METAPOLIS, which is Toyota’s own virtual city using 3-D images, to inspire new interest in cars and propose new ways for people to enjoy their vehicles through the Internet. Toyota utilized its GAZOO technology to further expand its automobile information service by launching the G-BOOK telematics service in Japan in fall 2002 and G-Link, which is a service exclusive to Lexus, in August 2005. Toyota also offers a theft detection system, vehicle tracking service, operator support service as standard to enhance services aiming to provide safety, security and comfort for G-BOOK and G-Link users in their lifestyle using vehicles. With G-BOOK mX announced in April 2007, Toyota started offering services that allow drivers to use more convenient navigation systems such as “Map-on-Demand” — the world’s first technology for automatically updating map data. Also, Toyota has further strengthened its linkage between Gazoo and G-BOOK and has, for example, allowed map information searched on a blog on GAZOO.com to be used on G-BOOK, further maturing as a comprehensive telematics service. In Japan, Toyota is seeking to promote the use of the G-BOOK by equipping all Crown models with navigation systems with the G-BOOK and increasing the number of car navigation system models that are compatible with G-BOOK. Toyota has also licensed its G-BOOK technology to certain other competitors in Japan. Toyota is applying the technology and experience it has accumulated in Japan to regions outside Japan. G-BOOK services have been available in China since March 2009, and its unique telematics services in the

United States was launched in August 2009. In addition, Toyota began offering the new G-BOOK software for smartphones starting from December 2010 in Japan, and began to offer the same service in Thailand starting March 2012.

In addition, in March 2004, Toyota launched its CRM (Customer Relationship Management) system called e-CRB (evolutionary Customer Relationship Building) in Thailand. e-CRB builds on a technology cultivated through the development of Gazoo and G-BOOK and offers its customers a variety of services such as providing information of new vehicles, accepting requests for brochures and estimates and notifying customers when it is time for maintenance by keeping track of the vehicle’s maintenance history and mileage. In addition, e-CRB offers an advanced operation system that can be utilized comprehensively at dealers including new and used cars and services. Toyota is currently promoting e-CRB in countries such as China, Thailand, Australia, India and Brazil where steady progress has been made as the service-in ratio has increased.

Also, Toyota introduced a system called Sales Logistics Integrated Management (“SLIM”) in Guangzhou, China. By utilizing real sales information and linking with production and distribution, Toyota is able to realize the Just-in-Time production system of producing and delivering only the number of vehicles that have been sold. SLIM has been recognized to significantly increase the freshness of inventory and improve cash flow.

In September 2010, Toyota announced its smart-grid initiatives, which are intended to demonstrate efficient energy use toward the realization of a low-carbon and energy-saving society. By utilizing technology cultivated through the Internet and telematics services mentioned above, Toyota developed the Toyota Smart Center (“TSC”) that optimally controls electricity and links EV (electric vehicles) and PHV (plug-in hybrid vehicles) with homes, and conducted in Rokkasho Village in Aomori, a demonstration project aimed to reduce overall CO₂ emissions and users’ electricity costs. In addition, in order to develop a global platform of the TSC, Toyota announced a partnership with Microsoft Corp. in April 2011 and a partnership with Salesforce.com in May 2011. Toyota plans to utilize the cloud technology of these two companies in its Internet and telematics services to build a framework for TSC’s global implementation. In January 2012, Toyota began eConnect for PHV and “TOYOTA friend” services. In May 2013, Toyota utilized the latest version of Microsoft’s SharePoint to comprehensively redesign GAZOO, the automobile information portal site. Toyota is also developing its “Big Data Traffic Information Service,” a new kind of traffic-information service utilizing big data including vehicle locations and speeds, road conditions and other parameters collected and stored via telematics services. Based on such data, traffic information, statistics and other related information can be provided to local governments and businesses to aid traffic flow improvement, provide map information services and assist disaster prevention measures. In June 2013, Toyota started accepting applications to use the service from local governments and businesses across Japan. Going forward, Toyota plans to continue to work with new information technologies and the IT industry to establish a framework for TSC’s global implementation and to realize a mobility society in the future.

Enhancing Vehicle Functionality — Driving Assistance Functions.

Toyota’s driving assistance functions offer functions that assist drivers with an aim to lessen the burden of driving, enhance safety and provide pleasure of driving to everyone. Toyota is proceeding with enhancements to commercialize various functions that assist the driver in sensing external information, avoiding danger and making appropriate maneuvers. These functions have started to be incorporated in some Toyota vehicles. Examples of driving assistance functions include the following:

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VDIM (Vehicle Dynamics Integrated Management) is a system that constantly monitors the driver’s operations and the vehicle’s situation and centrally manages the engine, steering mechanisms and brakes. By stabilizing the vehicle before the driver loses control of the vehicle, the VDIM achieves a high level of ‘active safety’ and improves driving performance, namely running, turning and stopping.

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“Pre-collision System” is a system that perceives possibilities of a crash with obstacles or the car in front through a millimeter-wave radar sensor that can precisely detect objects even in bad weather conditions. If collision seems to be unavoidable, it proceeds to activate safety devices at an early stage to reduce any damage. Toyota is also developing an advanced system that detects pedestrians using a stereo camera and a driver monitoring camera that detects the driver’s face orientation and the opening and closing of eyes, which enable the determination of the likelihood of a collision at an earlier stage.

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Radar Cruise Control (with all-speed tracking function) allows the vehicle to keep a constant distance between itself and the preceding vehicle within a speed range from zero to a preset speed, automatically slowing down and stopping if necessary to avoid collision. When the car in front speeds up, it allows the driver to accelerate, resuming the system.

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“Lane Keeping Assist System” is a system that uses a camera to detect white or yellow lane markers while driving on a highway. The system assists the driver’s operation of the steering wheel in order to help keep the vehicle traveling between the lane markers by controlling electric power steering, and also warns the driver if it detects possible deviation. This system does not automatically control the steering to maintain travel between lane markers, but requires the driver to steer.

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“Intelligent Parking Assist” is the world’s first parking assistance system that enables the vehicle to be automatically steered by electric steering when backing into a parking spot or when parallel-parking. The driver presets the parking position on the display monitor. The system allows the driver to set the parking position more easily, reducing driver maneuvering by using a spatial cognition feature that detects the parking space through ultrasonic sensors.

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“Blind Spot Monitor” is a system which aims to reduce accidents by alerting the driver to other vehicles in the driver’s blind spot diagonally behind the driver’s seat with sound and visual display in the side mirrors while changing lanes.

Enhancing Transport Systems.

Enhancing transport systems requires taking a general approach that addresses various factors across a wide scope that are pertinent not only to vehicles but also roads, people and public transport systems in order to ensure smooth and efficient movement of people and vehicles and to build a safe transportation environment. In addition to VICS and ETC (Electronic Toll Collection System), which are already standard in Japan, the “Vehicle-Infrastructure Cooperative Systems that Support Safety Driving,” which combines cutting edge IT and vehicle technology, is in development and has begun to be partially implemented.

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The “ITS Spot Service” commenced in 2009 and corresponding products are available for purchase. Mainly for use on highways, this service provides drivers with information related to road traffic and safe driving that is transmitted from road infrastructures to car navigation systems through video and voice.

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In the summer of 2011, Toyota introduced products corresponding to the driving safety support system (“DSSS”) which the National Police Agency has started operating. Mainly for use on normal roads, this system supports safe driving, including by preventing the driver from overlooking red lights, by transmitting traffic control information (traffic lights and signs, etc.) and other local information from road infrastructures to automobiles.

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Systems aimed at further reducing accidents, improving fuel efficiency and reducing CO2 emissions are in development. Through direct and continuous exchange of information between vehicles and the road, other vehicles and pedestrians, these systems aim to mitigate side collisions and accidents involving pedestrians, which have been difficult to mitigate to date. This also includes systems such as C-ACC (Co-operative Adaptive Cruise Control) which supports smooth acceleration and deceleration when following behind another vehicle, and fuel efficient driving.

Toyota is committed to developing new ITS products. Toyota believes that intelligent transport systems will become an integral part of its overall automotive operations and enhance the competitiveness of its vehicles. As familiarity with and demand for ITS products grows, Toyota expects an increasing number of ITS products to become commercially available and achieve greater acceptance each year.

Smart Communities.

In April 2010, Toyota City was selected as a “Model Region for Next-Generation Energy Systems” by the Ministry of Economy, Trade and Industry. Toyota has since joined the “Toyota City Low-Carbon Society Verification Council” (established in August 2010), and has been carrying out experiments relating to the “Optimization of Local Energy Use in Households and Destinations (commercial and public facilities)” and “Establishment of a System for Low-Carbon Emission Transportation.” In addition, starting in 2014, Toyota will launch an experimental ultra-compact electric vehicle sharing program in Grenoble, France, together with the city of Grenoble and local companies.

In February 2013, Toyota established the “F-Grid Ohira, Miyagi Limited Liability Partnership,” a smart community business which operates the “F-Grid” in the Sendai Hokubu Industrial Park in the village of Ohira, Miyagi, together with Toyota affiliated companies. The Partnership began supplying electricity and heat to partners in the industrial park in April 2013. This business aims to contribute to “creating a safe and secure community with the community and the industrial park working as one,” “revitalizing local industry” and “revitalizing the community.” Toyota believes that the elemental technologies developed through these experiments and businesses will help in the creation of new systems for society that meet differing social environments and municipal needs, not just in Japan but around the world, in both developed and emerging countries, and will play a role in the creation of energy and transportation infrastructure to help spread next-generation eco-cars.

Financial Services

Toyota’s financial services include loan programs and leasing programs for customers and dealers. Toyota believes that its ability to provide financing to its customers is an important value-added service. In July 2000, Toyota established a wholly-owned subsidiary, Toyota Financial Services Corporation (“TFSC”), to oversee the management of Toyota’s finance companies worldwide, through which Toyota aims to strengthen the overall competitiveness of its financial business, improve risk management and streamline decision-making processes. Toyota plans to expand its network of financial services, in accordance with its strategy of developing auto-related financing businesses in significant markets. Accordingly, Toyota currently operates financial services companies in 34 countries and regions, which support its automotive operations globally.

Toyota’s revenues from its financial services operations were ¥1,170.6 billion in fiscal 2013, ¥1,100.3 billion in fiscal 2012 and ¥1,192.2 billion in fiscal 2011. In fiscal 2012, Toyota collaborated with dealers in various countries and regions, and the financial services operations were steady overall, despite the harsh economic environment due to the negative impact of the Great East Japan Earthquake and the floods in Thailand. In fiscal 2013, with strengthening economies predominantly in the United States and emerging markets such as Asia, Toyota’s share of financing provided for new car sales of Toyota and Lexus vehicles in regions where TFSC operates hit 34%, its highest level ever, and the balance of loan receivables increased steadily as a result of the continued timely implementation of sales programs in collaboration with dealers. Meanwhile, Toyota is making efforts to provide both its customers and dealers with stable financial services, by diversifying its funding mechanisms with ABCP (Asset Backed Commercial Paper) and ABS (Asset Backed Securities), in addition to mid- to long-term financings, primarily in commercial paper issuances, corporate bonds and bank borrowings. In fiscal 2012, Toyota continued to perform detailed credit appraisals and serve customers by monitoring bad debt and loan payment extensions, and the percentage of credit losses improved by 0.19% from fiscal 2011 to 0.22%. In fiscal 2013, the percentage of credit losses remained at 0.23%, which was almost the same level as fiscal 2012. Toyota continues to work towards improving its risk management measures in connection with credit and residual value risks.

Toyota Motor Credit Corporation is Toyota’s principal financial services subsidiary in the United States. Toyota also provides financial services in 33 other countries and regions through various financial services subsidiaries, including:

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Toyota Finance Corporation in Japan,

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Toyota Credit Canada Inc. in Canada,

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Toyota Finance Australia Ltd. in Australia,

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Toyota Kreditbank GmbH in Germany, and

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Toyota Financial Services (UK) PLC in the United Kingdom.

Toyota Motor Credit Corporation provides a wide range of financial services, including retail financing, retail leasing, wholesale financing and insurance. Toyota Finance Corporation also provides a range of financial services, including retail financing, retail leasing, credit cards and housing loans. Toyota’s other finance subsidiaries provide services including retail financing, retail leasing and wholesale financing.

In May 2011, Toyota established Toyota Financial Services India Limited, a financial services company, in India. Toyota Financial Services India Limited began its operations in June 2012 and has since expanded its business to major cities such as Bangalore, Delhi and Mumbai. In January 2013, Toyota established a new leasing company, Toyota Motor Leasing China Co., Limited, in China, which began its operations in April 2013.

Net finance receivables for all of Toyota’s dealer and customer financing operations were approximately ¥12 trillion as of March 31, 2013, representing an increase of approximately 24.1% as compared to the previous year. The majority of Toyota’s financial services are provided in North America. As of March 31, 2013, approximately 57.6% of Toyota’s finance receivables were derived from financing operations in North America, 10.0% from Europe, 9.9% from Japan, 9.5% from Asia and 13.0% from other areas.

Approximately 49% of Toyota’s unit sales in the United States during fiscal 2013 included a finance or lease arrangement with Toyota. Because the majority of Toyota’s financial services operations are related to the sale of Toyota vehicles, a decrease in vehicle unit sales may lead to a contraction of Toyota’s financial services operations.

The worldwide financial services market is highly competitive. Toyota’s competitors in retail financing and retail leasing include commercial banks, credit unions and other finance companies. Commercial banks and other automobile finance subsidiary companies serving their parent automobile companies are competitors of Toyota’s wholesale financing activities. Competitors in Toyota’s insurance operations are primarily national and regional insurance companies.

For information on Toyota’s finance receivables and operating leases, please see “Operating and Financial Review and Prospects — Operating Results — Financial Services Operations.”

Retail Financing

Toyota’s finance subsidiaries acquire new and used vehicle installment contracts primarily from Toyota dealers. Installment contracts acquired must first meet specified credit standards. Thereafter, the finance company retains responsibility for contract collection and administration. Toyota’s finance subsidiaries acquire security interests in the vehicles financed and can generally repossess vehicles if customers fail to meet their contractual obligations. Almost all retail financings are non-recourse, which relieves the dealers from financial responsibility in the event of repossession. In most cases, Toyota’s finance subsidiaries require their retail financing customers to carry automobile insurance on financed vehicles covering the interests of both the finance company and the customer.

Toyota has historically sponsored, and continues to sponsor, special lease and retail programs by subsidizing below market lease and retail contract rates.

Retail Leasing

In the area of retail leasing, Toyota’s finance subsidiaries acquire new vehicle lease contracts originated primarily through Toyota dealers. Lease contracts acquired must first meet specified credit standards after which the finance company assumes ownership of the leased vehicle. The finance company is generally permitted to take possession of the vehicle upon a default by the lessee. Toyota’s finance subsidiaries are responsible for contract collection and administration during the lease period. The residual value is normally estimated at the time the vehicle is first leased. Vehicles returned to the finance subsidiaries at the end of their leases are sold by auction. For example, in the United States, vehicles are sold through a network of auction sites as well as through the Internet. In most cases, Toyota’s finance subsidiaries require lessees to carry automobile insurance on leased vehicles covering the interests of both the finance company and the lessee.

Wholesale Financing

Toyota’s finance subsidiaries also provide wholesale financing primarily to qualified Toyota vehicle dealers to finance inventories of new Toyota vehicles and used vehicles of Toyota and others. The finance companies acquire security interests in vehicles financed at wholesale. In cases where additional security interests would be required, the finance companies take dealership assets or personal assets, or both, as additional security. If a dealer defaults, the finance companies have the right to liquidate any assets acquired and seek legal remedies.

Toyota’s finance subsidiaries also make term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements. These loans are typically secured with liens on real estate, other dealership assets and/or personal assets of the dealers.

Insurance

Toyota provides insurance services in the United States through Toyota Motor Credit Corporation’s wholly-owned subsidiary, Toyota Motor Insurance Services, Inc. (“TMIS”) and its wholly-owned insurance company subsidiaries. Their principal activities include marketing, underwriting and claims administration. TMIS also provides coverage related to vehicle service agreements and contractual liability agreements through Toyota dealers to customers. In addition, TMIS also provides coverage and related administrative services to affiliated companies of Toyota Motor Credit Corporation. Toyota dealers in Japan and in other countries and regions also engage in vehicle insurance sales.

Other Financial Services

Toyota Finance Corporation launched its credit card business in April 2001 and began issuing Lexus credit cards in 2005 when the Lexus brand was introduced in Japan. As of March 31, 2013, Toyota Finance Corporation has 11.8 million card holders (including Lexus credit card holders).

As part of Toyota’s restructuring of its domestic financial services businesses, Toyota assigned all of the stock of Toyota Financial Services Securities Corporation (“TFSS”), a subsidiary of Toyota Financial Services Corporation (“TFSC”), to Tokai Tokyo Financial Holdings, Inc. (“TTFH”) and agreed to the merger of TFSS with Tokai Tokyo Securities Co., Ltd., a subsidiary of TTFH. In order to ensure the smooth implementation of the merger and to support the new company after the merger, TFSC made a 5% investment in TTFH.

All Other Operations

In addition to its automotive operations and financial services operations, Toyota is involved in a number of other non-automotive business activities. Net sales for these activities totaled ¥1,066.4 billion in fiscal 2013, ¥1,048.9 billion in fiscal 2012 and ¥972.2 billion in fiscal 2011. Sales to external customers of all other operations in fiscal 2013 represented 2.4% of Toyota’s net revenues for fiscal 2013. Substantially all of Toyota’s revenues from other operations were derived in Japan.

Housing

Toyota established its subsidiary Toyota Housing Corporation in April 2003 and has transferred to it product planning and sales operations related to the manufacture and sale of housing. Furthermore, in order to quickly and accurately grasp clients’ needs and to plan, develop and sell products on a timely basis, in April 2008, Toyota transferred the product development operation to Toyota Housing Corporation. In October 2010, Toyota spun-off its housing operations (project planning, technology development and manufacturing) through a statutory demerger and integrated them into Toyota Housing Corporation. Toyota believes that in the vastly changing housing market environment, the integration of the development, manufacture and sales functions will expedite decision making and lead to flexible business operations that will enable Toyota to better respond to the needs of even more customers. In March 2005, Toyota, together with institutional investors, agreed to jointly invest in Misawa Home Holdings, Inc. (“Misawa”; renamed Misawa Homes Co., Ltd.) pursuant to its request for assistance in its rehabilitation. In April 2010, determining that a stronger collaboration with Misawa would be desirable in order to achieve further growth in the difficult operating environment of the housing industry, Toyota Housing Corporation agreed to purchase Misawa shares from an institutional investor. In addition, Toyota transferred ownership of Misawa to Toyota Housing Corporation in October 2010. Through these activities, Toyota has strengthened the housing business of both companies.

Information Technology

See “— Enhancing Vehicle Functionality and Intelligent Transport Systems” for a description of Toyota’s information technology.

Governmental Regulation, Environmental and Safety Standards

Toyota is subject to laws in various jurisdictions regulating the levels of pollutants generated by its plants. In addition, Toyota is subject to regulations relating to the emission levels, fuel economy, noise and safety of its products. Toyota has incurred significant costs in complying with these laws and regulations and expects to incur significant compliance costs in the future. Toyota’s management views leadership in environmental protection as an important competitive factor in the marketplace.

Vehicle Emissions

Japanese Standards

The Air Pollution Control Law of Japan and the Road Vehicle Law and the Law Concerning Special Measures for Total Emission Reduction of Nitrogen Oxides from Automobiles in Specified Areas regulate vehicle emissions in Japan. In addition, both the Noise Regulation Law and the Road Vehicles Law provide for noise reduction standards on automobiles in Japan. Toyota’s vehicles manufactured for sale in Japan comply with all Japanese exhaust emission and noise level standards.

U.S. Federal Standards

The federal Clean Air Act directs the Environmental Protection Agency (“EPA”) to establish and enforce air quality standards, including emission control standards on passenger cars, light trucks and heavy-duty vehicles. The EPA decided in February 2000 to adopt more stringent vehicle emission and fuel economy standards applicable to passenger cars and light trucks produced in model years 2004 and beyond. In the standards adopted for model years 2004 and beyond, manufacturers must guarantee that their vehicles meet the requirements for ten years or 120 thousand miles, whichever occurs first. Manufacturers are not permitted to sell vehicles in the United States that do not meet the standards. In April 2007, EPA regulations that further restrict emissions from passenger cars and light trucks operating at cold temperatures became effective. The new emissions standards set by these regulations are being phased in between 2010 and 2013. Similar standards that further restrict emissions from heavy-duty vehicles operating at cold temperatures will be phased in from 2012 to 2015. In March 2013, the EPA announced new vehicle emission and fuel standards for passenger vehicles and light-duty trucks for model years 2017 and onwards.

Furthermore, in April 2007 the U.S. Supreme Court ruled that the EPA has the authority to regulate automobile emissions of greenhouse gases. In response to this ruling, on April 1, 2010 the EPA and the federal National Highway Traffic Safety Administration (“NHTSA”) issued a joint final rule to reduce the emission of greenhouse gases from passenger cars, light-duty trucks and medium-duty passenger vehicles for model years 2012 through 2016. These vehicles are required to meet an estimated combined average emissions level of 250 grams of carbon dioxide per mile, equivalent to 35.5 miles per gallon if the requirements were met through fuel economy standards. The NHTSA also set Corporate Average Fuel Economy (“CAFE”) standards for passenger cars and light trucks that will require manufacturers of those vehicles to meet an estimated combined average fuel economy level of 34.1 miles per gallon in model year 2016. In addition, on August 28, 2012, the EPA and the NHTSA jointly issued the final rule to further reduce greenhouse gas emissions and improve fuel economy for passenger vehicles, light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. In the final rule, these vehicles are required to meet an estimated combined average emission level of 163 grams of carbon dioxide per mile in model year 2025, equivalent to 54.5 miles per gallon if these requirements were met through improvements in fuel economy standards. The NHTSA also issued CAFE standards for passenger vehicles and light trucks that would require manufacturers to meet an estimated combined average fuel economy level of 49.6 miles per gallon in model year 2025. According to the final rule, these standards are to be reevaluated by 2018.

As discussed above, the EPA has been granted the authority to set fuel standards in connection with the regulation of automobile emissions. In October 2010, the EPA approved the sale and use of fuel with a 15% ethanol blend (“E15”) for model years 2007 and later passenger vehicles and light-duty trucks. The use of E15 is not permitted for engines used in lawnmowers, small generators, motorbikes, boats and other vehicles and equipment. Subsequently, in February 2011, the EPA approved the use of E15 for model years 2001 and later vehicles. The Alliance of Automobile Manufacturers (“The Alliance”), of which Toyota Motor North America is a member, has stated that current vehicles are only guaranteed to function on fuel up to 10% ethanol and the EPA’s permission is invalid. The Alliance created the Engine Products Group together with the Global Automakers, the National Marine Manufacturers Association and the Outdoor Power Equipment Institute, and in December 2010 the Engine Products Group brought suit against the EPA. The lawsuit was dismissed in January 2013 on the grounds that the Engine Products Group lacked standing, and in March 2013, the Engine Products Group appealed the decision to the Supreme Court of the United States.

California Standards

Under the federal Clean Air Act, states are permitted to establish their own vehicle emission control standards if they receive a waiver from the EPA. As a result, the California Air Resources Board (“CARB”) established the “Low Emission Vehicle Program” and set emission standards for certain regulated pollutants that were phased in beginning in the 2004 model year. Under these standards most light trucks and passenger cars are required to meet the same emissions standards, which were stricter than the federal standards. As part of the original Low Emission Vehicle Program, the CARB also required that a specified percentage of a manufacturer’s passenger cars and light trucks sold in California for all model years 1998 and after be “zero-emission vehicles” (vehicles producing no emissions of regulated pollutants). The CARB subsequently eliminated the zero-emission vehicles mandate for model years before 2005, and decided to adopt a zero-emission vehicles requirement for model years 2005 and beyond. This zero-emission vehicles requirement also permitted certain advanced technology vehicles such as PHV (Plug-in Hybrid Vehicles), hybrid cars and alternative fuel vehicles that meet “partial zero-emission vehicles requirements” to be granted partial qualification as EV (Electronic Vehicles) or FCV (Fuel Cell Vehicle). Toyota’s battery-powered RAV4 EV compact sport-utility vehicle and the Toyota FCHV qualify as zero-emission vehicles. The current Prius plug-in hybrid, Prius model and the Camry Hybrid qualify as partial zero-emission vehicles under the zero-emission vehicles requirement adopted by the CARB. Toyota intends to continue to develop additional advanced technologies and alternative fuel technologies that will allow other vehicles using such technologies to qualify as zero-emission vehicles or partial-zero-emission vehicles.

In July 2002, the California legislature passed legislation that required the CARB to develop and adopt, by the end of 2004, regulations that achieved the maximum feasible reduction in greenhouse gas emissions from

vehicles. In September 2004, the CARB adopted regulations that required a 20 to 30 percent reduction of greenhouse gas emissions from passenger vehicles, light trucks and other noncommercial vehicles to be phased in between the 2009 and 2016 model years.

In December 2007, the EPA denied California’s request for a waiver under the Clean Air Act that would have allowed the state to enforce these regulations to control greenhouse gas emissions from motor vehicles. However, the EPA reconsidered its decision pursuant to a direction issued by the U.S. President in January 2009, and in July 2009 decided to allow the state to enforce such regulations.

In February 2010, the CARB enacted regulations that deem automobile manufacturers that produced vehicles in model years 2012 through 2016 that are in compliance with the greenhouse gas emission regulations of the EPA to be in compliance with California’s greenhouse gas emission regulations. Toyota is currently developing plans to comply with the EPA regulations.

In January 2012, the CARB approved a new emission control program for model years 2017 to 2025 called Advanced Clean Cars. The program covers greenhouse gas standards for cars and light trucks, reductions of smog-forming emissions, zero-emission vehicles regulations and clean fuels outlet regulations. The CARB is in the process of developing specific rules for the program.

Other States

The states of New York, Massachusetts, Connecticut, Maine, Maryland, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Delaware and Colorado have either adopted, or plan to adopt, regulations substantially similar to California’s zero-emission vehicles requirement and greenhouse gas emissions regulations.

Canadian Standards

Canada has established vehicle emission standards equivalent to the federal standards in the United States, including the heightened requirements that became applicable to passenger cars and light trucks in model years 2004 and beyond. In October 2010, the Canadian government also established its proposed greenhouse gas emission regulations that are similar to those enacted by the EPA. Furthermore, certain Canadian provinces are currently considering enacting their own regulations on vehicle emissions of greenhouse gases.

European Standards

The European Union adopted a directive that establishes increasingly stringent emissions standards for passenger vehicles and light commercial vehicles in October 1998. Under this directive, the standards adopted beginning with year 2000 require manufacturers to recall any vehicles which fail to meet the standards for five years or 80 thousand kilometers, whichever occurs first. Toyota introduced vehicles complying with this directive in 1999. Under standards adopted in 2005, manufacturers are obligated to meet the more stringent standards for five years or 100 thousand kilometers, whichever occurs first. In 2007, the European Parliament adopted more stringent emission standards for passenger vehicles and light commercial vehicles. The effective dates for phasing in these stricter standards for passenger cars were September 2009 for Euro 5 and September 2014 for Euro 6. For light commercial vehicles, the effective dates are September 2010 for Euro 5 and September 2015 for Euro 6. Euro 5 provides for lower emission levels for gasoline and diesel powered vehicles and also extends the manufacturers’ responsibility for emission performance to 160 thousand kilometers. The primary focus of Euro 6 is to limit further emissions of diesel powered vehicles and bring them down to a level equivalent to gasoline powered vehicles.

Chinese Standards

Emissions regulations are being implemented throughout China pursuant to the Chinese National Standards (GB) of the Ministry of Environmental Protection of the People’s Republic of China, and the manufacture and

sale of models not meeting these regulations are prohibited. As for passenger vehicles, pursuant to GB18352.3-2005, Level 3 Emissions Regulations (corresponding to Euro 3 standards) apply to new models after July 2007, and Level 4 Emissions Regulations (corresponding to Euro 4 standards) apply to new models after July 2010. New models after July 2008 are also required to be equipped with on-board diagnostics. As for diesel-powered commercial vehicles, pursuant to GB17691-2005, new Level 3 Emissions Regulations apply to models after January 2007. Although Level 4 Emissions Regulations were to apply to new models after January 2010, and Level 5 Emissions Regulations were to apply to new models after January 2012, because an infrastructure to supply sufficient diesel fuel that meets the Level 4 quality standards has yet to be put in place, the Level 4 Emissions Regulations are scheduled to apply from July 2013. As for gasoline-powered commercial vehicles, pursuant to GB14762-2008, Level 3 Emissions Regulations apply to new models after July 2009, and Level 4 Emissions Regulations apply to new models after July 2012. After the first day the regulation is implemented to a new model, all new models released during the following approximate one-year period are also subject to the regulation. In addition, in some areas such as Beijing, Shanghai, Guangzhou, and the Pearl River Delta region, the above mentioned regulations were implemented several years earlier by regional environmental preservation authorities with the authorization of the Chinese State Council. With respect to passenger vehicles, adoption of GB regarding the Level 5 Emissions Regulations corresponding to Euro 5 is currently in progress, in order to implement the regulations throughout China. Beijing has already independently implemented its own Level 5 Emissions Regulations from March 2013.

Compliance with new emission control standards will present significant technological challenges to automobile manufacturers and will likely require significant expenditures. Examples of these challenges include the development of advanced technologies, such as high performance batteries and catalytic converters, as well as the development of alternative fuel technologies. Manufacturers that are unable to develop commercially viable technologies within the time frames set by the new standards will lose their market share and will be forced to decrease the number of types of vehicles and engines in their principal markets.

Standards of Other Countries

Countries other than Japan, the United States, Europe and China are also proactively introducing the emission regulations. Especially Eastern Europe, Taiwan and Hong Kong have followed the Europe’s lead and considered implementing emission regulations. Australia and other countries in Asia have also followed.

Vehicle Fuel Economy

Japanese Standards

The Law Concerning the Rational Use of Energy requires automobile manufacturers to improve their vehicles to meet specified fuel economy standards. Fuel economy standards are established according to the types of vehicles specified below, and are required to be met by either fiscal 2011 (April 2010-March 2011), fiscal 2016 (April 2015-March 2016) or fiscal 2021 (April 2020-March 2021).

Among qualifying passenger vehicles are:

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Vehicles which are designated in Article 75, Paragraph 1 of the Road Vehicles Law as type-designated vehicles (“type-designated vehicles”) with 10 seats or less using gasoline, gas oil or LPG;

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Type-designated vehicles with 11 seats or more that are 3.5 tons or less in vehicle weight using gasoline or gas oil; and

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Type-designated vehicles with 11 seats or more that are over 3.5 tons in vehicle weight using gas oil, or designated carbon monoxide emission control vehicles (“designated carbon monoxide emission control vehicles”) which are designated in Article 75-2 Paragraph 1 of the Road Vehicles Law.

Among qualifying cargo vehicles are:

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Type-designated vehicles that are 3.5 tons or less in vehicle weight using gasoline, gas oil or LPG; and

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Type-designated vehicles that are over 3.5 tons in vehicle weight using gas oil or LPG, or designated carbon monoxide emission control vehicles.

Toyota is in compliance with the fuel economy standards that currently apply and is promoting the improvement of its vehicles in order to achieve compliance with the standards that will apply beginning in fiscal 2016.

Japan is a signatory to the Framework Convention on Climate Change and has agreed to take measures to reduce its greenhouse gas emissions. Improved vehicle fuel economy is contributing to the reduction in carbon dioxide emissions.

U.S. Standards

The Federal Motor Vehicle Information and Cost Savings Act requires automobile manufacturers to comply with CAFE standards. Under this law, limits are imposed on the amount of regulated pollutants that may be emitted by new motor vehicles in the United States. A manufacturer is subject to substantial civil penalties if, in any model year, its vehicles do not meet the CAFE standards. Manufacturers that exceed the CAFE standards earn credits determined by the difference between the average fuel economy performance of their vehicles and the CAFE standards. Credits earned for the five model years preceding the current model year, and credits projected to be earned for the next three model years, can be used to meet CAFE standards in a current model year.

In April 2006, the NHTSA established CAFE standards applicable to light trucks for model year 2008 and beyond. These CAFE standards aimed to shift the framework from one that used to be advantageous only to compact car manufacturers to one that is fair to full line manufacturers. The requirements were changed so that the CAFE standards are now determined by a sales rate based on vehicle size (measured by the area of the wheel and wheel base) for each manufacturer.

In addition to the CAFE standards, there are multiple standards in the United States including the EPA’s emission regulations and the California standard. Automobile manufacturers had called for uniform standards, as they would need to comply with standards that varied by state if all standards became effective. On April 1, 2010 the EPA and the NHTSA issued a joint final rule to reduce the emission of greenhouse gases from passenger cars, light-duty trucks and medium-duty passenger vehicles for model years 2012 through 2016. These vehicles are required to meet an estimated combined average emissions level of 250 grams of carbon dioxide per mile, equivalent to 35.5 miles per gallon if the requirements were met through fuel economy standards. The NHTSA also set CAFE standards for passenger cars and light trucks that will require manufacturers of those vehicles to meet an estimated combined average fuel economy level of 34.1 miles per gallon in model year 2016. Furthermore, the EPA and NHTSA joint final rule allows the two agencies and California standards to act in a unified way, and creates a regulatory framework that makes compliance less burdensome for the manufacturers. In addition, in December 2011, the EPA and the NHTSA issued a joint proposed rule to further reduce greenhouse gas emissions and improve fuel economy for passenger vehicles, light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. In the proposed rule, these vehicles would be required to meet an estimated combined average emission level of 163 grams of carbon dioxide per mile in model year 2025, equivalent to 54.5 miles per gallon if these requirements were met through improvements in fuel economy standards. At the same time, the NHTSA also issued proposed CAFE standards for passenger vehicles and light trucks that would require manufacturers to meet an estimated combined average fuel economy level of 49.6 miles per gallon in model year 2025. The final rule applying to model years 2017 to 2025 was announced on August 28, 2012. The standards of fuel economy are stringent, and Toyota strives to meet the fuel economy standards by further developing fuel-efficient technology, alternative fuel technology and other advanced technology.

In addition, the Energy Tax Act of 1978 imposes a “gas guzzler” tax on automobiles with a fuel economy rating below specified levels.

European Standards

The European Union has signed the Kyoto Protocol and agreed to reduce carbon dioxide emissions by 8% during the years 2008 to 2012, as measured from the 1990 base year. In early 1999, the European Commission and the European Automotive Manufacturers Association (“ACEA”) reached a voluntary agreement which establishes an average emissions target of 140 grams of carbon dioxide per kilometer for new cars sold in the European Union in 2008 (the voluntary agreement applied to the 15 states who were members of the European Union at that time). The Japan Automobile Manufacturers Association and the Korean Automobile Manufacturers Association have also reached a voluntary agreement, similar to that entered into by the European Commission, with the year 2009 as a target year.

In December 2008, the European Parliament approved a new regulation that establishes an average emission standard of 130 grams of carbon dioxide per kilometer by 2012 for passenger vehicles sold in member states, made effective in June 2009. The regulation will phase in gradually, initially requiring 65% of new cars to comply with the new standards in 2012 and increasing to 100% of new cars in 2015. As a result of the new regulations, different targets will apply to each manufacturer, based on their respective fleets of vehicles and weight. Penalties will apply to those manufacturers who fail to meet their targets from 2012, in amounts corresponding to the degree of shortfall. Manufacturers failing to meet their targets between 2012 and 2018 will incur penalties of between €5 and €95 per each gram of carbon dioxide per kilometer shortfall for each non-compliant vehicle, and such penalties will rise to €95 in 2019 and beyond. Furthermore, a medium- to long-term target of reducing emissions to 95 grams of carbon dioxide per kilometer by 2020 has also been proposed. This represents a remarkably ambitious target, even in comparison to other fuel efficiency requirements worldwide. Furthermore, in June 2011, a new carbon dioxide emission standard applicable to light commercial vehicles entered into force establishing an average emissions target of 175 grams of carbon dioxide per kilometer. This regulation has the same basic regulatory framework as passenger vehicles, raising the compliance rate from 70% in 2014 to 100% in 2017, and as a longer term objective, 147 grams of carbon dioxide per kilometer by 2020 have been proposed.

An increasing number of European Union member states are introducing vehicle tax laws based on carbon dioxide emission levels, pursuant to the directive issued by the European Commission in 2005. This trend is expected to continue, in accordance with the recent increases in environmental awareness.

Chinese Standards

Fuel consumption regulations are being implemented pursuant to the Chinese National Standards (“GB”), and the manufacture and sale of vehicle models not meeting these regulations are prohibited. As for passenger vehicles, pursuant to GB19578-2004, Level 1 Fuel Consumption Regulations apply to new models after July 2005, and Level 2 Fuel Consumption Regulations apply to new models after January 2008. As for small commercial vehicles, pursuant to GB20997-2007, Level 2 Fuel Consumption Regulations apply to new models after February 2008, Level 1 Fuel Consumption Regulations apply to all vehicles as of January 2009, and Level 1 Fuel Consumption Regulations apply to all models as of January 2011. Each of these regulations applies to all applicable models beginning one year after first applying to new models. These regulations determine the consumption standards that apply depending on the mass of the applicable vehicle, and sets forth a method for determining if each model has met the regulation. With respect to passenger vehicles, GB27999-2011 has been issued to further strengthen fuel consumption regulations from 2012 and beyond. In these Level 3 Fuel Consumption Regulations for passenger vehicles, the regulation framework was substantially revised, such as a change from regulations requiring each model to meet consumption standards to regulations requiring automobile manufacturers to meet standards of average consumption across models.

Standards of Other Countries

As fuel prices increase and momentum gathers to prevent global warming, other countries in addition to Japan, the United States, Europe and China are moving to introduce fuel consumption regulations, and Korea, Mexico and Brazil have already decided to introduce fuel consumption regulations. Australia, Taiwan, India, Canada and Vietnam are also actively considering the introduction of new fuel consumption regulations using the regulations of Japan, Europe and the United States as a base, and may implement them by approximately 2015. Toyota predicts that this trend will spread to other countries, and in the future many nations will consider new regulations related to fuel consumption and CO₂.

Vehicle Safety

Japanese Standards

Standards requiring protection against electrocution have been applied to hybrid vehicles and electric vehicles manufactured since July 2012. In addition, the technological standards established by the United Nations Economic Commission for Europe (“UNECE”), which are harmonized with Japanese passenger protection standards against electrocution, have been introduced. The standards will apply to new vehicle models manufactured on and after June 2014 and vehicles that continue to be manufactured on and after June 2016.

For the purpose of harmonizing with UNECE standards, electromagnetic compatibility standards will apply to vehicles manufactured on and after August 2016. The pedestrian leg protection standards will apply gradually to new type-designated vehicles manufactured on and after April 2013 and non-new type-designated vehicles manufactured on and after February 2018. The rear underrun protection standards have been revised and will be applied to vehicles manufactured on and after July 2015.

In addition, preparations for the introduction of UNECE standards to tire pressure monitoring systems (“TPMS”), electronic vehicle stability control (“EVSC”) for heavy vehicles, safety of rechargeable energy storage systems, location and identification of hand controls, tell-tales and indicators and forward field of vision of drivers are currently in progress.

Furthermore, in Japan, considerations regarding the standardization of brake override systems, the strengthening of anti-spinal injury measures, and anti-drunk driving measures are currently under consideration. The guideline for improvement of vehicle safety of kindergarten school buses has been established.

Collision damage mitigating braking system standards for cargo vehicles and buses have been introduced and the system will be required gradually to be applied to new vehicle models manufactured on and after November 2014 and vehicles that continue to be manufactured on and after September 2017. Application of this standard to vehicles other than cargo vehicles and buses is also being considered.

U.S. Standards

The U.S. National Traffic and Motor Vehicle Safety Act of 1966, or Safety Act, requires vehicles and equipment sold in the United States to meet various safety standards issued by the NHTSA. The Safety Act also authorizes the NHTSA to investigate complaints relating to vehicle safety and to order manufacturers to recall and repair vehicles found to have safety-related defects. The cost of these recalls can be substantial depending on the nature of the repair and the number of vehicles affected.

The Transportation Recall Enhancement, Accountability and Documentation Act was enacted in the United States on November 1, 2000. This Act required the NHTSA to regulate the dynamic rollover standards and to upgrade federal motor vehicle safety standards relating to tires. It also required the NHTSA to enhance its authority to gather information potentially relating to motor vehicle defects. This Act substantially increases the maximum civil penalties for violation of regulatory requirements and specifies possible criminal penalties for violations of the federal Fraud and False Statements Act. In 2003, the NHTSA expanded its New Car Assessment Program (“NCAP”) to implement consumer information programs for vehicle rollover resistance and child restraints and, beginning in 2003, adopted extensive early warning defect reporting requirements. Regulations regarding tire-pressure monitoring systems were strengthened in 2005.

Legislation on a transportation budget plan promoting a safe and efficient vehicle safety program for drivers, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) was passed in August 2005. The legislation requires the NHTSA to propose and issue safety standards to reduce rollover accidents, to complete the creation of standards for the reduction of vehicle passengers released from cars at the time of rollover accidents, to upgrade door lock standards, to complete the upgrade of roof crash standards, to decide on the side impact protection standards for passengers in all seat locations, to review seat belt wearing technology and complete a study that includes a proposal for improving the rate of seat belt usage, to establish standards to display NCAP ratings on new car labels, and to complete the upgrade of the standard for power windows that will require pulling up switches. Some actions have already been taken and completed in response to the above requirements.

In February 2008, legislation to prevent non-traffic related injuries to young children caused by vehicles, the “Cameron Gulbransen Kids Transportation Safety Act,” was passed. The legislation requires the NHTSA to, among others, begin drafting standards for rearward visibility to prevent children from being struck by backing vehicles and to finalize such standards (the standards have not yet been completed) and to mandate the use of brake shift interlock systems, which were initially a voluntary regulation, from September 1, 2010.

In January 2011, legislation to improve the safety of the visually impaired and other pedestrians, the “Pedestrian Safety Enhancement Act of 2010,” was passed. The legislation requires the NHTSA to draft and finalize standards for warning sounds of electric and hybrid vehicles. The NHTSA formally proposed minimum sound standards in January 2013, and the standards are currently in the regulatory review process.

In response to the unintended acceleration issue in 2010, the NHTSA has started to examine measures to strengthen safety standards, such as mandating brake override systems, mandating Event Data Recorders, or EDR, and standardizing push-start switches.

Toyota actively invests in technology development designed to increase the safety of its vehicles. Toyota is developing technologies to increase the availability of existing safety systems to all types of its vehicles. These technologies include supplemental restraint system (“SRS”) airbags, anti-lock braking systems, side airbags, curtain shield airbags, vehicle stability control and other safety features.

European Regulations

In Europe, following the White Paper “European Transport Policy for 2010: Time to Decide” adopted in 2001, which targets halving the number of deaths caused by road accidents by 2010, various groups in different fields have conducted research and analyses.

The European Commission and the ACEA have established CARS 21, a High Level Group that aims to strengthen the competitiveness of the European automotive industry, and examined the recommendations with the legal framework of a decade later in mind. The CARS 21 final report issued at the end of 2005 contains recommendations relating to the simplification of legislation and road safety, among other issues, and indicates a Ten Year Roadmap, and in February 2007, the European Commission issued a communication regarding the CARS 21 final report, in which concrete action plans for future legislation were announced, and much legislation had proceeded.

In 2009, based on the CARS 21 final report released in February 2007, the European Commission enacted a new regulation and established a simplified framework, repealing more than 50 existing European Commission directives regarding vehicle safety other than pedestrian protection, and replacing them with a single regulation aimed at incorporating the United Nations Regulations. The new regulation also requires the adoption of advanced safety systems. The EU Regulation commenced in 2012 and it requires advanced safety systems, including requiring new type vehicle to have electronic stability control systems from 2011, to introduce regulations relating to low rolling resistance tires in 2013, to require tire pressure monitoring systems starting in 2012 and to require heavy vehicles to have advanced emergency braking systems and lane departure warning

systems from 2013. All of the technical requirements for these advanced safety systems were discussed in the United Nations (the technical requirements for advanced emergency braking in medium-duty passenger vehicles are under consideration by the United Nations). Further, application of the UN regulations came into force from November 2012 for new vehicle types and from 2014 for all new vehicles sold in the EU market. The new mandatory measures include electric car safety requirements and gear shift indicators.

In October 2010, CARS 21 was resumed in order to proceed with the realization of the “2020 Strategy” by the European Commission that aims for high-level, sustainable and comprehensive growth, and the CARS 21 final report was issued in June 2012. The final report addresses issues facing the widespread adoption of electric vehicles, including charging infrastructure in the EU, establishing battery requirements, adopting seat belt reminder devices for all seats, alcohol interlock devices, adopting speed management devices, establishing safety requirements for micro urban mobility, strengthening safety regulation to protect the vulnerable from collisions and the possibility of regulation in connection with preventative safety technology. In November 2012, “CARS 2020: Action Plan for a competitive and sustainable automotive industry in Europe” was issued based on the final report. The action plan issued in November 2012 is built on four core concepts, and within these concepts it discusses enhancement of road safety, improving the market conditions within the EU and the implementation of smart regulations. Each item is given a target date and is to be monitored going forward.

On the widespread adoption of emergency call systems (“eCall”), the European Commission concluded that a legislative approach is effective as a result of the impact assessment by the Commission in 2011. Accordingly, eCall is expected to become mandatory for light-duty passenger vehicles and light-duty commercial vehicles using the framework of “Whole Vehicle Type Approval.” In the event the installation of eCall becomes mandatory, it will be necessary at the same time to build infrastructure such as communication bases in different countries, and rulemaking regarding eCall is expected to also cover the creation of such infrastructure.

The possibility of regulation in connection with ITS and other advanced driver assist systems for 2020 and beyond is also under consideration. In addition, the adoption of advanced emergency breaking systems and lane departure warning systems on light vehicles, advanced emergency braking systems which detect pedestrians, and the adoption of blind spot monitors, reverse system which detect pedestrians, reverse cameras and Evert Data Recorders on trucks are also expected to be considered.

From April 2009, the applicable scope for “Whole Vehicle Type Approval” was extended to cover all vehicle categories, and are being phased in over five years depending on vehicle category. Furthermore, an amendment was issued in 2011 which clarifies the categories (especially those for passenger and light-duty commercial vehicles). Through this amendment, the criteria for light-duty commercial vehicles was clarified, and there is a possibility that vehicles currently classified as light-duty commercial vehicles become classified as passenger vehicles. In addition, revisions to EU regulations related to vehicle mass and dimensions were issued in 2012. These revisions clarified the mass, criteria and definitions which comprise the base specifications for vehicles.

United Nations Regulations

The 1958 Agreement: While originally based on the European regulations, the UN regulations are developing as an established international law, and Japan, Thailand, Malaysia and Egypt as well as other countries outside the EU have become members after the amendment in 1995, and many other countries are expected to join in the future. The countries bound by the 1958 Agreement have incorporated the UN regulations into their own domestic policies (The EU and Japan have directly included the UN regulations into their domestic legislations). While automotive parts and vehicle systems are regulated by the UN regulations, there are currently no regulations with respect to “International Whole Vehicle Type Approval” such as those in Europe. Japan proposed legislation establishing “Whole Vehicle Type Approval” under the United Nations in 2016, and the matter is currently being deliberated by the United Nations. If IWVTA (International Whole Vehicle Type Approval) is established, integration of global administrative regulations of each country, and simplification of registration procedures are expected. Going forward, amendments to each UN regulation to reflect the objectives of the establishment of IWVTA will commence.

Due to the EU’s incorporation of the UN safety regulations since 2012, the UN regulations are likely to be further influenced by the EU’s needs.

1998 Agreement: As a US-led agreement, the 1998 agreement aims to harmonize the technical regulations, and defines each Regulation as a Global Technical Regulation (“GTR”). At present, there are 12 GTRs in total. And currently, numerous provisions are under discussion in order to include more regulations. The countries bound by the 1998 agreement are required to incorporate the GTRs into their domestic laws. The 1998 agreement includes China and India that were not a part of the 1958 agreement, therefore, the direction taken by the GTRs will also influence those countries.

In 2012, concrete discussions on the development of the GTRs for EVs started due to the needs in Japan, the United States and Europe (the implementation of new GTRs is currently under deliberation with implementation aimed for 2014).

Chinese Standards

Vehicle safety regulations in China were drafted with reference to the UN regulations and cover the almost same matters as the UN regulations. However, these regulations also include unique provisions which take into account the distinctive characteristics of the Chinese market environment and the rules differ from the latest UN regulations. As for future safety regulations, standards related to airbag technologies and electric vehicle collision safety equipment are currently being planned.

Standards of Other Countries

Vehicle safety regulations in Canada are similar to those in the United States. In regions outside of North America, adoption and conformity with the UN regulations is widespread, including in those countries without automotive manufacturing industries. The list of signatories to the 1958 agreement of the United Nations continues to grow, and now includes Korea, Thailand and Malaysia in Asia, as well as Russia, South Africa, Egypt and Morocco. In addition, ASEAN, pursuant to its economic community mission, has decided to adopt the UN regulations as its regional agreement. Latin America, India and countries in the Middle East that are not signatories to the 1958 agreement of the United Nations are also moving forward to conform their respective regulations to the UN regulations or to adopt new regulations consistent with the UN regulations.

Environmental Matters

Japanese Standards

Toyota’s automotive operations in Japan are subject to substantial environmental regulation under laws such as the Air Pollution Law, the Water Pollution Control Law, the Noise Regulation Law and the Vibration Control Law. Under these laws, if a business entity establishes or alters any facility that is regulated by these laws, the business entity is required to give prior notice to regulators, and if a business entity discharges, uses or stores substances that are environmental burdens or causes noise or vibration from such facility, the business entity is also required to comply with the applicable standards. Toyota is also subject to local regulations, which in some cases impose more stringent obligations than the Japanese central government requirements. Toyota has complied with these regulations. Under the Waste Disposal and Public Cleaning Law, producers of industrial waste must dispose of industrial waste in the manner prescribed in the Waste Disposal and Public Cleaning Law. Toyota has also complied with the Waste Disposal and Public Cleaning Law.

The Soil Contamination Countermeasures Law of Japan requires that land owners conduct contamination testing and submit a report at the time they cease to use hazardous substances, such as in connection with the sale of a former factory, or if there is a possibility of health hazards due to land contamination. If it is found that land contamination exceeds a certain level, the relevant prefectural authority designates the area considered to be contaminated and orders the land owner to take necessary measures. Toyota is suitably managing its land in

accordance with the same law. In addition, under the Law on Recycling of End-of-Life Vehicles, vehicle manufacturers are required to take back and recycle specified materials (automotive shredder residues, air bags and fluorocarbons) of end-of-life vehicles and the provisions concerning such obligations of vehicle manufacturers became effective in January 2005. Toyota has coordinated with relevant parties to establish a vehicle take-back and recycle system throughout Japan. As a result, in fiscal 2013, Toyota achieved a recycling rate of 94% for automobile shredder residue (the legal requirement being 50%) and 94% for air bags (the legal requirement being 85%) and reached the targets set forth in this law.

U.S. Standards

Toyota’s assembly, manufacturing and other operations in the United States are subject to a wide range of environmental regulation under the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Pollution Prevention Act and the Toxic Substances Control Act. Toyota is also subject to a variety of state legislation that parallels, and in some cases imposes more stringent obligations than, federal requirements. These federal and state regulations impose severe restrictions on air- and water-borne discharges of pollution from Toyota facilities, the handling of hazardous materials at Toyota facilities and the disposal of wastes from Toyota operations. Toyota is subject to many similar requirements in its operations in Europe, Canada and other countries.

Pursuant to the Clean Air Act, the EPA has promulgated National Ambient Air Quality Standards (“NAAQS”) for six “criteria” pollutants, including for ozone and particulate matter. The Clean Air Act requires that the EPA review and possibly revise these NAAQS every five years. On December 14, 2012, the EPA made the annual health-based particulate matter NAAQS more stringent, and the EPA is scheduled to complete its review and possible revision of the ozone NAAQS in 2014. The revised annual health-based particulate matter NAAQS, as well as any future NAAQS revisions, could lead to additional pollution control requirements on the industry, including on Toyota’s manufacturing operations.

Toyota expects growing pressure in the next several years to further reduce emissions from motor vehicles and manufacturing facilities.

European Standards

In October 2000, the European Union brought into effect a directive that requires member states to promulgate regulations implementing the following:

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automotive manufacturers shall bear all or a significant part of the costs for taking back end-of-life vehicles sold after July 1, 2002 and dismantling and recycling those vehicles. Beginning January 1, 2007, this requirement became applicable to vehicles sold before July 1, 2002 as well;

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automotive manufacturers may not use certain hazardous materials in vehicles sold after July 1, 2003;

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certified vehicles models sold after December 15, 2008, shall be re-usable and/or recyclable to a minimum of 85% by weight per vehicle and shall be re-usable and/or re-use as material or energy to a minimum of 95% by weight per vehicle; and

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end-of-life vehicles must meet actual re-use and/or recycling of 80% and re-use and/or recovery of 85%, respectively, of vehicle weight by 2006, rising respectively to 85% and 95% by 2015.

Laws to implement this directive came into effect in each of the European Union member states. Currently, there are uncertainties surrounding the implementation of the applicable regulations in different European Union member states, particularly regarding automotive manufacturer responsibilities and resultant expenses that may be incurred.

In addition, under this directive, the member states must take measures to ensure that car manufacturers, distributors and other auto-related economic operators establish adequate used vehicle collection and treatment

facilities and to ensure that hazardous materials and recyclable parts are removed from vehicles prior to shredding. This directive impacts Toyota’s vehicles sold in the European Union. Toyota accommodated in offering its products, any measures the European Union member states will choose to take in order to comply with this directive.

Based on the legislation that has been enacted to date, Toyota has provided for its estimated liability related to covered vehicles in existence as of March 31, 2013. The amount of estimated liability may change depending on future legislation to be enacted and subject to other circumstances. Although Toyota does not expect its compliance with the directive to result in significant cash expenditures, Toyota is continuing to assess the impact of this future legislation on its financial position, results of operations and cash flows.

The European Union has also issued directives and made proposals relating to the following subjects on environmental matters:

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emission standards that include a framework permitting member states to introduce fiscal incentives to promote early compliance; and

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reform of rules governing automotive distribution and service. The block exemption on distribution has been amended so that dealers may engage in cross-border sales actively within the European Union and open additional facilities for sales and services. Additionally, dealers may no longer be required by manufacturers to operate both sales and service facilities side by side.

Toyota believes that its operations are materially in compliance with environmental regulatory requirements concerning its facilities and products in each of the markets in which it operates. Toyota continuously monitors these requirements and takes necessary operational measures to ensure that it remains in material compliance with all of these requirements.

Toyota believes that environmental regulatory requirements have not had a material adverse effect on its operations. However, compliance with environmental regulations and standards has increased costs and is expected to lead to higher costs in the future. Therefore, Toyota recognizes that effective environmental cost management will become increasingly important. Moreover, innovation and leadership in the area of environmental protection are becoming increasingly important to remain competitive in the market. As a result, Toyota has proceeded with the development and production of environmentally friendly technologies, such as hybrid vehicles, fuel-cell vehicles and high fuel efficiency, low emission engines.

In addressing environmental issues, based on an assessment of the environmental impact of its products through their life cycles, Toyota, as a manufacturer, strives to take all possible measures in each life stage of a product, from development through production and sales, and continues to work toward technological innovations to make efficient use of resources and to reduce the burden on the environment.

Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934, as amended. Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Pursuant to Section 13(r), Toyota is disclosing the following information.

During the fiscal year ended March 31, 2013:

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P.T. Toyota-Astra Motor (“TAM”), an Indonesian company, sold three Toyota vehicles to the Iranian embassy in Indonesia. P.T. Toyota Motor Manufacturing Indonesia, an Indonesian company and subsidiary of Toyota, manufactured and sold the vehicles to TAM. TAM is the sole distributor of

Toyota vehicles in Indonesia. As of March 31, 2013, Toyota held 49 percent of the shares of common stock of TAM, and PT Astra International Tbk, an Indonesian company, held the remaining 51 percent of the shares of common stock of TAM.

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Tokyo Toyota Motor Co., Ltd., a wholly-owned indirect subsidiary of Toyota, performed maintenance services for Toyota vehicles owned by the Iranian embassy in Japan.

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Toyota Tourist International, Inc., a majority-owned subsidiary of Toyota, obtained two visas from the Iranian embassy in Japan in connection with certain travel arrangements.

Altogether, the above activities contributed approximately ¥4 million in gross revenues to Toyota and net profit was substantially less. Toyota believes that none of the above transactions subject it or its affiliates to U.S. sanctions. At this time, there has been no determination as to whether TAM, Tokyo Toyota Motor or Toyota Tourist International will cease conducting the activities described above.

Research and Development

Toyota’s research and development activities focus on the environment and energy, safety, IT/ITS technology and product development. For a detailed discussion of the company’s research and development policies for the last three years, see “Operating and Financial Review and Prospects — Research and Development, Patents and Licenses”.

The following table provides information for Toyota’s principal research and development facilities.


Facility		Principal Activity
Japan

Toyota Technical Center		Product planning, style, design and evaluation

Tokyo Design Research & Laboratory		Research of advanced styling designs

Higashi-Fuji Technical Center		Advanced research and development

Shibetsu Proving Ground		Vehicle testing and evaluation

Tokyo Development Center		Advanced development of electronics

United States

Toyota Motor Engineering and Manufacturing North America, Inc.		North American production and product planning, upper body planning, evaluation

Calty Design Research, Inc.		Design

Toyota Research Institute of North America (“TRI-NA”)		Advanced research relating to “energy and environment”, “safety” and “mobility infrastructure”

Europe

Toyota Motor Europe NV/SA		Upper body planning for European production, advanced research

Toyota Europe Design Development S.A.R.L.		Design

Toyota Motorsport GmbH		Development of motor sports vehicles

Asia Pacific

Toyota Motor Asia Pacific Engineering and Manufacturing Co., Ltd.		Production, planning and evaluation of vehicles that are produced in Australia and Asia

Toyota Technical Center Asia Pacific Australia Pty, Ltd.		Production, planning and evaluation of vehicles that are produced in Australia and Asia

China

Toyota Motor Engineering and Manufacturing (China) Co., Ltd.		Research of new, low-energy vehicle technology, vehicle evaluation and quality assurance in China

The success of Toyota’s research and development activities is a key element of Toyota’s strategy. The effectiveness of Toyota’s research and development activities is subject to a number of factors, some of which are not in Toyota’s control. These factors include the introduction of innovations by Toyota’s competitors that may reduce the value of Toyota’s initiatives and Toyota’s ability to convert its research and development into commercially successful technologies and products.

Components and Parts, Raw Materials and Sources of Supply

Toyota purchases parts, components, raw materials, equipment and other supplies from multiple competing suppliers located around the world. Toyota works closely with its suppliers to pursue the most optimal purchasing possible. Toyota believes that this policy encourages technological innovation, cost reduction and other measures to strengthen its vehicle competitiveness. No single supplier accounted for more than 5% of Toyota’s consolidated purchases of raw materials, parts and equipment during fiscal 2013, except for Denso Corporation, an affiliated company of Toyota, which supplied approximately 10% of Toyota’s purchases during fiscal 2013. Toyota plans to continue purchases based on the same principle and does not anticipate any difficulty in obtaining stable supplies in the foreseeable future.

Because Toyota had more than 52 overseas operations in 27 countries and regions as of December 31, 2012, procurement of parts and components is being carried out not only locally in the country of the production site but also from third countries, and the distribution network has become increasingly more complex. In order to realize timely and efficient distribution at the same time as keeping total costs at a minimum, Toyota is promoting efforts to optimize each stage of the supply-chain. To this end, Toyota has developed a standardized system of global distribution and is supporting the operation of the system at each production base. The use of the global distribution system aims at implementing parts procurement that meets changes in vehicle production in a timely manner. These varying efforts, combined together, have led to maximized customer satisfaction, as well as to building a good working relationship with Toyota’s suppliers.

Toyota has placed ongoing efforts into other methods for pursuing the commoditization of components and parts used in various vehicle models. This includes minimizing the differences between models and reducing the number of parts used for each model. Toyota uses a shared global database in order to purchase parts and materials from the most competitive suppliers among Toyota factories located in various areas worldwide. By doing so, Toyota aims to boost the efficiency of its sourcing from external suppliers. In addition, Toyota has been working on a cost reduction measure referred to as RR-CI activities. RR-CI activities aim to improve competitive power through thorough localization, sharing parts and components, and manufacturing reforms together with producing products matching customers’ needs in each region and vehicle category. Urgent VA (value analysis) Activities that began in fiscal 2008 implements cost reductions as part of a unified effort with suppliers for the various types of vehicles already on sale. Toyota has constantly been working on All-Toyota VA Activities since the beginning of fiscal 2010. In addition, Toyota has been working on sweeping advances in product appeal by sharing more parts and components, and cost reductions by activities related to the TNGA.

There were some declines in market prices of raw materials such as steel in fiscal 2013, but the direction of prices is still unforeseeable. Toyota is continually promoting cost reduction efforts, such as reducing the amount of raw materials it uses.

Toyota’s ability to continue to obtain supplies in an efficient manner is subject to a number of factors, some of which are not in Toyota’s control. These factors include the ability of its suppliers to provide a continued source of supplies and the effect on Toyota of competition by other users in obtaining the supplies.

Intellectual Property

Toyota holds numerous Japanese and foreign patents, trademarks, design patents and some utility model registrations. It also has a number of applications pending for Japanese and foreign patents. While Toyota

considers all of its intellectual property to be important, it does not consider any one or group of patents, trademarks, design patents or utility model registrations to be so important that their expiration or termination would materially affect Toyota’s business.

Capital Expenditures and Divestitures

Set forth below is a chart of Toyota’s principal capital expenditures between April 1, 2010 and March 31, 2013, the approximate total costs of such activity, as well as the location and method of financing of such activity, presented on a “by subsidiary” basis and as reported in Toyota’s annual Japanese securities report filed with the director of the Kanto Local Finance Bureau.


Description of Activity	Total Cost (Yen in billions)		Location	Primary Method of Financing
Japan

Investment primarily in technology and products by Toyota Motor Corporation	¥	515.8	Japan	Internal funds, financing from issuance of bonds, etc.

Investment primarily in technology and products by Hino Motors, Ltd.		76.0	Japan	Internal funds

Investment primarily in technology and products by Toyota Auto Body Co., Ltd.		47.5	Japan	Internal funds

Investment primarily in technology and products by Daihatsu Motor Co., Ltd.		39.6	Japan	Internal funds

Outside of Japan

Investment primarily to promote localization by Toyota Motor Manufacturing Canada Inc.		77.6	Canada	Internal funds

Investment primarily to promote localization by Toyota Kirloskar Motor Private Ltd.		69.2	India	Internal funds

Investment primarily to promote localization by Toyota do Brasil Ltda.		67.7	Brazil	Internal funds

Investment primarily to promote localization by Toyota Motor Thailand Co., Ltd.		67.3	Thailand	Internal funds

Investment primarily to promote localization by Toyota Motor Manufacturing, Kentucky, Inc.		66.8	United States	Internal funds

Investment primarily to promote localization by Toyota Motor Manufacturing, Mississippi, Inc.		58.5	United States	Internal funds

Investment primarily to promote localization by P.T. Astra Daihatsu Motor		57.5	Indonesia	Internal funds

Investment primarily to promote localization by P.T. Toyota Motor Manufacturing Indonesia		48.2	Indonesia	Internal funds

Investment primarily to promote localization by Toyota Motor Corporation Australia Ltd.		46.6	Australia	Internal funds

Investment primarily to promote localization by Toyota Motor Europe NV/SA		46.5	Belgium	Internal funds

Investment primarily in leased automobiles by Toyota Motor Credit Corporation		2,490.8	United States	Internal funds, financing from issuance of bonds, etc.

Set forth below is information with respect to Toyota’s material plans to construct, expand or improve its facilities between April 2013 and March 2014, presented on a “by subsidiary” basis and as reported in Toyota’s annual Japanese securities report filed with the director of the Kanto Local Finance Bureau.


Description of Activity	Total Cost (Yen in billions)		Location	Primary Method of Financing
Japan

Investment primarily in manufacturing facilities by Toyota Motor Corporation	¥	210.0	Japan	Internal funds, financing from issuance of bonds, etc.

Investment primarily in manufacturing facilities by Hino Motors, Ltd.		37.5	Japan	Internal funds

Investment primarily in manufacturing facilities by Daihatsu Motor Co., Ltd.		35.0	Japan	Internal funds

Outside of Japan

Investment primarily in manufacturing facilities by Toyota Motor Thailand Co., Ltd.		46.0	Thailand	Internal funds

Investment primarily in manufacturing facilities by Toyota Motor Manufacturing, Indiana, Inc.		34.6	Unites States	Internal funds

Investment primarily in manufacturing facilities by Toyota do Brasil Ltda.		24.5	Brazil	Internal funds

Set forth below is additional information with respect to Toyota’s material plans to construct, expand or improve its facilities, presented on a “by facility” basis.

Tohoku Region Plant. In April 2008, Toyota decided to build an engine plant in Kurokawa, Miyagi Prefecture, Japan. However, while the commencement of production at this plant, which was initially expected to occur at the end of 2010, was postponed, Toyota Motor Tohoku Corporation (“Toyota Tohoku”) commenced assembly of small-size engines from the end of 2012. Toyota Tohoku merged with Kanto Auto Works, Ltd. and Central Motor Co., Ltd. in July 2012 and became Toyota Motor East Japan, Inc.

Sorocaba Plant. In August 2010, Toyota decided to construct a vehicle plant in Sorocaba, Brazil. This plant is producing the Etios small vehicle introduced in India with an annual production capacity of 70 thousand units. The plant commenced production in September 2012.

Karawang No. 2 Plant. In November 2011, Toyota decided to establish a vehicle plant in Karawang, West Java, Indonesia. Production at the facility commenced in March 2013. Production capacity at the time of launch of the plant was 70 thousand units, and is expected to increase to 120 thousand units by the beginning of 2014. The plant is also expected to produce new vehicles that meet market demand.

Toyota does not collect information on the amount of expenditures already paid for each plant under construction because Toyota believes that it is difficult and it would require unreasonable effort or expense to identify and categorize each expenditure item with reasonable accuracy as past and future expenditures. Toyota’s construction projects consist of numerous expenditures, each of which is continually being adjusted and incurred in variable and constantly changing amounts as part of the overall work-in-progress.

Seasonality

Toyota has historically experienced slight seasonal fluctuations in unit sales. For each of the past three fiscal years, Toyota’s unit sales levels have been highest in March, with approximately 10% to 12% of annual unit sales generated during that month, and for each of the remaining months, its unit sales have generated approximately 6% to 9% of its annual unit sales.

Legal Proceedings

Product Recalls

From time-to-time, Toyota issues vehicle recalls and takes other safety measures including safety campaigns relating to its vehicles. In November 2009, Toyota announced a safety campaign in North America for certain models of Toyota and Lexus vehicles related to floor mat entrapment of accelerator pedals, and later expanded it to include additional models. In January 2010, Toyota announced a recall in North America for certain models of Toyota vehicles related to sticking and slow-to-return accelerator pedals. Also in January 2010, Toyota recalled in North America, Europe, China and other regions certain models of Toyota vehicles related to sticking accelerator pedals. In February 2010, Toyota announced a worldwide recall related to the software program that controls the antilock braking system (“ABS”) in certain vehicle models including the Prius. Set forth below is a description of various claims, lawsuits and government investigations involving Toyota in the United States relating to these recalls and other safety measures.

Class Action and Consolidated Litigation

Approximately 200 putative class actions and more than 500 individual product liability personal injury cases have been filed since November 2009 alleging that certain Toyota, Lexus and Scion vehicles contain defects that lead to unintended acceleration. In April 2010, the approximately 190 putative class actions in federal court as well as the federal product liability personal injury cases and warranty and lemon law cases were consolidated for pretrial proceedings into a single multi-district litigation in the United States District Court for the Central District of California. Approximately 10 putative class actions and various product liability personal injury cases pending in state courts were subsequently consolidated into the federal action. The remaining class actions lawsuits are pending in a consolidated state action in California.

In December 2012, Toyota and the plaintiffs announced that they had reached an agreement to settle the economic loss claims in the consolidated federal action. The court preliminarily approved the agreement and held the final approval hearing in June 2013. The court took the matter under submission and scheduled a hearing in July 2013 for the presentation of additional information. In fiscal 2013, Toyota recorded a $1.1 billion pre-tax charge against earnings to cover the estimated costs of this resolution and other potential recall-related resolutions, including the resolution of the civil litigation filed by the Orange County District Attorney and the state attorneys general’s investigation discussed below.

The settlement provides a customer support program covering certain vehicle parts, the free installation of a brake override system on the remaining floor mat entrapment safety campaign vehicles and funds for cash payments to customers who do not receive the brake override system, cash payments to individuals who allegedly suffered a loss on the sale, lease or insuring the residual value of Toyota’s vehicles and funds for safety-related research and education programs. The settlement does not cover product liability personal injury claims in the consolidated federal action or pending in various state courts in the United States.

In April 2013, Toyota announced that the court had approved an agreement to resolve the civil action filed by the Orange County District Attorney in California state court seeking, among other things, statutory penalties alleging that Toyota sold and marketed defective vehicles in violation of various California statutes. The amount of the settlement, which was not material to Toyota, was included in the charge taken in fiscal 2013.

claim that all owners and lessees of vehicles, including those for which recalls have been implemented, should be compensated for the alleged defects related to the antilock braking system. These cases have been consolidated into two actions, one in the United States District Court for the Central District of California and one in the Los Angeles County Superior Court. In January 2013, the Court in the federal case issued an order denying the plaintiff’s motion for class certification and granting summary judgment in favor of Toyota on the claims of the principal named plaintiff for the cases relating to recalled vehicles. A class certification hearing in connection with the claims related to those vehicles that were not recalled is scheduled in July 2013.

From February through March 2010, Toyota was sued in 6 putative shareholder class actions on behalf of investors in Toyota American Depositary Receipts (“ADRs”) and common stock. The cases alleged violations of the Securities Exchange Act of 1934 and Japan’s Financial Instruments and Exchange Act and were consolidated into a single action in the United States District Court for the Central District of California. The judge dismissed with prejudice the claims based on Japan’s Financial Instruments and Exchange Act, and Toyota reached an agreement to resolve the claims asserted on behalf of purchasers of Toyota’s ADRs for an amount not material to Toyota. The court approved the settlement in March 2013.

While Toyota has resolved or is attempting to resolve many of these matters, Toyota believes that it has meritorious defenses to all of them and will vigorously defend those matters not resolved.

Government Investigations

In February 2010, Toyota received a subpoena from the U.S. Attorney for the Southern District of New York and a voluntary request and subpoena from the U.S. Securities and Exchange Commission (“SEC”). The subpoenas and the voluntary request primarily seek documents related to unintended acceleration and certain financial records. This is a coordinated investigation and has included interviews of Toyota and non-Toyota witnesses, as well as production of documents. In June 2010, Toyota received a second voluntary request and subpoena from the SEC and a subpoena from the U.S. Attorney for the Southern District of New York seeking production of documents related to the recalls of the steering relay rod. Toyota is cooperating with the U.S. Attorney’s Office and SEC in their investigations, which are on-going.

In June 2012, Toyota announced an amendment to the 2009 floor mat entrapment safety campaign to include model year 2010 RX350 and RX450h. Toyota submitted additional documents related to this amendment pursuant to NHTSA’s request. In October 2012, Toyota filed an additional amendment to include model year 2008 through 2011 Land Cruiser. In December 2012, Toyota announced an agreement with NHTSA to resolve timeliness claims related to the model year 2010 RX350 and RX450h safety campaign under which Toyota agreed to make a $17.4 million payment to the U.S. Treasury.

Toyota also received subpoenas and formal and informal requests from various states’ attorneys general, including the Executive Committee for a group of 30 states’ plus one territory’s attorney general, and certain local governmental agencies regarding various recalls, the facts underlying those recalls and customer handling related to those recalls. In February 2013, Toyota and the attorneys general resolved these investigations for an amount not material to Toyota. Such amount was included in the charge taken in fiscal 2013. In connection with this settlement, Toyota also made commitments to continue to conduct certain activities it is already undertaking.

Beyond the amounts accrued for the recall-related matters, Toyota is unable to estimate a range of reasonably possible loss, if any, for the other recall-related matters because (i) many of the proceedings are in evidence gathering stages, (ii) significant factual issues need to be resolved, (iii) the legal theory or nature of the claims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of other matters of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Although Toyota cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could have an adverse effect on Toyota’s financial position, results of operations or cash flows.

Other Proceedings

Toyota has various other legal actions, other governmental proceedings and other claims pending against it, including other product liability claims in the United States. For the same reasons discussed above relating to the recall-related legal proceedings, Toyota is unable to estimate a range of reasonably possible loss, if any, beyond the amounts accrued, with respect to these claims. Based upon information currently available to Toyota, however, Toyota believes that its losses from these matters, if any, would not have a material adverse effect on Toyota’s financial position, results of operations or cash flows.

4.C ORGANIZATIONAL STRUCTURE

As of March 31, 2013, Toyota Motor Corporation had 257 Japanese subsidiaries and 252 overseas subsidiaries. The following table sets forth for each of Toyota Motor Corporation’s principal subsidiaries, the country of incorporation and the percentage ownership interest and the voting interest held by Toyota Motor Corporation.


Name of Subsidiary	Country of Incorporation	Percentage Ownership Interest		Percentage Voting Interest
Toyota Financial Services Corporation	Japan		100.00		100.00
Hino Motors, Ltd.	Japan		50.21		50.62
Toyota Motor Kyushu, Inc.	Japan		100.00		100.00
Daihatsu Motor Co., Ltd.	Japan		51.33		51.64
Toyota Finance Corporation	Japan		100.00		100.00
Toyota Auto Body Co., Ltd.	Japan		100.00		100.00
Toyota Motor East Japan, Inc.	Japan		100.00		100.00
Toyota Motor Engineering & Manufacturing North America, Inc.	United States		100.00		100.00
Toyota Motor Manufacturing, Kentucky, Inc.	United States		100.00		100.00
Toyota Motor North America, Inc.	United States		100.00		100.00
Toyota Motor Credit Corporation	United States		100.00		100.00
Toyota Motor Manufacturing, Indiana, Inc.	United States		100.00		100.00
Toyota Motor Manufacturing, Texas, Inc.	United States		100.00		100.00
Toyota Motor Sales, U.S.A., Inc.	United States		100.00		100.00
Toyota Motor Manufacturing Canada Inc.	Canada		100.00		100.00
Toyota Credit Canada Inc.	Canada		100.00		100.00
Toyota Motor Europe NV/SA	Belgium		100.00		100.00
Toyota Kreditbank GmbH	Germany		100.00		100.00
Toyota Motor Finance (Netherlands) B.V.	Netherlands		100.00		100.00
OOO “TOYOTA MOTOR”	Russia		100.00		100.00
Toyota Motor (China) Investment Co., Ltd.	China		100.00		100.00
Toyota Motor Finance (China) Co., Ltd.	China		100.00		100.00
Toyota Kirloskar Motor Private Ltd.	India		89.00		89.00
P.T. Toyota Motor Manufacturing Indonesia	Indonesia		95.00		95.00
Toyota Motor Asia Pacific Pte Ltd.	Singapore		100.00		100.00
Kuozui Motors, Ltd.	Taiwan		70.00		70.00
Toyota Leasing (Thailand) Co., Ltd.	Thailand		86.39		86.39
Toyota Motor Thailand Co., Ltd.	Thailand		86.43		86.43
Toyota Motor Asia Pacific Engineering and Manufacturing Co., Ltd.	Thailand		100.00		100.00
Toyota Motor Corporation Australia Ltd.	Australia		100.00		100.00
Toyota Finance Australia Ltd.	Australia		100.00		100.00
Toyota Argentina S.A.	Argentina		100.00		100.00
Toyota do Brasil Ltda.	Brazil		100.00		100.00
Toyota South Africa Motors (Pty) Ltd.	South Africa		100.00		100.00

4.D PROPERTY, PLANTS AND EQUIPMENT

As of December 31, 2012, Toyota and its affiliated companies produce automobiles and related components through more than 52 overseas manufacturing organizations in 27 countries and regions besides Japan. The facilities are located principally in Japan, the United States, Canada, the United Kingdom, France, Turkey, Thailand, China, Taiwan, India, Indonesia, South Africa, Australia, Argentina and Brazil.

In addition to its manufacturing facilities, Toyota’s properties include sales offices and other sales facilities in major cities, repair service facilities, and research and development facilities.

The following table sets forth information, as of March 31, 2013, with respect to Toyota’s principal facilities and organizations, all of which are owned by Toyota Motor Corporation or its subsidiaries. However, small portions, all under approximately 20%, of some facilities are on leased premises.

Facility or Subsidiary Name

Location

Land Area
(thousand
square
meters)

Number of
Employees

Principal
Products or
Functions

Japan (Toyota Motor Corporation)

Tahara Plant

Tahara City, Aichi Pref.

4,029

7,821

Automobiles

Higashi-Fuji Technical Center

Susono City, Shizuoka Pref.

2,066

2,839

Research and
Development

Toyota Head Office and Technical Center

Toyota City, Aichi Pref.

1,930

21,193

Research and
Development

Motomachi Plant

Toyota City, Aichi Pref.

1,594

7,625

Automobiles

Takaoka Plant

Toyota City, Aichi Pref.

1,311

3,293

Automobiles

Tsutsumi Plant

Toyota City, Aichi Pref.

937

5,045

Automobiles

Kamigo Plant

Toyota City, Aichi Pref.

868

3,034

Automobile parts

Kinu-ura Plant

Hekinan City, Aichi Pref.

836

3,062

Automobile parts

Honsha Plant

Toyota City, Aichi Pref.

551

1,776

Automobile parts

Nagoya Office

Nagoya City, Aichi Pref.

2,267

Office

Japan (Subsidiaries)

Daihatsu Motor Co., Ltd.

Ikeda City, Osaka, etc.

8,401

11,217

Automobiles

Hino Motors, Ltd.

Hino City, Tokyo, etc.

5,444

11,476

Automobiles

Toyota Motor East Japan, Inc.

Kurokawa-gun, Miyagi Pref., etc.

2,616

7,404

Automobiles

Toyota Auto Body Co., Ltd.

Kariya City, Aichi Pref., etc.

2,255

11,708

Automobiles

Toyota Motor Kyushu, Inc.

Miyawaka City, Fukuoka Pref., etc.

1,988

7,124

Automobiles

Outside Japan (Subsidiaries)

Toyota do Brasil Ltda.

Sao Paulo, Brazil

6,237

5,279

Automobiles

Toyota Motor Manufacturing Canada, Inc.

Ontario, Canada

4,756

6,171

Automobiles

Toyota Motor Thailand Co., Ltd.

Samut Prakan, Thailand

4,300

9,122

Automobiles

Toyota Motor Sales, U.S.A., Inc.

California, U.S.A.

3,786

6,513

Sales facilities

Toyota Motor Corporation Australia, Ltd.

Victoria, Australia

1,338

3,828

Automobiles

Toyota is constantly engaged in upgrading, modernizing and revamping the operations of its manufacturing facilities, based on its assessment of market needs and prospects. To respond flexibly to fluctuations in demand in each of its production operations throughout the world, Toyota continually reviews and implements

appropriate production measures such as revising takt time and adjusting days of operation. As a result, Toyota believes it would require unreasonable effort to track the exact productive capacity and the extent of utilization of each of its manufacturing facilities with a reasonable degree of accuracy.

As of March 31, 2013, property, plant and equipment having a net book value of approximately ¥91.8 billion was pledged as collateral securing indebtedness incurred by Toyota Motor Corporation’s consolidated subsidiaries. Toyota believes that there does not exist any material environmental issues that may affect the company’s utilization of its assets.

Toyota considers all its principal manufacturing facilities and other significant properties to be in good condition and adequate to meet the needs of its operations.

See “— Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s material plans to construct, expand or improve facilities.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A OPERATING RESULTS

All financial information discussed in this section is derived from Toyota’s consolidated financial statements that appear elsewhere in this annual report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

Overview

The business segments of Toyota include automotive operations, financial services operations and all other operations. Automotive operations are Toyota’s most significant business segment, accounting for 90% of Toyota’s total revenues before the elimination of intersegment revenues for fiscal 2013. Toyota’s primary markets based on vehicle unit sales for fiscal 2013 were: Japan (26%), North America (28%), Europe (9%) and Asia (19%).

Automotive Market Environment

The worldwide automotive market is highly competitive and volatile. The demand for automobiles is affected by a number of factors including social, political and general economic conditions; introduction of new vehicles and technologies; and costs incurred by customers to purchase or operate vehicles. These factors can cause consumer demand to vary substantially in different geographic markets and for different types of automobiles.

For the automobile industry, markets have progressed in a steady manner, especially in the U.S. and emerging countries such as Asia. The demand for products with advanced green technology has remained strong throughout all markets worldwide.

The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market based on location of customers for the past three fiscal years.


	Thousands of units
	Year Ended March 31,
	2011		2012		2013
Japan		1,913		2,071		2,279
North America		2,031		1,872		2,469
Europe		796		798		799
Asia		1,255		1,327		1,684
Other*		1,313		1,284		1,640

Overseas total		5,395		5,281		6,592

Total		7,308		7,352		8,871

*	“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

During fiscal 2013 and 2012, Toyota’s consolidated vehicle unit sales in Japan increased as compared with each prior fiscal year, primarily as a result of the active introduction of new products and the efforts of dealers nationwide. Toyota and Lexus brands’ market share excluding mini-vehicles was 48.4% for fiscal 2013, representing a record high, and market share (including Daihatsu and Hino brands) including mini-vehicles remained at a high level of 44.3% following the prior fiscal year. Overseas consolidated vehicle unit sales decreased during fiscal 2012, whereas they increased during fiscal 2013. During fiscal 2012, total overseas vehicle unit sales decreased, particularly in North America due to impact of the Great East Japan Earthquake and the flood in Thailand, although an increase in Asia resulted from steady demand in spite of the flood in Thailand. During fiscal 2013, total overseas vehicle unit sales increased in every region.

Toyota’s share of total vehicle unit sales in each market is influenced by the quality, safety, reliability, price, design, performance, economy and utility of Toyota’s vehicles compared with those offered by other manufacturers. The timely introduction of new or redesigned vehicles is also an important factor in satisfying customer needs. Toyota’s ability to satisfy changing customer preferences can affect its revenues and earnings significantly.

The profitability of Toyota’s automotive operations is affected by many factors. These factors include:

•

vehicle unit sales volumes,

•

the mix of vehicle models and options sold,

•

the level of parts and service sales,

•

the levels of price discounts and other sales incentives and marketing costs,

•

the cost of customer warranty claims and other customer satisfaction actions,

•

the cost of research and development and other fixed costs,

•

the prices of raw materials,

•

the ability to control costs,

•

the efficient use of production capacity,

•

the adverse effect on production due to the reliance on various suppliers for the provision of supplies,

•

the adverse effect on market, sales and productions of natural calamities and interruptions of social infrastructure, and

•

changes in the value of the Japanese yen and other currencies in which Toyota conducts business.

Changes in laws, regulations, policies and other governmental actions can also materially impact the profitability of Toyota’s automotive operations. These laws, regulations and policies include those attributed to environmental matters, vehicle safety, fuel economy and emissions that can add significantly to the cost of vehicles. The European Union has enforced a directive that requires manufacturers to be financially responsible for taking back end-of-life vehicles and to take measures to ensure that adequate used vehicle disposal facilities are established and those hazardous materials and recyclable parts are removed from vehicles prior to scrapping. See “Legislation Regarding End-of-Life Vehicles”, “Information on the Company — Business Overview — Governmental Regulation, Environmental and Safety Standards” and note 23 to the consolidated financial statements for a more detailed discussion of these laws, regulations and policies.

Many governments also regulate local content, impose tariffs and other trade barriers, and enact price or exchange controls that can limit an automaker’s operations and can make the repatriation of profits unpredictable. Changes in these laws, regulations, policies and other governmental actions may affect the production, licensing, distribution or sale of Toyota’s products, cost of products or applicable tax rates. From time-to-time when potential safety problems arise, Toyota issues vehicle recalls and takes other safety measures including safety campaigns with respect to its vehicles. In November 2009, Toyota announced a safety campaign in North America for certain models of Toyota and Lexus brands’ vehicles related to floor mat entrapment of accelerator pedals, and later expanded it to include additional models. In January 2010, Toyota announced a recall in North America for certain models of Toyota vehicles related to sticking and slow-to-return accelerator pedals. Also in January 2010, Toyota recalled in Europe and China certain models of Toyota vehicles related to sticking accelerator pedals. In February 2010, Toyota announced a recall in markets including Japan, North America and Europe related to the braking control system in certain vehicle models including the Prius. The recalls and other safety measures described above have led to a number of claims, lawsuits and government investigations against Toyota in the United States. For a more detailed description of these claims, lawsuits and government investigations, see note 23 to the consolidated financial statements.

The worldwide automotive industry is in a period of global competition which may continue for the foreseeable future, and in general the competitive environment in which Toyota operates is likely to intensify. Toyota believes it has the resources, strategies and technologies in place to compete effectively in the industry as an independent company for the foreseeable future.

Financial Services Operations

The competition of worldwide automobile financial services industry is intensifying despite the recovery trend in the automotive markets. As competition increases, margins on financing transactions may decrease and market share may also decline as customers obtain financing for Toyota vehicles from alternative sources.

Toyota’s financial services operations mainly include loans and leasing programs for customers and dealers. Toyota believes that its ability to provide financing to its customers is an important value added service. Therefore, Toyota has expanded its network of finance subsidiaries in order to offer financial services in many countries.

Toyota’s competitors for retail financing and retail leasing include commercial banks, credit unions and other finance companies. Meanwhile, commercial banks and other captive automobile finance companies also compete against Toyota’s wholesale financing activities.

Toyota’s total finance receivables increased during fiscal 2013 mainly due to the favorable impact of fluctuations in foreign currency translation rates and an increase in the retail receivables.

The following table provides information regarding Toyota’s finance receivables and operating leases in the past two fiscal years.


	Yen in millions
	March 31,
	2012			2013
Finance Receivables
Retail	¥	7,248,793		¥	9,047,782
Finance leases		955,430			1,029,887
Wholesale and other dealer loans		2,033,954			2,615,728

		10,238,177			12,693,397
Deferred origination costs		105,533			135,398
Unearned income		(494,123	)		(628,340	)
Allowance for credit losses
Retail		(77,353	)		(83,858	)
Finance leases		(30,637	)		(28,928	)
Wholesale and other dealer loans		(24,238	)		(26,243	)

		(132,228	)		(139,029	)

Total finance receivables, net		9,717,359			12,061,426
Less – Current portion		(4,114,897	)		(5,117,660	)

Noncurrent finance receivables, net	¥	5,602,462		¥	6,943,766

Operating Leases
Vehicles	¥	2,536,595		¥	2,999,294
Equipment		87,848			104,351
Less – Deferred income and other		(49,090	)		(65,634	)

		2,575,353			3,038,011
Less – Accumulated depreciation		(667,406	)		(749,238	)
Less – Allowance for credit losses		(8,135	)		(8,020	)

Vehicles and equipment on operating leases, net	¥	1,899,812		¥	2,280,753

Toyota’s finance receivables are subject to collectability risks. These risks include consumer and dealer insolvencies and insufficient collateral values (less costs to sell) to realize the full carrying values of these receivables. See discussion in “Critical Accounting Estimates — Allowance for Doubtful Accounts and Credit Losses” and note 11 to the consolidated financial statements.

Toyota continues to originate leases to finance new Toyota vehicles. These leasing activities are subject to residual value risk. Residual value losses could be incurred when the lessee of a vehicle does not exercise the option to purchase the vehicle at the end of the lease term. See discussion in “Critical Accounting Estimates — Investment in Operating Leases” and note 2 to the consolidated financial statements.

Toyota enters into interest rate swap agreements and cross currency interest rate swap agreements to convert its fixed-rate debt to variable-rate functional currency debt. A portion of the derivative instruments are entered into to hedge interest rate risk from an economic perspective and are not designated as a hedge of specific assets or liabilities on Toyota’s consolidated balance sheet and accordingly, unrealized gains or losses related to derivatives that are not designated as a hedge are recognized currently in operations. See discussion in “Critical Accounting Estimates — Derivatives and Other Contracts at Fair Value” and “Quantitative and Qualitative Disclosures about Market Risk” and notes 20 and 26 to the consolidated financial statements.

The fluctuations in funding costs can affect the profitability of Toyota’s financial services operations. Funding costs are affected by a number of factors, some of which are not in Toyota’s control. These factors

include general economic conditions, prevailing interest rates and Toyota’s financial strength. Funding costs decreased during fiscal 2012 and 2013, mainly as a result of lower interest rates.

Toyota launched its credit card business in Japan in April 2001. As of March 31, 2012, Toyota had 10.9 million cardholders, an increase of 2.0 million cardholders compared with March 31, 2011. As of March 31, 2013, Toyota had 11.8 million cardholders, an increase of 0.9 million cardholders compared with March 31, 2012. The credit card receivables at March 31, 2012 increased by ¥44.0 billion from March 31, 2011 to ¥307.5 billion. The credit card receivables at March 31, 2013 increased by ¥30.5 billion from March 31, 2012 to ¥338.1 billion.

Other Business Operations

Toyota’s other business operations consist of housing including the manufacture and sale of prefabricated homes, information technology related businesses including information technology and telecommunications, intelligent transport systems and GAZOO, and other businesses.

Toyota does not expect its other business operations to materially contribute to Toyota’s consolidated results of operations.

Currency Fluctuations

Toyota is affected by fluctuations in foreign currency exchange rates. Toyota is exposed to fluctuations in the value of the Japanese yen against the U.S. dollar and the euro and, to a lesser extent, the Australian dollar, the Russian ruble, the Canadian dollar, the British pound, and others. Toyota’s consolidated financial statements, which are presented in Japanese yen, are affected by foreign currency exchange fluctuations through both translation risk and transaction risk.

Translation risk is the risk that Toyota’s consolidated financial statements for a particular period or for a particular date will be affected by changes in the prevailing exchange rates of the currencies in those countries in which Toyota does business compared with the Japanese yen. Even though the fluctuations of currency exchange rates to the Japanese yen can be substantial, and, therefore, significantly impact comparisons with prior periods and among the various geographic markets, the translation risk is a reporting consideration and does not reflect Toyota’s underlying results of operations. Toyota does not hedge against translation risk.

Transaction risk is the risk that the currency structure of Toyota’s costs and liabilities will deviate from the currency structure of sales proceeds and assets. Transaction risk relates primarily to sales proceeds from Toyota’s non-domestic operations from vehicles produced in Japan.

Toyota believes that the location of its production facilities in different parts of the world has significantly reduced the level of transaction risk. As part of its globalization strategy, Toyota has continued to localize production by constructing production facilities in the major markets in which it sells its vehicles. In calendar 2011 and 2012, Toyota produced 71.3% and 75.4% of its non-domestic sales outside Japan, respectively. In North America, 66.8% and 75.3% of vehicles sold in calendar 2011 and 2012 respectively were produced locally. In Europe, 57.7% and 58.5% of vehicles sold in calendar 2011 and 2012 respectively were produced locally. Localizing production enables Toyota to locally purchase many of the supplies and resources used in the production process, which allows for a better match of local currency revenues with local currency expenses.

Toyota also enters into foreign currency transactions and other hedging instruments to address a portion of its transaction risk. This has reduced, but not eliminated, the effects of foreign currency exchange rate fluctuations, which in some years can be significant. See notes 20 and 26 to the consolidated financial statements for additional information.

Generally, a weakening of the Japanese yen against other currencies has a positive effect on Toyota’s revenues, operating income and net income attributable to Toyota Motor Corporation. A strengthening of the Japanese yen against other currencies has the opposite effect. Although, in fiscal 2012, the Japanese yen was on average and at the end of the fiscal year stronger against the U.S. dollar in comparison to the prior fiscal year, it was on average and at the end of the fiscal year weaker in fiscal 2013. In fiscal 2012 and 2013, the Japanese yen was on average stronger against the euro in comparison to fiscal 2011 and 2012, respectively. The Japanese yen was at the end of fiscal 2012 stronger against the euro in comparison to the prior fiscal year, but was weaker at the end of fiscal 2013 due to the depreciation of the yen in the second half of the fiscal year. See further discussion in “Quantitative and Qualitative Disclosures about Market Risk — Market Risk Disclosures — Foreign Currency Exchange Rate Risk”.

During fiscal 2012 and 2013, the average exchange rate of the Japanese yen against the U.S. dollar and the euro compared to the prior fiscal year has fluctuated as described above. The operating results excluding the impact of currency fluctuations described in “Results of Operations — Fiscal 2013 Compared with Fiscal 2012” and “Results of Operations — Fiscal 2012 Compared with Fiscal 2011” show results of net revenues obtained by applying the Japanese yen’s average exchange rate in the previous fiscal year to the local currency-denominated net revenues for fiscal 2012 and 2013, respectively, as if the value of the Japanese yen had remained constant for the comparable periods. Results excluding the impact of currency fluctuations year-on-year are not on the same basis as Toyota’s consolidated financial statements and do not conform with U.S. GAAP. Furthermore, Toyota does not believe that these measures are a substitute for U.S. GAAP measures. However, Toyota believes that such results excluding the impact of currency fluctuations year-on-year provide additional useful information to investors regarding the operating performance on a local currency basis.

Segmentation

Toyota’s most significant business segment is its automotive operations. Toyota carries out its automotive operations as a global competitor in the worldwide automotive market. Management allocates resources to, and assesses the performance of, its automotive operations as a single business segment on a worldwide basis. Toyota does not manage any subset of its automotive operations, such as domestic or overseas operations or parts, as separate management units.

The management of the automotive operations is aligned on a functional basis with managers having oversight responsibility for the major operating functions within the segment. Management assesses financial and non-financial data such as vehicle unit sales, production volume, market share information, vehicle model plans and plant location costs to allocate resources within the automotive operations.

Geographic Breakdown

The following table sets forth Toyota’s net revenues in each geographic market based on the country location of the parent company or the subsidiaries that transacted the sale with the external customer for the past three fiscal years.


	Yen in millions
	Year ended March 31,
	2011		2012		2013
Japan	¥	6,966,929	¥	7,293,804	¥	7,910,456
North America		5,327,809		4,644,348		6,167,821
Europe		1,920,416		1,917,408		2,003,113
Asia		3,138,112		3,116,849		4,058,629
Other*		1,640,422		1,611,244		1,924,173

*	“Other” consists of Central and South America, Oceania and Africa.

Results of Operations — Fiscal 2013 Compared with Fiscal 2012


	Yen in millions
	Year ended March 31,						2013 v. 2012 Change
	2012			2013			Amount			Percentage
Net revenues:
Japan	¥	11,167,319		¥	12,821,018		¥	1,653,699			14.8	%
North America		4,751,886			6,284,425			1,532,539			32.3
Europe		1,993,946			2,083,113			89,167			4.5
Asia		3,334,274			4,385,476			1,051,202			31.5
Other*		1,760,175			2,094,265			334,090			19.0
Intersegment elimination/unallocated amount		(4,423,947	)		(5,604,105	)		(1,180,158	)		—

Total		18,583,653			22,064,192			3,480,539			18.7
Operating income (loss):
Japan		(207,040	)		576,335			783,375			—
North America		186,409			221,925			35,516			19.1
Europe		17,796			26,462			8,666			48.7
Asia		256,790			376,055			119,265			46.4
Other*		108,814			133,744			24,930			22.9
Intersegment elimination/unallocated amount		(7,142	)		(13,633	)		(6,491	)		—

Total		355,627			1,320,888			965,261			271.4
Operating margin		1.9	%		6.0	%		4.1	%
Income before income taxes and equity in earnings of affiliated companies		432,873			1,403,649			970,776			224.3
Net margin from income before income taxes and equity in earnings of affiliated companies		2.3	%		6.4	%		4.1	%
Equity in earnings of affiliated companies		197,701			231,519			33,818			17.1
Net income attributable to Toyota Motor Corporation		283,559			962,163			678,604			239.3
Net margin attributable to Toyota Motor Corporation		1.5	%		4.4	%		2.9	%

*	“Other” consists of Central and South America, Oceania and Africa.

Net Revenues

Toyota had net revenues for fiscal 2013 of ¥22,064.1 billion, an increase of ¥3,480.5 billion, or 18.7%, compared with the prior fiscal year. This increase reflected changes in numbers of the vehicle unit sales and sales mix of ¥3,031.5 billion and favorable impact of fluctuations in foreign currency translation rates of ¥281.8 billion. Excluding the difference in the Japanese yen value used for translation purposes of ¥281.8 billion, net revenues would have been ¥21,782.3 billion during fiscal 2013, a 17.2% increase compared with the prior fiscal year. The automotive market in 2012 increased by 11.3% in North America and 14.3% in Asia compared with the prior fiscal year. In fiscal 2013, the market in the U.S. and emerging countries such as Asia developed in a steady manner. Under these automotive market conditions, Toyota’s consolidated vehicle unit sales increased to 8,871 thousand vehicles by 20.7% compared with the prior fiscal year.

The table below shows Toyota’s net revenues from external customers by product category and by business.


	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount			Percentage
Vehicles	¥	14,164,940	¥	17,446,473	¥	3,281,533			23.2	%
Parts and components for overseas production		338,000		356,756		18,756			5.5
Parts and components for after service		1,532,219		1,577,690		45,471			3.0
Other		929,219		997,843		68,624			7.4

Total Automotive		16,964,378		20,378,762		3,414,384			20.1
All Other		547,538		535,388		(12,150	)		(2.2	)

Total sales of products		17,511,916		20,914,150		3,402,234			19.4
Financial services		1,071,737		1,150,042		78,305			7.3

Total	¥	18,583,653	¥	22,064,192	¥	3,480,539			18.7	%

Toyota’s net revenues include net revenues from sales of products, consisting of net revenues from automotive operations and all other operations, which increased by 19.4% during fiscal 2013 compared with the prior fiscal year to ¥20,914.1 billion, and net revenues from financial services operations which increased by 7.3% during fiscal 2013 compared with the prior fiscal year to ¥1,150.0 billion. Excluding the difference in the Japanese yen value used for translation purposes of ¥246.0 billion, net revenues from sales of products would have been ¥20,668.1 billion, an 18.0% increase during fiscal 2013 compared with the prior fiscal year. The increase in net revenues from sales of products is due to an increase in Toyota vehicle unit sales by 1,519 thousand vehicles. Excluding the difference in the Japanese yen value used for translation purposes of ¥35.8 billion, net revenues from financial services operations would have been ¥1,114.2 billion, a 4.0% increase during fiscal 2013 compared with the prior fiscal year. This increase was mainly due to an increase of ¥25.8 billion rental revenue generated by vehicles and equipment on operating lease.

The following table shows the number of financing contracts by geographic region at the end of the fiscal 2013 and 2012, respectively.


	Number of financing contracts in thousands
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Japan		1,697		1,765		68		4.0	%
North America		4,535		4,596		61		1.3
Europe		796		825		29		3.7
Asia		649		868		219		33.7
Other*		552		618		66		11.9

Total		8,229		8,672		443		5.4	%

*	“Other” consists of Central and South America, Oceania and Africa.

Geographically, net revenues (before the elimination of intersegment revenues) for fiscal 2013 increased by 14.8% in Japan, 32.3% in North America, 4.5% in Europe, 31.5% in Asia, and 19.0% in Other compared with the prior fiscal year. Excluding the difference in the Japanese yen value used for translation purposes of ¥281.8 billion, net revenues in fiscal 2013 would have increased by 14.8% in Japan, 26.2% in North America, 6.9% in Europe, 28.0% in Asia and 22.5% in Other compared with the prior fiscal year.

The following is a discussion of net revenues in each geographic market (before the elimination of intersegment revenues).

Japan


	Thousands of units
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Toyota’s consolidated vehicle unit sales*		3,741		4,202		461		12.3	%
* including number of exported vehicle unit sales

	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Net revenues:
Sales of products	¥	11,040,964	¥	12,687,092	¥	1,646,128		14.9	%
Financial services		126,355		133,926		7,571		6.0

Total	¥	11,167,319	¥	12,821,018	¥	1,653,699		14.8	%

Toyota’s domestic and exported vehicle unit sales increased by 461 thousand vehicles compared with the prior fiscal year due mainly to a recovery from the negative impact of the Great East Japan Earthquake in the first half of fiscal 2012, an increase in demand by subsidies for eco-cars offered by the government and strong sales of Aqua and other car models in fiscal 2013.

North America


	Thousands of units
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,872		2,469		597		31.9	%

	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Net revenues:
Sales of products	¥	4,048,532	¥	5,564,183	¥	1,515,651		37.4	%
Financial services		703,354		720,242		16,888		2.4

Total	¥	4,751,886	¥	6,284,425	¥	1,532,539		32.3	%

In North America, the vehicle unit sales increased by 597 thousand vehicles compared with the prior fiscal year due mainly to the market recovering in a steady manner and strong sales of Corolla, Camry and other car models.

Europe


	Thousands of units
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Toyota’s consolidated vehicle unit sales		798		799		1		0.1	%

	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Net revenues:
Sales of products	¥	1,925,670	¥	2,007,207	¥	81,537		4.2	%
Financial services		68,276		75,906		7,630		11.2

Total	¥	1,993,946	¥	2,083,113	¥	89,167		4.5	%

Net revenues in Europe as a whole increased due primarily to the 1 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year. The vehicle unit sales increased in Eastern Europe, especially in Russia, although sales of Toyota brands’ vehicles decreased in Western Europe compared with the prior fiscal year due to the European sovereign debt crisis.

Asia


	Thousands of units
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,327		1,684		357		26.9	%

	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Net revenues:
Sales of products	¥	3,275,871	¥	4,307,943	¥	1,032,072		31.5	%
Financial services		58,403		77,533		19,130		32.8

Total	¥	3,334,274	¥	4,385,476	¥	1,051,202		31.5	%

Net revenues in Asia as a whole increased due primarily to the 357 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year. The vehicle unit sales increased due mainly to the expansion of markets such as Thailand and Indonesia, and the recovery during fiscal 2013 from the negative impacts of the flood in Thailand in fiscal 2012.

Other


	Thousands of units
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,284		1,640		356		27.8	%

	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Net revenues:
Sales of products	¥	1,636,043	¥	1,942,215	¥	306,172		18.7	%
Financial services		124,132		152,050		27,918		22.5

Total	¥	1,760,175	¥	2,094,265	¥	334,090		19.0	%

Net revenues in Other as a whole increased due primarily to the 356 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year. The vehicle unit sales increased due mainly to strong sales of IMV and Land Cruiser in each region in fiscal 2013 and the recovery from the shortages of parts supplies caused by the Great East Japan Earthquake and the flood in Thailand in fiscal 2012.

Operating Costs and Expenses


	Yen in millions
	Year ended March 31,				2013 v. 2012 Change
	2012		2013		Amount		Percentage
Operating costs and expenses
Cost of products sold	¥	15,795,918	¥	18,010,569	¥	2,214,651		14.0	%
Cost of financing operations		592,646		630,426		37,780		6.4
Selling, general and administrative		1,839,462		2,102,309		262,847		14.3

Total	¥	18,228,026	¥	20,743,304	¥	2,515,278		13.8	%


	Yen in millions
	2013 v. 2012 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix	¥	2,360,000
Effect of fluctuation in foreign currency translation rates		270,000
Effect of cost reduction efforts		(450,000	)
Effect of increase in miscellaneous costs and others		335,278

Total	¥	2,515,278

Operating costs and expenses increased by ¥2,515.2 billion, or 13.8%, to ¥20,743.3 billion during fiscal 2013 compared with the prior fiscal year. This increase resulted from the ¥2,360.0 billion impact of changes in vehicle unit sales and sales mix, the ¥270.0 billion unfavorable impact of fluctuations in foreign currency translation rates and the ¥335.2 billion increase in miscellaneous costs and others, partially offset by the ¥450.0 billion impact of cost reduction efforts.

The increase in miscellaneous costs and others was due mainly to the ¥90.0 billion charge for costs related to the settlement of the economic loss claims in the consolidated federal action in the U.S., the ¥70.0 billion increase in labor costs, the ¥50.0 billion impact of increase in product quality related expenses and

the ¥20.0 billion increase in research and development expenses. This increase in product quality related expenses resulted from the weakening of the Japanese yen at the end of fiscal 2013 against other currencies in comparison to the prior fiscal year. See note 14 to the consolidated financial statements.

During fiscal 2013, Toyota announced recalls and other safety measures including the following:

In October 2012, Toyota announced in Japan and other regions the voluntary safety recall of certain models of Toyota brands’ vehicles in relation to the inspection and application of special fluorine grease to the driver’s side Power Window Master Switch (PWMS). In November 2012, Toyota announced in Japan and other regions the voluntary safety recall of certain models of Toyota brands’ vehicles in relation to the insufficient hardness treatment of some intermediate extension shafts and in relation to the electric water pump for the hybrid system.

Cost Reduction Efforts

During fiscal 2013, Toyota’s continued cost reduction efforts reduced operating costs and expenses by ¥450.0 billion. The amount of effect of cost reduction efforts includes the impact of fluctuation in the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production materials and parts. In fiscal 2013, continued cost reduction efforts together with suppliers contributed to the improvement in earnings. These cost reduction efforts related to ongoing value engineering and value analysis activities, the use of common parts resulting in a reduction of part types and other manufacturing initiatives designed to reduce the costs of vehicle production.

Cost of Products Sold

Cost of products sold increased by ¥2,214.6 billion, or 14.0%, to ¥18,010.5 billion during fiscal 2013 compared with the prior fiscal year. The increase resulted from the ¥2,124.0 billion impact of changes in vehicle unit sales and sales mix and the ¥201.0 billion unfavorable impact of fluctuations in foreign currency translation rates, partially offset by the ¥450.0 billion impact of cost reduction efforts.

Cost of Financing Operations

Cost of financing operations increased by ¥37.7 billion, or 6.4%, to ¥630.4 billion during fiscal 2013 compared with the prior fiscal year. The increase resulted from the ¥33.1 billion unfavorable impact of fluctuations in foreign currency translation rates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by ¥262.8 billion, or 14.3%, to ¥2,102.3 billion during fiscal 2013 compared with the prior fiscal year. This increase reflected the ¥90.0 billion charge for costs related to the settlement of the economic loss claims in the consolidated federal action in the U.S., the ¥43.2 billion increase in expenses for the financial services operations and the ¥35.8 billion unfavorable impact of fluctuations in foreign currency translation rates.

Operating Income


	Yen in millions
	2013 v. 2012 Change
Changes in operating income and loss:
Effect of marketing efforts	¥	650,000
Effect of cost reduction efforts		450,000
Effect of changes in exchange rates		150,000
Effect of increase of miscellaneous costs and others		(300,000	)
Other		15,261

Total	¥	965,261

Toyota’s operating income increased by ¥965.2 billion, or 271.4%, to ¥1,320.8 billion during fiscal 2013 compared with the prior fiscal year. This increase was due mainly to the ¥650.0 billion increase of marketing efforts, the ¥450.0 billion impact of cost reduction efforts and the ¥150.0 billion favorable impact of changes in exchange rates, partially offset by the ¥300.0 billion increase in miscellaneous costs and others. The increase in miscellaneous costs and others was due mainly to the ¥90.0 billion charge for costs related to the settlement of the economic loss claims in the consolidated federal action in the U.S., the ¥70.0 billion increase in labor costs, the ¥50.0 billion impact of increase in product quality related expenses and the ¥20.0 billion increase in research and development expenses.

During fiscal 2013, operating income (before elimination of intersegment profits), increased by ¥783.3 billion in Japan compared with the prior fiscal year, ¥35.5 billion, or 19.1%, in North America, ¥8.6 billion, or 48.7%, in Europe, ¥119.2 billion, or 46.4%, in Asia, and ¥24.9 billion, or 22.9%, in Other.

The following is a description of operating income in each geographic market.

Japan


	Yen in millions
	2013 v. 2012 Change
Changes in operating income and loss:
Effect of marketing efforts	¥	415,000
Effect of cost reduction efforts		380,000
Effect of changes in exchange rates		165,000
Effect of increase of miscellaneous costs and others		(170,000	)
Other		(6,625	)

Total	¥	783,375

North America


	Yen in millions
	2013 v. 2012 Change
Changes in operating income and loss:
Effect of marketing efforts	¥	30,000
Effect of cost reduction efforts		50,000
Effect of increase of miscellaneous costs and others		(65,000	)
Other		20,516

Total	¥	35,516

Europe


	Yen in millions
	2013 v. 2012 Change
Changes in operating income and loss:
Effect of marketing efforts	¥	5,000
Effect of cost reduction efforts		5,000
Effect of increase of miscellaneous costs and others		(5,000	)
Other		3,666

Total	¥	8,666

Asia


	Yen in millions
	2013 v. 2012 Change
Changes in operating income and loss:
Effect of marketing efforts	¥	135,000
Effect of cost reduction efforts		15,000
Effect of changes in exchange rates		(10,000	)
Effect of increase of miscellaneous costs and others		(30,000	)
Other		9,265

Total	¥	119,265

Other Income and Expenses

Interest and dividend income decreased by ¥1.1 billion, or 1.2%, to ¥98.6 billion during fiscal 2013 compared with the prior fiscal year.

Interest expense was ¥22.9 billion during fiscal 2013, on the same level as that of the prior fiscal year.

Foreign exchange gain, net decreased by ¥31.5 billion, or 85.0%, to ¥5.5 billion during fiscal 2013 compared with the prior fiscal year. Foreign exchange gains and losses include the differences between the value of foreign currency denominated assets and liabilities recognized through transactions in foreign currencies translated at prevailing exchange rates and the value at the date the transaction settled during the fiscal year, including those settled using forward foreign currency exchange contracts, or the value translated by appropriate year-end current exchange rates. The ¥31.5 billion decrease in foreign exchange gain, net was due mainly to the losses resulting from the Japanese yen being stronger against foreign currencies at the time foreign currency bonds were redeemed during fiscal 2013 than those at the time of purchase.

Other loss, net increased by ¥38.3 billion to ¥1.5 billion during fiscal 2013 compared with the prior fiscal year.

Income Taxes

The provision for income taxes increased by ¥289.4 billion, or 110.3%, to ¥551.6 billion during fiscal 2013 compared with the prior fiscal year due to the increase in income before income taxes. The effective tax rate for fiscal 2013 was 39.3%, which was higher than the statutory tax rate in Japan. This was due mainly to deferred tax liabilities relating to undistributed earnings in affiliated companies accounted for by the equity method.

Net Income and Loss Attributable to Noncontrolling Interests and Equity in Earnings of Affiliated Companies

Net income attributable to noncontrolling interests increased by ¥36.5 billion, or 43.2%, to ¥121.3 billion during fiscal 2013 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2013 in net income attributable to the shareholders of consolidated subsidiaries.

Equity in earnings of affiliated companies during fiscal 2013 increased by ¥33.8 billion, or 17.1%, to ¥231.5 billion compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2013 in net income attributable to the shareholders of affiliated companies accounted for by the equity method.

Net Income Attributable to Toyota Motor Corporation

Net income attributable to the shareholders of Toyota Motor Corporation increased by ¥678.6 billion, or 239.3%, to ¥962.1 billion during fiscal 2013 compared with the prior fiscal year.

Other Comprehensive Income and Loss

Other comprehensive income increased by ¥856.8 billion to ¥822.7 billion for fiscal 2013 compared with the prior fiscal year. This increase resulted from favorable foreign currency translation adjustments gains of ¥434.6 billion in fiscal 2013 compared with losses of ¥87.7 billion in the prior fiscal year, and from unrealized holding gains on securities in fiscal 2013 of ¥368.5 billion compared with gains of ¥129.3 billion in the prior fiscal year. The increase in unrealized holding gains on securities was due mainly to changes in stock prices.

Segment Information

The following is a discussion of results of operations for each of Toyota’s operating segments. The amounts presented are prior to intersegment elimination.


	Yen in millions
	Year ended March 31,						2013 v. 2012 Change
	2012			2013			Amount			Percentage
Automotive:
Net revenues	¥	16,994,546		¥	20,419,100		¥	3,424,554			20.2	%
Operating income		21,683			944,704			923,021			4,256.9
Financial Services:
Net revenues		1,100,324			1,170,670			70,346			6.4
Operating income		306,438			315,820			9,382			3.1
All Other:
Net revenues		1,048,915			1,066,461			17,546			1.7
Operating income		42,062			53,616			11,554			27.5
Intersegment elimination/unallocated amount:
Net revenues		(560,132	)		(592,039	)		(31,907	)		—
Operating income		(14,556	)		6,748			21,304			—

Automotive Operations Segment

The automotive operations segment is Toyota’s largest operating segment by net revenues. Net revenues for the automotive segment increased during fiscal 2013 by ¥3,424.5 billion, or 20.2%, compared with the prior fiscal year to ¥20,419.1 billion. The increase reflects the ¥3,030.0 billion of favorable impact of changes in vehicle unit sales and sales mix and the ¥245.4 billion favorable impact of fluctuations in foreign currency translation rates.

Operating income from the automotive operations increased by ¥923.0 billion during fiscal 2013 compared with the prior fiscal year to ¥944.7 billion. This increase in operating income was due mainly to the ¥150.0 billion favorable impact of changes in exchange rates, the ¥645.0 billion of favorable impact of changes in vehicle unit sales and sales mix, and the ¥450.0 billion impact of cost reduction efforts, partially offset by the ¥300.0 billion increase in miscellaneous costs and others.

The changes in vehicle unit sales and changes in sales mix was due primarily to the increase in Toyota’s vehicle unit sales by 1,519 thousand vehicles compared with the prior fiscal year resulting from the increase in vehicle unit sales in every region. The increase in miscellaneous costs and others was due mainly to the ¥90.0 billion charge for costs related to the settlement of the economic loss claims in the consolidated federal action in the U.S., the ¥70.0 billion increase in labor costs, the ¥50.0 billion impact of increase in product quality related expenses and the ¥20.0 billion increase in research and development expenses.

Financial Services Operations Segment

Net revenues for the financial services operations increased during fiscal 2013 by ¥70.3 billion, or 6.4%, compared with the prior fiscal year to ¥1,170.6 billion. This increase was primarily due to the ¥36.0 billion favorable impact of fluctuations in foreign currency translation rates and the ¥25.8 billion increase in rental income from vehicles and equipment on operating leases.

Operating income from financial services operations increased by ¥9.3 billion, or 3.1%, to ¥315.8 billion during fiscal 2013 compared with the prior fiscal year. This increase was due primarily to the recording of ¥12.9 billion of valuation gains on interest rate swaps stated at fair value.

Ratio of credit loss experience in the United States is as follows:


	Year ended March 31,
	2012			2013
Net charge-offs as a percentage of average gross earning assets:
Finance receivables		0.24	%		0.29	%
Operating lease		0.11			0.18

Total		0.21	%		0.27	%

All Other Operations Segment

Net revenues for Toyota’s other operations segments increased by ¥17.5 billion, or 1.7%, to ¥1,066.4 billion during fiscal 2013 compared with the prior fiscal year.

Operating income from Toyota’s other operations segments increased by ¥11.5 billion, or 27.5%, to ¥53.6 billion during fiscal 2013 compared with the prior fiscal year.

Results of Operations — Fiscal 2012 Compared with Fiscal 2011


	Yen in millions
	Year ended March 31,						2012 v. 2011 Change
	2011			2012			Amount			Percentage
Net revenues:
Japan	¥	10,986,246		¥	11,167,319		¥	181,073			1.6	%
North America		5,429,136			4,751,886			(677,250	)		(12.5	)
Europe		1,981,497			1,993,946			12,449			0.6
Asia		3,374,534			3,334,274			(40,260	)		(1.2	)
Other*		1,809,116			1,760,175			(48,941	)		(2.7	)
Intersegment elimination/unallocated amount		(4,586,841	)		(4,423,947	)		162,894			—

Total		18,993,688			18,583,653			(410,035	)		(2.2	)
Operating income (loss):
Japan		(362,396	)		(207,040	)		155,356			—
North America		339,503			186,409			(153,094	)		(45.1	)
Europe		13,148			17,796			4,648			35.4
Asia		312,977			256,790			(56,187	)		(18.0	)
Other*		160,129			108,814			(51,315	)		(32.0	)
Intersegment elimination/unallocated amount		4,918			(7,142	)		(12,060	)		—

Total		468,279			355,627			(112,652	)		(24.1	)
Operating margin		2.5	%		1.9	%		(0.6	)%
Income before income taxes and equity in earnings of affiliated companies		563,290			432,873			(130,417	)		(23.2	)
Net margin from income before income taxes and equity in earnings of affiliated companies		3.0	%		2.3	%		(0.7	)%
Equity in earnings of affiliated companies		215,016			197,701			(17,315	)		(8.1	)
Net income attributable to Toyota Motor Corporation		408,183			283,559			(124,624	)		(30.5	)
Net margin attributable to Toyota Motor Corporation		2.1	%		1.5	%		(0.6	)%

*	“Other” consists of Central and South America, Oceania and Africa.

Net Revenues

Toyota had net revenues for fiscal 2012 of ¥18,583.6 billion, a decrease of ¥410.0 billion, or 2.2%, compared with the prior fiscal year. This decrease reflects unfavorable impact of fluctuations in foreign currency translation rates and others of ¥717.7 billion, partially offset by changes in numbers of the vehicle unit sales and sales mix of approximately ¥320.0 billion and other factors. Excluding the difference in the Japanese yen value used for translation purposes of ¥717.7 billion, net revenues would have been approximately ¥19,301.3 billion during fiscal 2012, a 1.6% increase compared with the prior fiscal year. The automotive market in fiscal 2012 increased by 9.7% in North America and 3.9% in Asia compared with the prior fiscal year due to that market in the U.S. and emerging countries such as Asia have developed in a steady manner. Under these automotive market conditions, despite the Great East Japan Earthquake and the flood in Thailand, Toyota’s consolidated vehicle unit sales increased to 7,352 thousand vehicles by 0.6% compared with the prior fiscal year.

The table below shows Toyota’s net revenues from external customers by product category and by business.


	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Vehicles	¥	14,507,479	¥	14,164,940	¥	(342,539	)		(2.4	)%
Parts and components for overseas production		335,366		338,000		2,634			0.8
Parts and components for after service		1,553,497		1,532,219		(21,278	)		(1.4	)
Other		926,411		929,219		2,808			0.3

Total Automotive		17,322,753		16,964,378		(358,375	)		(2.1	)
All Other		497,767		547,538		49,771			10.0

Total sales of products		17,820,520		17,511,916		(308,604	)		(1.7	)
Financial services		1,173,168		1,071,737		(101,431	)		(8.6	)

Total	¥	18,993,688	¥	18,583,653	¥	(410,035	)		(2.2	)%

Toyota’s net revenues include net revenues from sales of products, consisting of net revenues from automotive operations and all other operations, which decreased by 1.7% during fiscal 2012 compared with the prior fiscal year to ¥17,511.9 billion, and net revenues from financial services operations which decreased by 8.6% during fiscal 2012 compared with the prior fiscal year to ¥1,071.7 billion. Excluding the difference in the Japanese yen value used for translation purposes of ¥650.8 billion, net revenues from sales of products would have been ¥18,162.7 billion, a 1.9% increase during fiscal 2012 compared with the prior fiscal year. The increase in net revenues from sales of products is due to an increase in Toyota vehicle unit sales by 44 thousand vehicles. Excluding the difference in the Japanese yen value used for translation purposes of ¥66.9 billion, net revenues from financial services operations would have been approximately ¥1,138.6 billion, a 2.9% decrease during fiscal 2012 compared with the prior fiscal year. This decrease was mainly due to the decrease of ¥18.3 billion rental revenue generated by vehicles and equipment on operating lease.

The following table shows the number of financing contracts by geographic region at the end of the fiscal 2012 and 2011, respectively.


	Number of financing contracts in thousands
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Japan		1,709		1,697		(12	)		(0.7	)%
North America		4,654		4,535		(119	)		(2.6	)
Europe		790		796		6			0.7
Asia		522		649		127			24.3
Other*		527		552		25			4.9

Total		8,202		8,229		27			0.3	%

*	“Other” consists of Central and South America, Oceania and Africa.

Geographically, net revenues (before the elimination of intersegment revenues) for fiscal 2012 decreased by 12.5% in North America, 1.2% in Asia, and 2.7% in Other, whereas net revenues increased by 1.6% in Japan and 0.6% in Europe compared with the prior fiscal year. Excluding the difference in the Japanese yen value used for translation purposes of ¥717.7 billion, net revenues in fiscal 2012 would have decreased by 5.1% in North America, and would have increased by 1.6% in Japan, 5.3% in Europe, 3.8% in Asia and 1.7% in Other compared with the prior fiscal year.

The following is a discussion of net revenues in each geographic market (before the elimination of intersegment revenues).

Japan


	Thousands of units
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount		Percentage
Toyota’s consolidated vehicle unit sales*		3,611		3,741		130		3.6	%
* including number of exported vehicle unit sales

	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount		Percentage
Net revenues:
Sales of products	¥	10,864,329	¥	11,040,964	¥	176,635		1.6	%
Financial services		121,917		126,355		4,438		3.6

Total	¥	10,986,246	¥	11,167,319	¥	181,073		1.6	%

Although Toyota’s domestic and exported vehicle unit sales decreased due to the impact of the Great East Japan Earthquake in the first half of fiscal 2012, Toyota’s domestic and exported vehicle unit sales over the fiscal year increased by 130 thousand vehicles compared with the prior fiscal year. The increase in vehicle unit sales resulted primarily from introduction of new products such as Prius a and Aqua.

North America


	Thousands of units
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Toyota’s consolidated vehicle unit sales		2,031		1,872		(159	)		(7.8	)%

	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Net revenues:
Sales of products	¥	4,603,192	¥	4,048,532	¥	(554,660	)		(12.0	)%
Financial services		825,944		703,354		(122,590	)		(14.8	)

Total	¥	5,429,136	¥	4,751,886	¥	(677,250	)		(12.5	)%

In North America, the vehicle unit sales decreased by 159 thousand vehicles compared with the prior fiscal year due to decreased production as a result of shortages of parts supplies caused by the Great East Japan Earthquake and the flood in Thailand, consisting of a 67 thousand vehicles, or 30.7%, decrease in RAV4 sales, a 26 thousand vehicles, or 22.4%, decrease in Tundra sales, and a 21 thousand vehicles, or 7.3%, decrease in Corolla sales. Net revenues in North America decreased compared with the prior fiscal year due to the decrease in vehicle unit sales and the unfavorable impact of fluctuations in foreign currency translation rates of ¥398.9 billion.

Europe


	Thousands of units
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Toyota’s consolidated vehicle unit sales		796		798		2			0.3	%

	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Net revenues:
Sales of products	¥	1,910,336	¥	1,925,670	¥	15,334			0.8	%
Financial services		71,161		68,276		(2,885	)		(4.1	)

Total	¥	1,981,497	¥	1,993,946	¥	12,449			0.6	%

Net revenues in Europe as a whole increased due primarily to the 2 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year, such as a 49 thousand vehicles increase in Russia, where the economy has been strong, although sales of Toyota brands’ vehicles decreased in some European countries compared with the prior fiscal year, such as a 18 thousand vehicles decrease in Italy and a 7 thousand vehicles decrease in Portugal, both of which were mainly due to the European sovereign debt crisis.

Asia


	Thousands of units
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Toyota’s consolidated vehicle unit sales		1,255		1,327		72			5.7	%

	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Net revenues:
Sales of products	¥	3,325,466	¥	3,275,871	¥	(49,595	)		(1.5	)%
Financial services		49,068		58,403		9,335			19.0

Total	¥	3,374,534	¥	3,334,274	¥	(40,260	)		(1.2	)%

Despite the flood in Thailand, Toyota’s vehicle unit sales in Asia increased by 72 thousand vehicles compared with the prior fiscal year due to steady growth in automotive markets. Although Toyota’s vehicle unit sales in Asia increased, net revenues in Asia decreased compared with the prior fiscal year mainly due to the unfavorable impact of fluctuations in foreign currency translation rates of ¥168.8 billion and others.

Other


	Thousands of units
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Toyota’s consolidated vehicle unit sales		1,313		1,284		(29	)		(2.2	)%

	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Net revenues:
Sales of products	¥	1,694,680	¥	1,636,043	¥	(58,637	)		(3.5	)%
Financial services		114,436		124,132		9,696			8.5

Total	¥	1,809,116	¥	1,760,175	¥	(48,941	)		(2.7	)%

Net revenues in Other decreased due to decreases in Toyota’s vehicle unit sales primarily as a result of shortages of parts supplies caused by the Great East Japan Earthquake and the flood in Thailand. Toyota’s vehicle unit sales decreased by 25 thousand vehicles in Oceania, and by 19 thousand vehicles in the Middle East, respectively, compared with the prior fiscal year.

Operating Costs and Expenses


	Yen in millions
	Year ended March 31,				2012 v. 2011 Change
	2011		2012		Amount			Percentage
Operating costs and expenses
Cost of products sold	¥	15,985,783	¥	15,795,918	¥	(189,865	)		(1.2	)%
Cost of financing operations		629,543		592,646		(36,897	)		(5.9	)
Selling, general and administrative		1,910,083		1,839,462		(70,621	)		(3.7	)

Total	¥	18,525,409	¥	18,228,026	¥	(297,383	)		(1.6	)%


	Yen in millions
	2012 v. 2011 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	150,000
Effect of fluctuation in foreign currency translation rates and others		(432,300	)
Effect of cost reduction efforts		(150,000	)
Effect of increase in miscellaneous costs and others		134,917

Total	¥	(297,383	)

Operating costs and expenses decreased by ¥297.3 billion, or 1.6%, to ¥18,228.0 billion during fiscal 2012 compared with the prior fiscal year. This decrease resulted from the ¥432.3 billion favorable impact of fluctuations in foreign currency translation rates and others, and the ¥150.0 billion impact of cost reduction efforts, partially offset by the ¥150.0 billion impact of changes in vehicle unit sales and sales mix and other operational factors and the ¥134.9 billion increase in miscellaneous costs and others.

The increase in miscellaneous costs and others was due mainly to a ¥100.0 billion increase in labor costs, a ¥50.0 billion increase in research and development expenses and the ¥104.9 billion increase in other various costs, partially offset by the ¥120.0 billion impact of decrease in product quality related expenses and others. This cost decreased because costs related to recalls and other safety measures occurred at a high level during the prior fiscal year. See note 14 to the consolidated financial statements.

During fiscal 2012, Toyota announced recalls and other safety measures including the following:

In June 2011, Toyota announced in Japan and other regions a voluntary safety recall of certain models of Toyota and Lexus brands’ vehicles in relation to damage to elements of the substrate and potential shutdown of the hybrid system that may have resulted from improper manufacturing of electronic converter control substrate. The affected vehicle models included Harrier Hybrid, Kluger Hybrid, RX400h, and Highlander Hybrid, 111 thousand vehicles were included in this recall.

In September 2011, Toyota announced in Japan the service campaign of certain models of Toyota in relation to abnormal noise and oil leakage that may have resulted from slack of bolts in the sub transmission and the rear wheel differential. The affected vehicle models included EstimaL, EstimaT and Wish, 181 thousand vehicles were included in this service campaign.

In November 2011, Toyota announced in Japan and other regions the voluntary safety recall of certain models of Toyota and Lexus brands’ vehicles in relation to abnormal noise, charge warning light indicators, and increasing of handle operation force resulted from peeling of a bonded part of the engine crankshaft pulley. The affected vehicle models included AlphardG, AlphardV, EstimaL, EstimaT, KlugerV, KlugerL, Kluger Hybrid, Harrier, Harrier Hybrid, Windom, RX300, RX330, RX400h, ES300, ES330, Solara, Camry, Avalon, Sienna, Highlander, and Highlander Hybrid, 549 thousand vehicles were included in this recall.

Cost Reduction Efforts

During fiscal 2012, Toyota’s continued cost reduction efforts reduced operating costs and expenses by ¥150.0 billion. The amount of effect of cost reduction efforts includes the impact of fluctuation in the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production materials and parts. In fiscal 2012, raw materials prices were on an increasing trend; however, continued cost reduction efforts together with suppliers contributed to the improvement in earnings by more than offsetting the effects from raw materials price increase. These cost reduction efforts related to ongoing value engineering and value analysis activities, the use of common parts resulting in a reduction of part types and other manufacturing initiatives designed to reduce the costs of vehicle production.

Cost of Products Sold

Cost of products sold decreased by ¥189.8 billion, or 1.2%, to ¥15,795.9 billion during fiscal 2012 compared with the prior fiscal year. The decrease resulted from the ¥343.6 billion favorable impact of fluctuations in foreign currency translation rates and others, and the ¥150.0 billion impact of cost reduction efforts, partially offset by the ¥135.0 billion impact of changes in vehicle unit sales and sales mix and other operational factors, and ¥110.0 billion increase in miscellaneous costs and others. The increase in miscellaneous costs was due mainly to the ¥50.0 billion increase in research and development expenses and the ¥80.0 billion increase in labor costs.

Cost of Financing Operations

Cost of financing operations decreased by ¥36.8 billion, or 5.9%, to ¥592.6 billion during fiscal 2012 compared with the prior fiscal year. The decrease resulted from the ¥35.7 billion favorable impact of fluctuations in foreign currency translation rates and others, partially offset by the ¥20.8 billion recording of valuation losses on interest rate swaps stated at fair value.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by ¥70.6 billion, or 3.7%, to ¥1,839.4 billion during fiscal 2012 compared with the prior fiscal year. This decrease reflects the ¥53.0 billion favorable impact of fluctuations in foreign currency translation rates and others, and the ¥19.2 billion decrease for the financial services operations.

Operating Income


	Yen in millions
	2012 v. 2011 Change
Changes in operating income and loss:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	170,000
Effect of fluctuation in foreign currency translation rates and others		(285,400	)
Effect of increase in miscellaneous costs and others		(100,000	)
Effect of cost reduction efforts, financial services operations, and others		102,748

Total	¥	(112,652	)

Toyota’s operating income decreased by ¥112.6 billion, or 24.1%, to ¥355.6 billion during fiscal 2012 compared with the prior fiscal year. This decrease was due mainly to the ¥285.4 billion unfavorable impact of fluctuations in foreign currency translation rates and others, and the ¥100.0 billion increase in miscellaneous costs and others, partially offset by the ¥170.0 billion of favorable impact by changes in vehicle unit sales and sales mix and other operational factors and the ¥102.7 billion increase of cost reduction efforts, financial services operations, and others. The unfavorable impact of fluctuations in foreign currency translation rates and others included ¥250.0 billion unfavorable impact of fluctuations in foreign currency transaction rates. The ¥102.7 billion increase of cost reduction efforts, financial services operations, and others reflects the ¥150.0 billion impact of cost reduction efforts, partially offset by the ¥10.0 billion decrease in operating income in the financial services operations.

During fiscal 2012, operating loss (before elimination of intersegment profits), decreased by ¥155.3 billion in Japan compared with the prior fiscal year. During fiscal 2012, operating income (before elimination of intersegment profits), increased by ¥4.6 billion, or 35.4%, in Europe compared with the prior fiscal year, whereas it decreased by ¥153.0 billion, or 45.1%, in North America, decreased by ¥56.2 billion, or 18.0%, in Asia, and decreased by ¥51.3 billion, or 32.0%, in Other.

The following is a description of operating income and loss in each geographic market.

Japan


	Yen in millions
	2012 v. 2011 Change
Changes in operating income and loss:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	195,000
Effect of fluctuation in foreign currency translation rates and others		(275,000	)
Effect of cost reduction efforts, decrease in miscellaneous costs and others		235,356

Total	¥	155,356

The decrease in operating losses in Japan reflects the ¥195.0 billion of favorable impact by changes in vehicle unit sales and sales mix and other operational factors and ¥235.3 billion impact of the cost reduction efforts, and decrease in miscellaneous costs and others, partially offset by the ¥275.0 billion unfavorable impact of effect of fluctuation in foreign currency transaction rates and others. The cost reduction efforts, decrease in miscellaneous costs and others mainly reflect the ¥130.0 billion impact of the cost reduction efforts and ¥40.0 billion decrease in miscellaneous costs and others. The increase in vehicle unit sales was mainly due to introduction of new products such as Prius a and Aqua.

North America


	Yen in millions
	2012 v. 2011 Change
Changes in operating income and loss:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	(5,000	)
Effect of fluctuation in foreign currency translation rates and others		(7,500	)
Effect of cost reduction efforts, increase in miscellaneous costs and others		(140,594	)

Total	¥	(153,094	)

The decrease in operating income in North America was due to the ¥55.0 billion decrease in operating income in the financial services operations, the ¥7.5 billion unfavorable impact of the fluctuations in foreign currency translation rates and others, the ¥5.0 billion negative impact of changes in vehicle unit sales and sales mix and other operational factors and the ¥90.0 billion increase in miscellaneous costs and others.

Europe


	Yen in millions
	2012 v. 2011 Change
Changes in operating income and loss:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	(15,000	)
Effect of fluctuation in foreign currency translation rates and others		(1,200	)
Effect of cost reduction efforts, decrease in miscellaneous costs and others		20,848

Total	¥	4,648

The increase in operating income in Europe was due to the ¥10.0 billion impact of cost reduction efforts and the ¥5.0 billion increase in operating income in the financial services operations, partially offset by ¥15.0 billion negative impact of changes in vehicle unit sales and sales mix and other operational factors and the ¥1.2 billion unfavorable impact of fluctuations in foreign currency translation rates and others.

Asia


	Yen in millions
	2012 v. 2011 Change
Changes in operating income and loss:
Effect of changes in vehicle unit sales and sales mix and other operational factors	¥	(10,000	)
Effect of fluctuation in foreign currency translation rates and others		11,600
Effect of cost reduction efforts, increase in miscellaneous costs and others		(57,787	)

Total	¥	(56,187	)

The decrease in operating income in Asia was due to the ¥10.0 billion negative impact of changes in vehicle unit sales and sales mix and other operational factors and others and the ¥35.0 billion increase in miscellaneous costs and others, partially offset by the ¥11.6 billion favorable impact of the fluctuation in foreign currency translation rates and others.

Other Income and Expenses

Interest and dividend income increased by ¥9.0 billion, or 10.0%, to ¥99.8 billion during fiscal 2012 compared with the prior fiscal year.

Interest expense decreased by ¥6.3 billion, or 21.8%, to ¥22.9 billion during fiscal 2012 compared with the prior fiscal year.

Foreign exchange gain, net increased by ¥22.8 billion, or 159.4%, to ¥37.1 billion during fiscal 2012 compared with the prior fiscal year.

The net gain of ¥37.1 billion in fiscal 2012 was primarily attributable to Toyota Motor Corporation’s receivables denominated in the U.S. dollars, specifically transactional gains on account of an increase in export volume due to the recovery of production levels in the second half of fiscal 2012 after the Great East Japan Earthquake, and the weakening of the Japanese yen against the U.S. dollar in the second half of fiscal 2012, together with the impact of forward foreign currency exchange contracts, which were mainly denominated in the U.S. dollars and the yen as well as the euro and the yen.

The ¥22.8 billion increase in foreign exchange gain, net, during fiscal 2012 compared with the prior fiscal year was mainly attributable to the losses incurred by certain subsidiaries during fiscal 2011. Such losses were principally due to the Brazilian real and the Thai baht, the functional currencies for Toyota Motor Corporation’s Brazilian and Thai subsidiaries, respectively, both strengthening against the U.S. dollar, decreasing the value of assets denominated in dollars that were not settled during the year.

Other loss, net decreased by ¥56.0 billion to ¥36.8 billion during fiscal 2012 compared with the prior fiscal year. This was due to the recognition of impairment losses on available-for-sale securities.

Income Taxes

The provision for income taxes decreased by ¥50.5 billion, or 16.2%, to ¥262.2 billion during fiscal 2012 compared with the prior fiscal year due to the decrease in income before income taxes. The effective tax rate for fiscal 2012 was 60.6%, which was higher than the statutory tax rate in Japan. This was due to recurring items such as the valuation allowance and deferred tax liabilities relating to undistributed earnings in affiliated companies accounted for by the equity method.

Net Income and Loss Attributable to Noncontrolling Interests and Equity in Earnings of Affiliated Companies

Net income attributable to noncontrolling interests increased by ¥27.4 billion, or 47.9%, to ¥84.7 billion during fiscal 2012 compared with the prior fiscal year. This increase was due to an increase during fiscal 2012 in net income attributable to the shareholders of consolidated subsidiaries.

Equity in earnings of affiliated companies during fiscal 2012 decreased by ¥17.3 billion, or 8.1%, to ¥197.7 billion compared with the prior fiscal year. This decrease was due to a decrease during fiscal 2012 in net income attributable to the shareholders of affiliated companies accounted for by the equity method.

Net Income Attributable to Toyota Motor Corporation

Net income attributable to the shareholders of Toyota Motor Corporation decreased by ¥124.6 billion, or 30.5%, to ¥283.5 billion during fiscal 2012 compared with the prior fiscal year.

Other Comprehensive Income and Loss

Other comprehensive loss decreased by ¥263.8 billion to ¥34.1 billion for fiscal 2012 compared with the prior fiscal year. This decrease resulted from unfavorable foreign currency translation adjustments losses of ¥87.7 billion in fiscal 2012 compared with losses of ¥287.6 billion in the prior fiscal year, and from unrealized holding gains on securities in fiscal 2012 of ¥129.3 billion compared with losses of ¥26.1 billion in the prior fiscal year. The increase in unrealized holding gains on securities was due to changes in stock prices.

Segment Information

The following is a discussion of results of operations for each of Toyota’s operating segments. The amounts presented are prior to intersegment elimination.


	Yen in millions
	Year ended March 31,						2012 v. 2011 Change
	2011			2012			Amount			Percentage
Automotive:
Net revenues	¥	17,337,320		¥	16,994,546		¥	(342,774	)		(2.0	)%
Operating income		85,973			21,683			(64,290	)		(74.8	)
Financial Services:
Net revenues		1,192,205			1,100,324			(91,881	)		(7.7	)
Operating income		358,280			306,438			(51,842	)		(14.5	)
All Other:
Net revenues		972,252			1,048,915			76,663			7.9
Operating income		35,242			42,062			6,820			19.4
Intersegment elimination/unallocated amount:
Net revenues		(508,089	)		(560,132	)		(52,043	)		—
Operating income		(11,216	)		(14,556	)		(3,340	)		—

Automotive Operations Segment

The automotive operations segment is Toyota’s largest operating segment by net revenues. Net revenues for the automotive segment decreased during fiscal 2012 by ¥342.7 billion, or 2.0%, compared with the prior fiscal year to ¥16,994.5 billion. The decrease reflects the ¥649.2 billion unfavorable impact of fluctuations in foreign currency translation rates and others, partially offset by the ¥320.0 billion of favorable impact by changes in vehicle unit sales and sales mix, and other operational factors.

Operating income from the automotive operations decreased by ¥64.3 billion during fiscal 2012 compared with the prior fiscal year to ¥21.6 billion. This decrease in operating income was due to the ¥250.0 billion unfavorable impact of fluctuations in foreign currency rates and the ¥100.0 billion increase in miscellaneous costs and others, partially offset by the ¥170.0 billion effect of cost reduction efforts, and the ¥150.0 billion of favorable impact by changes in vehicle unit sales and sales mix.

The changes in vehicle unit sales and changes in sales mix was due primarily to an increase in Toyota’s vehicle unit sales by 44 thousand vehicles compared with the prior fiscal year resulting from the introduction of new products in spite of the impact of the Great East Japan Earthquake and the flood in Thailand. The increase in miscellaneous costs and others was due primarily to the ¥100.0 billion increase in labor costs and the ¥50.0 billion increase in research and development expenses.

Financial Services Operations Segment

Net revenues for the financial services operations decreased during fiscal 2012 by ¥91.8 billion, or 7.7%, compared with the prior fiscal year to ¥1,100.3 billion. This decrease was primarily due to the unfavorable impact of fluctuations in foreign currency translation rates and others of ¥66.9 billion and the ¥18.3 billion decrease in rental income from vehicles and equipment on operating leases.

Operating income from financial services operations decreased by ¥51.8 billion, or 14.5%, to ¥306.4 billion during fiscal 2012 compared with the prior fiscal year. This decrease was due primarily to the recording of ¥20.8 billion of valuation losses on interest rate swaps stated at fair value.

Ratio of credit loss experience in the United States is as follows:


	Year ended March 31,
	2011			2012
Net charge-offs as a percentage of average gross earning assets:
Finance receivables		0.61	%		0.24	%
Operating lease		0.22			0.11

Total		0.52	%		0.21	%

All Other Operations Segment

Net revenues for Toyota’s other operations segments increased by ¥76.6 billion, or 7.9%, to ¥1,048.9 billion during fiscal 2012 compared with the prior fiscal year.

Operating income from Toyota’s other operations segments increased by ¥6.8 billion, or 19.4%, to ¥42.0 billion during fiscal 2012 compared with the prior fiscal year.

Related Party Transactions

Toyota does not have any significant related party transactions other than transactions with affiliated companies in the ordinary course of business. See note 12 to the consolidated financial statements for further discussion.

Legislation Regarding End-of-Life Vehicles

In October 2000, the European Union enforced a directive that requires member states to promulgate regulations implementing the following:

•

manufacturers shall bear all or a significant part of the costs for taking back end-of-life vehicles put on the market after July 1, 2002 and dismantling and recycling those vehicles. Beginning January 1, 2007, this requirement will also be applicable to vehicles put on the market before July 1, 2002;

•

manufacturers may not use certain hazardous materials in vehicles sold after July 2003;

•

vehicles type-approved and put on the market after December 15, 2008 shall be re-usable and/or recyclable to a minimum of 85% by weight per vehicle and shall be re-usable and/or recoverable to a minimum of 95% by weight per vehicle; and

•

end-of-life vehicles must meet actual re-use of 80% and re-use as material or energy of 85%, respectively, of vehicle weight by 2006, rising to 85% and 95%, respectively, by 2015.

See note 23 to the consolidated financial statements for further discussion.

Recent Accounting Pronouncements in the United States

In December 2011, FASB issued updated guidance of disclosures about offsetting assets and liabilities. This guidance requires additional disclosures about gross and net information for assets and liabilities including financial instruments eligible for offset in the balance sheets. This guidance is effective for fiscal year beginning on or after January 1, 2013, and for interim period within the fiscal year. Management does not expect this guidance to have a material impact on Toyota’s consolidated financial statements.

component of accumulated other comprehensive income based on its source. This guidance is effective for fiscal year beginning on or after December 15, 2012, and for interim period within the fiscal year. Management does not expect this guidance to have a material impact on Toyota’s consolidated financial statements.

Critical Accounting Estimates

The consolidated financial statements of Toyota are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Toyota believes that of its significant accounting policies, the following may involve a higher degree of judgments, estimates and assumptions:

Product Warranties and Recalls and Other Safety Measures

Toyota generally warrants its products against certain manufacturing and other defects. Provisions for product warranties are provided for specific periods of time and/or usage of the product and vary depending upon the nature of the product, the geographic location of the sale and other factors. All product warranties are consistent with commercial practices. Toyota includes a provision for estimated product warranty costs as a component of cost of sales at the time the related sale is recognized. The accrued warranty costs represent management’s best estimate at the time of sale of the total costs that Toyota will incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs is primarily based on historical experience of product failures as well as current information on repair costs. The amount of warranty costs accrued also contains an estimate of warranty claim recoveries to be received from suppliers. The foregoing evaluations are inherently uncertain, as they require material estimates and some products’ warranties extend for several years. Consequently, actual warranty costs may differ from the estimated amounts and could require additional warranty provisions. If these factors require a significant increase in Toyota’s accrued estimated warranty costs, it would negatively affect future operating results of the automotive operations.

An estimate of warranty claim accrued for each fiscal year is calculated based on the estimate of warranty claim per unit. The estimate of warranty claim per unit is calculated by dividing the actual amounts of warranty claim, net of claim recovery cost received from suppliers, by the number of sales units for the fiscal year.

As the historical recovery amounts received from suppliers is used as a factor in Toyota’s calculation of estimated accrued warranty cost, the estimated accrued warranty cost may change depending on the average recovery amounts received from suppliers in the past. However, Toyota believes that there is not a significant uncertainty of estimated amounts based on historical experience regarding recoveries received from suppliers. Toyota may seek recovery to suppliers over the life of the warranty, and there are no other significant special terms and conditions including cap on amounts that can be recovered.

Toyota accrues for costs of recalls and other safety measures, as well as product warranty cost described above, included as a component of cost of sales at the time of vehicle sale. Toyota provides for such “liabilities for recalls and other safety measures” at the time of vehicle sales comprehensively by aggregate sales of various models in a certain period by geographical regions instead of by individual models. While there is no difference in the calculation method among geographical regions, Toyota believes it is reasonable to calculate the liabilities by geographical regions because of factors such as varying labor costs among geographical regions.

The “liabilities for the costs of recalls and other safety measures” recorded in the balance sheet is calculated by deducting the “accumulated amount of repair cost paid” from the “expected liability for the cost of recalls and other safety measures”. As such, this liability is evaluated every period based on new data and are adjusted as appropriate. Toyota calculates these liabilities for units sold in the current period and each of the past 10 fiscal years, and aggregates such liabilities in determining the final liability amount.

The “expected liability for the cost of recalls and other safety measures” are calculated by multiplying the “sales unit” by the “expected average repair cost per unit”. The “expected average repair cost per unit” is calculated based on dividing the “accumulated amount of repair cost paid per unit” by the “pattern of payment occurrences”. The “pattern of payment occurrence” represents a ratio that shows the measure of payment occurrence over 10 years based on actual payments with regard to units sold within 10 years

Factors that may cause a difference between the amount accrued at the time of vehicle sale and actual payment on individual recalls and other safety measures mainly include actual cost of recalls and safety measures during the period being significantly different from the accumulated amount of repair cost paid per unit (generally comprised of parts and labor) and the actual pattern of payment occurrence during the period being significantly different from the pattern of the payment occurrence in the past, which is considered as part of our estimation process for future recalls and other safety measures.

As described above, in estimating the comprehensive provision, the actual cost of individual recalls and other safety measures is included as a component of the calculation such as the accumulated amount of repair cost paid per unit. Thus, an individual recall announcement generally does not directly impact the financial statements when it occurs.

Allowance for Doubtful Accounts and Credit Losses

Natures of estimates and assumptions

Retail receivables and finance lease receivables consist of retail installment sales contracts secured by passenger cars and commercial vehicles. Collectability risks include consumer and dealer insolvencies and insufficient collateral values (less costs to sell) to realize the full carrying values of these receivables. As a matter of policy, Toyota maintains an allowance for doubtful accounts and credit losses representing management’s estimate of the amount of asset impairment in the portfolios of finance, trade and other receivables. Toyota determines the allowance for doubtful accounts and credit losses based on a systematic, ongoing review and evaluation performed as part of the credit-risk evaluation process, historical loss experience, the size and composition of the portfolios, current economic events and conditions, the estimated fair value and adequacy of collateral, and other pertinent factors. This evaluation is inherently judgmental and requires material estimates, including the amounts and timing of future cash flows expected to be received, which may be susceptible to significant change. Although management considers the allowance for doubtful accounts and credit losses to be adequate based on information currently available, additional provisions may be necessary due to (i) changes in management estimates and assumptions about asset impairments, (ii) information that indicates changes in expected future cash flows, or (iii) changes in economic and other events and conditions. To the extent that sales incentives remain an integral part of sales promotion with the effect of reducing new vehicle prices, resale prices of used vehicles and, correspondingly, the collateral value of Toyota’s retail receivables and finance lease receivables could experience further downward pressure. If these factors require a significant increase in Toyota’s allowance for doubtful accounts and credit losses, it could negatively affect future operating results of the financial services operations. The level of credit losses, which has a greater impact on Toyota’s results of operations, is influenced by two factors: frequency of occurrence and expected severity of loss. For evaluation purposes, exposures to credit losses are segmented into the two primary categories of “consumer” and “dealer”. Toyota’s “consumer” category consists of smaller balances that are homogenous retail receivables and finance lease receivables. The “dealer” category consists of wholesale and other dealer loan receivables. The overall allowance for credit losses is evaluated at least quarterly, considering a variety of assumptions and factors to determine whether reserves are considered adequate to cover probable losses.

Sensitivity analysis

The level of credit losses, which could significantly impact Toyota’s results of operations, is influenced by two factors: frequency of occurrence and expected severity of loss. The overall allowance for credit losses is evaluated at least quarterly, considering a variety of assumptions and factors to determine whether reserves are

considered adequate to cover probable losses. The following table illustrates the effect of an assumed change in frequency of occurrence or expected severity of loss mainly in the United States, assuming all other assumptions are held consistent respectively. The table below represents the impact on the allowance for credit losses in Toyota’s financial services operations of the change in frequency of occurrence or expected severity of loss as any change impacts most significantly on the financial services operations.


	Yen in millions
	Effect on the allowance for credit losses as of March 31, 2013
10 percent change in frequency of occurrence or expected severity of loss	¥	3,950

Investment in Operating Leases

Natures of estimates and assumptions

Vehicles on operating leases, where Toyota is the lessor, are valued at cost and depreciated over their estimated useful lives using the straight-line method to their estimated residual values. Toyota utilizes industry published information and its own historical experience to determine estimated residual values for these vehicles. Toyota evaluates the recoverability of the carrying values of its leased vehicles for impairment when there are indications of declines in residual values, and if impaired, Toyota recognizes an allowance for losses on its residual values.

Throughout the life of the lease, management performs periodic evaluations of estimated end-of-term fair values to determine whether estimates used in the determination of the contractual residual value are still considered reasonable. Factors affecting the estimated residual value at lease maturity include, but are not limited to, new vehicle incentive programs, new vehicle pricing, used vehicle supply, projected vehicle return rates, and projected loss severity. The vehicle return rate represents the number of leased vehicles actually returned at contract maturity as a percentage of the number of lease contracts originally scheduled to be mature in the same period less lease contracts subject to early terminations. A higher rate of vehicle returns exposes Toyota to higher potential losses incurred at lease termination. Severity of loss is the extent to which the end-of-term fair value of a lease is less than its carrying value at lease end.

To the extent that sales incentives remain an integral part of sales promotion, resale prices of used vehicles and, correspondingly, the fair value of Toyota’s leased vehicles could be subject to downward pressure. The extent of the impact this will have on the end of term residual value depends on the significance of the incentive programs and whether they are sustained over a number of periods. This in turn can impact the projection of future used vehicle values, adversely impacting the expected residual value of the current operating lease portfolio and increasing the provision for residual value losses. However, various other factors impact used vehicle values and the projection of future residual values, including the supply of and demand for used vehicles, interest rates, inflation, the actual or perceived quality, safety and reliability of vehicles, the general economic outlook, new vehicle pricing, projected vehicle return rates and projected loss severity, which may offset this effect. Such factors might adversely affect the results of operations for financial services due to significant charges reducing the estimated residual value.

Sensitivity analysis

The following table illustrates the effect of an assumed change in the vehicle return rate and end-of-term market values mainly in the United States, which Toyota believes are the critical estimates, in determining the residual value losses, holding all other assumptions constant. The following table represents the impact on the residual value losses in Toyota’s financial services operations of the change in vehicle return rate and end-of-term market values as those changes have a significant impact on financial services operations.


	Yen in millions
	Effect on the residual value losses over the remaining terms of the operating leases on and after April 1, 2013
1 percent increase in vehicle return rate	¥	1,035
1 percent increase in end-of-term market values	¥	5,267

Impairment of Long-Lived Assets

Toyota periodically reviews the carrying value of its long-lived assets held and used and assets to be disposed of, including intangible assets, when events and circumstances warrant such a review. This review is performed using estimates of future cash flows. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Management believes that the estimates of future cash flows and fair values are reasonable. However, changes in estimates of such cash flows and fair values would affect the evaluations and negatively affect future operating results of the automotive operations.

Pension Costs and Obligations

Natures of estimates and assumptions

Pension costs and obligations are dependent on assumptions used in calculating such amounts. These assumptions include discount rates, benefits earned, interest costs, expected rate of return on plan assets, mortality rates and other factors. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect Toyota’s pension costs and obligations.

The two most critical assumptions impacting the calculation of pension costs and obligations are the discount rates and the expected rates of returns on plan assets. Toyota determines the discount rates mainly based on the rates of high quality fixed income bonds or fixed income governmental bonds currently available and expected to be available during the period to maturity of the defined benefit pension plans. Toyota determines the expected rates of return for pension assets after considering several applicable factors including, the composition of plan assets held, assumed risks of asset management, historical results of the returns on plan assets, Toyota’s principal policy for plan asset management, and forecasted market conditions. A weighted-average discount rate of 2.0% domestically and 5.0% overseas and a weighted-average expected rate of return on plan assets of 2.5% domestically and 7.0% overseas are the results of assumptions used for the various pension plans in calculating Toyota’s consolidated pension costs for fiscal 2013. Also, a weighted-average discount rate of 1.7% domestically and 4.5% overseas is the result of assumption used for the various pension plans in calculating Toyota’s consolidated pension obligations for fiscal 2013.

Sensitivity analysis

The following table illustrates the effects of assumed changes in weighted-average discount rates and the weighted-average expected rate of return on plan assets, which Toyota believes are critical estimates in determining pension costs and obligations, assuming all other assumptions are consistent.


	Yen in millions
	Domestic						Overseas
	Effect on pre-tax income for the year ended March 31, 2014			Effect on obligations for the year ended March 31, 2013			Effect on pre-tax income for the year ended March 31, 2014			Effect on obligations for the year ended March 31, 2013
Discount rates
0.5% decrease	¥	(7,217	)	¥	117,113		¥	(4,598	)	¥	57,956
0.5% increase		6,984			(108,417	)		4,365			(52,908	)
Expected rate of return on plan assets
0.5% decrease	¥	(5,451	)				¥	(2,396	)
0.5% increase		5,451						2,396

Derivatives and Other Contracts at Fair Value

Toyota uses derivatives in the normal course of business to manage its exposure to foreign currency exchange rates and interest rates. The accounting for derivatives is complex and continues to evolve. Toyota estimates the fair value of derivative financial instruments using industry-standard valuation models that require observable inputs including interest rates and foreign exchange rates, and the contractual terms. In other certain cases when market data is not available, key inputs to the fair value measurement include quotes from counterparties, and other market data. These estimates are based upon valuation methodologies deemed appropriate under the circumstances. However, the use of different assumptions may have a material effect on the estimated fair value amounts.

Marketable Securities and Investments in Affiliated Companies

Toyota’s accounting policy is to record a write-down of such investments to net realizable value when a decline in fair value below the carrying value is other-than-temporary. In determining if a decline in value is other-than-temporary, Toyota considers the length of time and the extent to which the fair value has been less than the carrying value, the financial condition and prospects of the company and Toyota’s ability and intent to retain its investment in the company for a period of time sufficient to allow for any anticipated recovery in fair value.

Deferred Tax Assets

The factors used to assess the likelihood of realization of the deferred tax assets are the future reversal of existing taxable temporary differences, the future taxable income and available tax planning strategies that are prudent and feasible. All available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed for deferred tax assets which are not more-likely-than-not to be realized.

The accounting for deferred tax assets represents Toyota’s current best estimate based on all available evidence. Unanticipated events or changes could result in re-evaluating the realizability of deferred tax assets.

Outlook

As for our world future business environment, the U.S. economy is expected to benefit from ongoing moderate recovery and a pickup in the pace of economic expansion in emerging countries. Europe, meanwhile, still faces the risk of economic stagnation due to the sovereign debt crisis and other factors, though a gradual bottoming out is anticipated.

The automotive market is expected to see recovery in the U.S. and expansion in emerging countries. However, amid the change in market structure, as seen in the expansion and diversification of demand for eco-cars backed by rising environmental consciousness, fierce competition exists on a global scale. With the foregoing external factors in mind, Toyota expects that net revenues for fiscal 2014 will increase compared with fiscal 2013 as results of a favorable impact of fluctuations in foreign currency translation rates and an increase in vehicle unit sales. With respect to operating income, factors expected to contribute to an increase in operating income include the favorable impact of fluctuations in foreign currency rates, increased vehicle unit sales through marketing efforts, and cost reduction efforts. On the other hand, factors expected to contribute to a decrease in operating income include increase in miscellaneous costs and others. As the result, Toyota expects that operating income will increase in fiscal 2014 compared with fiscal 2013. Also, Toyota expects that income before income taxes and equity in earnings of affiliated companies and net income attributable to Toyota Motor Corporation will increase in fiscal 2014.

For the purposes of this outlook discussion, Toyota is assuming an average exchange rate of ¥90 to the U.S. dollar and ¥120 to the euro. Exchange rate fluctuations can materially affect Toyota’s operating results. In particular, a strengthening of the Japanese yen against the U.S. dollar can have a material adverse effect on Toyota’s operating results. See “Operating and Financial Review and Prospects — Operating Results — Overview — Currency Fluctuations” for further discussion.

The foregoing statements are forward-looking statements based upon Toyota’s management’s assumptions and beliefs regarding exchange rates, market demand for Toyota’s products, economic conditions and others. See “Cautionary Statement Concerning Forward-Looking Statements”. Toyota’s actual results of operations could vary significantly from those described above as a result of unanticipated changes in the factors described above or other factors, including those described in “Risk Factors”.

5.B LIQUIDITY AND CAPITAL RESOURCES

Historically, Toyota has funded its capital expenditures and research and development activities through cash generated by operations.

In fiscal 2014, Toyota expects to sufficiently fund its capital expenditures and research and development activities through cash and cash equivalents on hand, and cash generated by operations. Toyota will use its funds for the development of environment technologies, maintenance and replacement of manufacturing facilities, and the introduction of new products. See “Information on the Company — Business Overview — Capital Expenditures and Divestitures” for information regarding Toyota’s material capital expenditures and divestitures for fiscal 2011, 2012 and 2013, and information concerning Toyota’s principal capital expenditures and divestitures currently in progress.

Toyota funds its financing programs for customers and dealers, including loans and leasing programs, from both cash generated by operations and borrowings by its sales finance subsidiaries. Toyota seeks to expand its ability to raise funds locally in markets throughout the world by expanding its network of finance subsidiaries.

Net cash provided by operating activities increased by ¥998.8 billion to ¥2,451.3 billion for fiscal 2013, compared with ¥1,452.4 billion for fiscal 2012. The increase was primarily attributable to the ¥965.2 billion increase in operating income. See “Operating and financial review and prospects — Operating results — Operating income” for further information regarding the increase in operating income.

Net cash provided by operating activities decreased by ¥571.5 billion to ¥1,452.4 billion for fiscal 2012, compared with ¥2,024.0 billion for fiscal 2011. The decrease was primarily attributable to the ¥112.6 billion decrease in operating income, to a decline in depreciation expense of ¥107.7 billion and a reduction in inventory.

Even though other working capital items significantly fluctuated in line with the significant decrease in production and sales in March 2011 due to the Great East Japan Earthquake and increase in sales in the second half of fiscal 2012 due to the recovery of production levels from the Great East Japan Earthquake, changes in other working capital items largely offset each other such that Toyota believes the impact of such changes on net cash provided by operating activities was not material. The impact of changes in interest and other items on net cash provided by operating activities were also not material.

Inventory levels were at comparable levels as between the ends of fiscal 2010 and 2011; while the reduction in sales after the Lehman financial crisis and other factors kept the inventory level low at the end of fiscal 2010, the inventory level at the end of fiscal 2011 was approximately equivalent because of the Great East Japan Earthquake and the subsequent downturn in production. However, the inventory level at the end of fiscal 2012 increased due to the recovery of production and sales after the Great East Japan Earthquake. This increase of inventory involved related expenditures incurred in producing the inventory, which resulted in reducing the net cash provided by operating activities by ¥396.7 billion.

Furthermore, depreciation decreased by ¥107.7 billion in fiscal 2012 as a result of a reduction of Toyota’s capital expenditures after the Lehman financial crisis compared with capital expenditures before such financial crisis. The decrease in depreciation favorably affected net income while it did not affect the net cash provided by operating activities.

Net cash used in investing activities increased by ¥1,584.6 billion to ¥3,027.3 billion for fiscal 2013, compared with ¥1,442.6 billion for fiscal 2012. The increase was primarily attributable to the ¥630.5 billion increase in finance receivables, to the ¥426.5 billion increase in marketable securities and security investments and to the ¥311.0 billion increase in purchases of investments in property.

Net cash used in investing activities decreased by ¥673.6 billion to ¥1,442.6 billion for fiscal 2012, compared with ¥2,116.3 billion for fiscal 2011. The decrease was primarily attributable to the ¥1,248.1 billion decrease in purchases of marketable securities and security investments, partially offset by a ¥859.3 billion decrease in sales and maturity of marketable securities and security investments.

Net cash provided by or used in financing activities increased by ¥832.5 billion to ¥477.2 billion increase for fiscal 2013, compared with ¥355.3 billion decrease for fiscal 2012. The increase was primarily attributable to the ¥796.4 billion increase in proceeds from issuance of long-term debt and to the ¥185.4 billion decrease in payments of long-term debt.

Net cash provided by or used in financing activities decreased by ¥789.6 billion to ¥355.3 billion decrease for fiscal 2012, compared with ¥434.3 billion increase for fiscal 2011. The decrease was primarily attributable to the ¥536.6 billion decrease in proceeds from issuance of long-term debt and to the ¥377.9 billion increase in payments of long-term debt.

Total capital expenditures for property, plant and equipment, excluding vehicles and equipment on operating leases, were ¥854.5 billion during fiscal 2013, an increase of 18.1% over the ¥723.5 billion in total capital expenditures during the prior fiscal year. This increase was due primarily to an increase of investments in North America and Asia.

Total capital expenditures for vehicles and equipment on operating leases were ¥1,119.5 billion during fiscal 2013, an increase of 38.5% over the ¥808.5 billion in expenditures from the prior fiscal year. This increase was due to an increase in investments in the financial services operations.

Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately ¥910.0 billion during fiscal 2014.

Based on currently available information, Toyota does not expect environmental matters to have a material impact on its financial position, results of operations, liquidity or cash flows during fiscal 2014. However, uncertainty exists with respect to Toyota’s obligations under current and future environment regulations as described in “Information on the Company — Business Overview — Governmental Regulation, Environmental and Safety Standards”.

Cash and cash equivalents were ¥1,718.2 billion as of March 31, 2013. Most of Toyota’s cash and cash equivalents are held in the Japanese yen or in the U.S. dollars. In addition, time deposits were ¥106.7 billion and marketable securities were ¥1,445.6 billion as of March 31, 2013.

Liquid assets, which Toyota defines as cash and cash equivalents, time deposits, marketable debt securities and its investment in monetary trust funds, increased during fiscal 2013 by ¥1,043.0 billion, or 18.1%, to ¥6,804.5 billion.

Trade accounts and notes receivable, less allowance for doubtful accounts decreased during fiscal 2013 by ¥28.1 billion, or 1.4%, to ¥1,971.6 billion. This decrease was due to a decrease in the volume of sales in the fourth quarter of fiscal 2013.

Inventories increased during fiscal 2013 by ¥93.5 billion, or 5.8%, to ¥1,715.7 billion. This increase was due mainly to the fluctuations in foreign currency translation rates.

Total finance receivables, net increased during fiscal 2013 by ¥2,344.0 billion, or 24.1%, to ¥12,061.4 billion. This increase was due mainly to the fluctuations in foreign currency translation rates and an increase in the number of financing contracts. As of March 31, 2013, finance receivables were geographically distributed as follows: in North America 57.6%, in Europe 10.0%, in Japan 9.9%, in Asia 9.5% and in Other 13.0%.

Marketable securities and other securities investments, including those included in current assets, increased during fiscal 2013 by ¥1,387.6 billion, or 26.5%, reflecting an increase in the fair values of common stocks and purchase of marketable securities and security investments.

Property, plant and equipment increased during fiscal 2013 by ¥615.8 billion, or 9.9%, primarily reflecting fluctuations in foreign currency translation rates and the increase in the capital expenditures, partially offset by the impacts of depreciation charges during the year.

Accounts and notes payable decreased during fiscal 2013 by ¥128.8 billion, or 5.7%. This decrease was due mainly to a decrease in production volume in the fourth quarter of fiscal 2013.

Accrued expenses increased during fiscal 2013 by ¥357.0 billion, or 19.5%. This increase was due mainly to the charge for costs related to the settlement of the economic loss claims in the consolidated federal action in the U.S. and the increase of product quality related expenses resulted from the weakening of the Japanese yen at the end of fiscal 2013 against other currencies in comparison to the prior fiscal year. Income taxes payable increased during fiscal 2013 by ¥22.4 billion, or 16.8%, as a result of reflecting fluctuations in foreign currency translation rates.

Toyota’s total borrowings increased during fiscal 2013 by ¥2,126.2 billion, or 17.7%. Toyota’s short-term borrowings consist of loans with a weighted-average interest rate of 2.31% and commercial paper with a weighted-average interest rate of 0.52%. Short-term borrowings increased during fiscal 2013 by ¥638.8 billion, or 18.5%, to ¥4,089.5 billion. Toyota’s long-term debt consists of unsecured and secured loans, medium-term notes, unsecured notes and long-term capital lease obligations with interest rates ranging from 0.00% to 27.30%, and maturity dates ranging from 2013 to 2050. The current portion of long-term debt increased during fiscal 2013

by ¥191.8 billion, or 7.6%, to ¥2,704.4 billion and the non-current portion increased by ¥1,295.5 billion, or 21.4%, to ¥7,337.8 billion. The increase in total borrowings resulted from an increase in medium-term notes. As of March 31, 2013, approximately 40% of long-term debt was denominated in the U.S. dollars, 17% in the Japanese yen, 13% in the Australian dollars, and 30% in other currencies. Toyota hedges interest rate risk exposure of fixed-rate borrowings by entering into interest rate swaps. There are no material seasonal variations in Toyota’s borrowings requirements.

As of March 31, 2013, Toyota’s total interest bearing debt was 116.3% of Toyota Motor Corporation shareholders’ equity, compared with 113.8% as of March 31, 2012.

The following table provides information for credit rating of Toyota’s short-term borrowing and long-term debt from rating agencies, Standard & Poor’s Ratings Group (S&P), Moody’s Investors Services (Moody’s), and Rating and Investment Information, Inc. (R&I), as of May 31, 2013. A credit rating is not a recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated separately of any other rating.


	S&P	Moody’s	R&I
Short-term borrowing	A-1+	P-1	—
Long-term debt	AA-	Aa3	AA+

Toyota’s unfunded pension liabilities of Japanese plans decreased during fiscal 2013 by ¥48.6 billion, or 8.8%, to ¥504.1 billion. On the other hand, the liabilities of foreign plans increased during fiscal 2013 by ¥30.1 billion, or 24.4%, to ¥153.9 billion. The unfunded amounts will be funded through future cash contributions by Toyota or in some cases will be settled on the retirement date of each covered employee. The decrease in unfunded pension liabilities of the Japanese plans as of the end of fiscal 2013 compared with the prior fiscal year end reflects mainly an increase in pension assets due to rising equity security prices, despite an increase in pension benefit obligations resulted from a decline in discount rate. On the other hand, the increase in liabilities of foreign plans reflects the increase in pension benefit obligations resulted from a decline in discount rate. See note 19 to the consolidated financial statements for further discussion.

Toyota’s treasury policy is to maintain controls on all exposures, to adhere to stringent counterparty credit standards, and to actively monitor marketplace exposures. Toyota remains centralized, and is pursuing global efficiency of its financial services operations through Toyota Financial Services Corporation.

The key element of Toyota’s financial strategy is maintaining a strong financial position that will allow Toyota to fund its research and development initiatives, capital expenditures and financial services operations efficiently even if earnings are subject to short-term fluctuations. Toyota believes that it maintains sufficient liquidity for its present requirements and that by maintaining its high credit ratings, it will continue to be able to access funds from external sources in large amounts and at relatively low costs. Toyota’s ability to maintain its high credit ratings is subject to a number of factors, some of which are not within Toyota’s control. These factors include general economic conditions in Japan and the other major markets in which Toyota does business, as well as Toyota’s successful implementation of its business strategy.

5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

Toyota believes that its long-term success depends on its ability to secure a leadership position with respect to vehicle research and development.

Toyota’s research and development expenditures were approximately ¥807.4 billion in fiscal 2013, ¥779.8 billion in fiscal 2012 and ¥730.3 billion in fiscal 2011.

For this reason, Toyota is promoting next generation environmentally friendly, energy efficient, and safe vehicle technology in its research and development. Toyota is making efforts to produce vehicles that are friendly to the environment and human beings, with efforts focused in the following fields:

•

further improvements in hybrid technologies (functions, costs, etc.) and subsequent environmental contributions;

•

improvement in gasoline engine fuel economy and improvement of technology in connection with more stringent emissions standards;

•

promoting improvements in clean diesel engine functioning and fuel economy;

•

development of electric vehicles, fuel-electric vehicles and other alternative fuel vehicles; and

•

development of technology designed to promote driving and vehicle safety.

Toyota’s belief is that the environment is one of the most important issues. Toyota is aiming to lower the volume of carbon dioxide emissions at all stages of operations, including development, production, logistics, usage, disposal and recycling of vehicles, as well as the reduction of environmental burdens. Toyota also utilizes various energy resources as a substitute to oil, and has successfully developed a plug-in hybrid vehicle which can be charged from domestic power supplies. Toyota is committed to realize the mass production of electric vehicles, the development of next-generation batteries, and the development of alternative fuel vehicles such as biofuel and fuel-cell vehicles. Toyota aims to maintain its leadership position in environmental technology, and is responding to environmental issues, the representative example being the Prius, the hybrid car introduced to the Japanese market in 1997.

In May 2010, Toyota invested in Tesla Motors, Inc. (“Tesla”) in the amount of $50 million as part of a basic agreement with Tesla to implement a joint venture related to the development, technology, and production systems of electric vehicles and their components. At the 26th International Battery, Hybrid and Fuel Cell Electric Vehicle Symposium held in May 2012, Toyota announced the jointly developed electric vehicle, the RAV4 EV, which was released in California in summer 2012.

Toyota’s research and development activities focus on the environment, vehicle safety, information technology and product development.

Toyota’s environmental research and development activities focus on:

•

Developing light-weight and more fuel-efficient engines and transmissions. These technologies include improved technologies in fuel economy, emission, and performance, such as the development of next-generation direct injection system and variable valve system for gasoline engines and the development of the next-generation ultra high pressure common rail system and the diesel particulate and nitrous oxide reduction system for diesel engines.

•

Developing alternative fuel powering systems for commercial sale. This includes developing hybrid vehicles and fuel cell hybrid vehicles. The second-generation Prius that Toyota introduced in September 2003 features a new hybrid system which decreases negative environmental impact while increasing power and performance. Furthermore, the third-generation Prius was introduced in 2009, and broke the record for sales by vehicle type which was previously held by the Corolla. The Aqua (called Prius c in the US), introduced in December 2011 and sold in approximately 50 countries worldwide, is a world leader in fuel economy and low pricing. In addition, Toyota’s cumulative sales of hybrid vehicles has exceeded 5 million units, which contributed approximately 34 million ton reduction in CO₂ emissions. In July 2007, Toyota developed the Plug-in Hybrid Vehicle (“PHV”) and received certification from Japan’s Ministry of Land, Infrastructure, Transport and Tourism (“MLIT”). PHV runs as an Electric Vehicle (“EV”) in short distances and runs as a regular hybrid vehicle in long distances. Tests are conducted in Japan, North America and Europe and in late 2009, Toyota commenced its sale of PHV with lithium ion batteries to fleet vehicle users in Japan, North America and Europe. Toyota also commenced its sale of PHV models in January 2012, which can be charged

from domestic power supplies in Japan, North America and Europe. In addition, in September 2008, Toyota started leasing the new Toyota Fuel Cell Hybrid Vehicle — advanced (the “new Toyota FCHV-adv”). The new Toyota FCHV-adv has completely overhauled its fuel cell system and has made significant improvements to low-temperature startup performance and cruising distance, which had posed challenges to promoting its widespread use. Toyota believes that fuel cell vehicles will be strong eco-cars for future generations. By 2015, Toyota plans to introduce sedan-type fuel cell vehicles at reasonable prices for customers in Japan, the United States and Europe where appropriate infrastructure is expected to be available. To control increases in oil prices and reduce the consumption of oil, the proliferation of fuel alternatives to oil such as biofuel and natural gas is expanding in some countries. Toyota works towards the ongoing formation of a mobility society through the introduction to the market of low-ethanol content vehicles (“E10”), natural gas vehicles and high-concentration flex-fuel vehicles (“FFV”) that are compatible with ethanol fuel, as well as through research and development into other practical uses of oil alternatives and biofuels, such as research into fuels that will not compete with food production, and into genetically modified organism (“GMO”) technology in order to process sugarcane more efficiently.

•

Engaging in recycling activities that take into account the lifecycle (development, manufacture, use, disposal) of a vehicle. Research and development focuses primarily on (1) developing materials that are suitable for recycling and designs that facilitate dismantling parts, and (2) research on effective dismantling technology of end-of-life vehicles and use of recycle materials.

Toyota’s work in the area of vehicle safety is focused on the development of technologies designed to prevent accidents in the first instance, as well as the development of technologies that protect passengers and reduce the damage on impact in the event of an accident. Safety technologies in development include:

•

research on protecting diverse passengers, including senior citizens,

•

autonomous driving support systems, including pre-collision system, and

•

data exchange driving-support systems using advanced communication technologies.

To expand the frontiers of safety technology in automobiles, Toyota completed in 1995 its first prototype Advanced Safety Vehicle, the ASV-1. The ASV-2, which was introduced in 2000, incorporates emerging technologies, such as an autonomous safety support system that uses CCD stereo cameras to recognize obstacles in traffic lanes and an infrastructure-harmonized safety support system to warn the driver of pedestrian crossings. In 2002, Toyota conducted road testing of the ASV-3, a prototype based on further improved infrastructure-harmonized system. With the February 2003 introduction of the Harrier in Japan, Toyota became the first car manufacturer to implement a pre-collision system in its automobiles. This advanced system utilizes pre-collision sensors that use millimeter wave radar and cameras to detect objects presenting hazards, and in addition to alerting the driver to the danger of potential collisions, this system employs a brake assist mechanism that utilizes power-assisted braking to minimize the speed on impact, and automatically applies the vehicle’s brakes when a collision is determined to be inevitable. In February 2004, Toyota introduced the pre-collision system for the first time in the United States by equipping the LS430 with the above features.

In September 2006, at the time of introduction of LS460 in Japan, Toyota established the world’s first enhanced pre-collision system, which added functions to detect pedestrians in front, to support driver steering, and to react to vehicle collision.

In February 2008, Toyota developed the world’s first driver monitoring pre-collision system for the Crown sold in Japan, that monitors whether the driver’s eyes are open, in addition to the face monitor which monitors the direction in which the driver is facing.

In addition, in 2011, Toyota established the Collaborative Safety Research Center aimed at reducing the number of traffic accident related deaths through cooperation with various hospitals and universities in North America. Toyota is greatly fortifying its efforts toward product safety and quality, and this research center is part of these efforts. Established within the same research center is the Toyota Technical Center (“TTC”), which is

the research and development center of Toyota Motor Engineering & Manufacturing North America, Inc. At the TTC, Toyota’s technicians based in Japan also take part in planning, and perform research focused on reducing the risk of distracted or impaired driving behaviors, as well as the protection of vulnerable demographics such as young children and the elderly. Toyota is also promoting the spread of safe vehicle technologies, and is implementing analyses of traffic accident and driver behavior data. Toyota is planning to invest in the amount of 50 million dollars over the next 5 years, starting from 2011.

In order to promote further streamlining of the global external decision-making process with respect to the development of vehicle safety technologies, Toyota appointed a Chief Safety Technology Officer (“CSTO”) in 2011, who will execute a general integration of safety technology within Toyota’s technology department.

Toyota’s product development program uses a series of methods which are generally intended to promote timely and appropriate responses to changing market demand. These methods include:

•

optimizing and eliminating vehicle platforms,

•

sharing parts and components among multiple vehicles,

•

shortening the time for development and production preparation by the simultaneous study of design and production engineering processes, and

•

using simulation technology for production design and evaluation.

Toyota carefully analyzes patents and the need for patents in each area of research to formulate more effective research and development strategies. Toyota identifies research and development projects in which it should acquire patents, and files relevant applications as necessary to help build a strong global patent portfolio.

In addition, Toyota wishes to contribute to sustainable mobility by promoting the spread of technologies with environmental and safety benefits. This is why Toyota takes an open stance to patent licensing, and grants licenses when appropriate terms are met. For example, in March 2004, Toyota and Ford Motor Company entered into licensing agreements for patents related to hybrid systems and emissions purification. In addition, in March 2010, Toyota and Mazda Motor Corporation entered into a licensing agreement regarding the supply of hybrid system technology.

Toyota does not consider any one group of patents or licenses to be so important that their expiration or termination would materially affect Toyota’s business. For a further discussion of Toyota’s intellectual property, see “Information on the Company — Business Overview — Intellectual Property”.

5.D TREND INFORMATION

For a discussion of the trends that affect Toyota’s business and operating results, see “— Operating Results” and “— Liquidity and Capital Resources”.

5.E OFF-BALANCE SHEET ARRANGEMENTS

Toyota uses its securitization program as part of its funding through special purpose entities for its financial services operations. Toyota is considered the primary beneficiary of these special purpose entities and therefore consolidates them. Toyota has not entered into any off-balance sheet securitization transactions during fiscal 2013.

Lending Commitments

Credit Facilities with Credit Card Holders

Toyota’s financial services operations issue credit cards to customers. As customary for credit card businesses, Toyota maintains credit facilities with holders of credit cards issued by Toyota. These facilities are

used upon each holder’s requests up to the limits established on an individual holder’s basis. Although loans made to customers through these facilities are not secured, for the purposes of minimizing credit risks and of appropriately establishing credit limits for each individual credit card holder, Toyota employs its own risk management policy which includes an analysis of information provided by financial institutions in alliance with Toyota. Toyota periodically reviews and revises, as appropriate, these credit limits. Outstanding credit facilities with credit card holders were ¥245.2 billion as of March 31, 2013.

Credit Facilities with Dealers

Toyota’s financial services operations maintain credit facilities with dealers. These credit facilities may be used for business acquisitions, facilities refurbishment, real estate purchases, and working capital requirements. These loans are typically collateralized with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate. Toyota obtains a personal guarantee from the dealer or corporate guarantee from the dealership when deemed prudent. Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover Toyota’s exposure under such agreements. Toyota prices the credit facilities according to the risks assumed in entering into the credit facility. Toyota’s financial services operations also provide financing to various multi-franchise dealer organizations, referred to as dealer groups, often as part of a lending consortium, for wholesale inventory financing, business acquisitions, facilities refurbishment, real estate purchases, and working capital requirements. Toyota’s outstanding credit facilities with dealers totaled ¥1,795.8 billion as of March 31, 2013.

Guarantees

Toyota enters into certain guarantee contracts with its dealers to guarantee customers’ payments of their installment payables that arise from installment contracts between customers and Toyota dealers, as and when requested by Toyota dealers. Guarantee periods are set to match the maturity of installment payments, and as of March 31, 2013, ranged from one month to 35 years. However, they are generally shorter than the useful lives of products sold. Toyota is required to execute its guarantee primarily when customers are unable to make required payments.

The maximum potential amount of future payments as of March 31, 2013 is ¥1,849.4 billion. Liabilities for these guarantees of ¥6.5 billion have been provided as of March 31, 2013. Under these guarantee contracts, Toyota is entitled to recover any amounts paid by it from the customers whose obligations it guaranteed.

5.F TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Contractual Obligations and Commitments

For information regarding debt obligations, capital lease obligations, operating lease obligations and other obligations, including amounts maturing in each of the next five years, see notes 13, 22 and 23 to the consolidated financial statements. In addition, as part of Toyota’s normal business practices, Toyota enters into long-term arrangements with suppliers for purchases of certain raw materials, components and services. These arrangements may contain fixed/minimum quantity purchase requirements. Toyota enters into such arrangements to facilitate an adequate supply of these materials and services.

The following tables summarize Toyota’s contractual obligations and commercial commitments as of March 31, 2013.


	Yen in millions
	Total		Payments Due by Period
	Total		Less than 1 year		1 to 3 years		3 to 5 years		5 years and after
Contractual Obligations:
Short-term borrowings (note 13)
Loans	¥	1,062,233	¥	1,062,233	¥	—	¥	—	¥	—
Commercial paper		3,027,295		3,027,295		—		—		—
Long-term debt* (note 13)		10,020,853		2,700,333		3,788,631		2,545,775		986,114
Estimated amount of interest expense on long-term debt		757,581		220,552		299,299		126,644		111,086
Capital lease obligations (note 13)		21,399		4,095		4,839		3,217		9,248
Non-cancelable operating lease obligations (note 22)		61,877		11,299		17,386		11,701		21,491
Commitments for the purchase of property, plant and other assets (note 23)		203,901		57,970		9,902		3,761		132,268

Total	¥	15,155,139	¥	7,083,777	¥	4,120,057	¥	2,691,098	¥	1,260,207

*	“Long-term debt” represents future principal payments.

Toyota is unable to make reasonable estimates of the period of cash settlement with respect to liabilities recognized for uncertain tax benefits, and accordingly such liabilities are excluded from the table above. See note 16 to the consolidated financial statements for further discussion.

Toyota expects to contribute ¥54,094 million domestically and ¥8,688 million overseas to its pension plans in fiscal 2014.


	Yen in millions
	Total Amounts Committed		Amount of Commitment Expiration Per Period
	Total Amounts Committed		Less than 1 year		1 to 3 years		3 to 5 years		5 years and after
Commercial Commitments (note 23):
Maximum potential exposure to guarantees given in the ordinary course of business	¥	1,849,493	¥	813,754	¥	503,822	¥	397,108	¥	134,809

Total Commercial Commitments	¥	1,849,493	¥	813,754	¥	503,822	¥	397,108	¥	134,809

5.G SAFE HARBOR

All information that is not historical in nature disclosed under “— Off-Balance Sheet Arrangements” and “— Tabular Disclosure of Contractual Obligations” is deemed to be a forward-looking statement. See “Cautionary Statement Concerning Forward-Looking Statements” for additional information.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A DIRECTORS AND SENIOR MANAGEMENT

In March 2011, Toyota unveiled its “Toyota Global Vision”. In order to realize the Global Vision, Toyota implemented a new management organization highlighted by a more streamlined board of directors and a reduced number of layers in the executive decision-making structure.

In April 2013, Toyota implemented organizational changes in order to further increase “the speed of decision-making” through “clarification of operations and earnings responsibility.” Specifically, Toyota’s automotive business was split into four business units. These business units are “Lexus International,” which covers the Lexus business, “Toyota No. 1,” which covers North America, Europe and Japan, “Toyota No. 2,” which covers China, Asia & Middle East, East Asia & Oceania, Africa and Latin America & Caribbean and “Unit Center,” which covers all unit-related operations. Toyota’s executive vice presidents are assigned to each operation, and each are responsible for the operations and earnings of the respective business unit. Furthermore, in order to achieve sustainable growth through the continuous development of “even-better cars” that exceed customer expectations around the world, and to realize the “Toyota Global Vision,” the “TNGA Planning Division,” an organization directly under Toyota’s top management, was established in order to rapidly promote the implementation of the TNGA.

Toyota believes it is crucial for it to be led by directors and senior management who deeply understand, and can effectively implement, Toyota’s strengths — the monozukuri spirit of conscientious manufacturing and the genchi genbutsu principle of placing emphasis on on-site operations with a go-and-see attitude for continued improvement and problem solving. At the 109th Ordinary General Shareholders’ Meeting held in June 2013, three outside directors were appointed in order to further reflect the opinions of those from outside the company in management’s decision-making process. Toyota has seven audit & supervisory board members, four of whom are outside audit & supervisory board members.


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Takeshi Uchiyamada (August 17, 1946)	Chairman of the Board	1969 Joined Toyota Motor Corporation (“TMC”) 1998 Director of TMC 2001 Managing Director of TMC 2003 Senior Managing Director of TMC 2005 Executive Vice President of TMC 2012 Vice Chairman of TMC 2013 Chairman of TMC	43,739

Akio Toyoda (May 3, 1956)	President, Member of the Board	1984 Joined TMC 2000 Director of TMC 2002 Managing Director of TMC 2003 Senior Managing Director of TMC 2005 Executive Vice President of TMC 2009 President of TMC (important concurrent duties) Corporate Auditor of Toyota Boshoku Corporation Chairman and CEO of Toyota Motor North America, Inc. Chairman of Toyota Motor Sales & Marketing Corporation Chairman of Japan Automobile Manufacturers Association, Inc.	4,588,975


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Satoshi Ozawa (August 5, 1949)	Executive Vice President, Member of the Board	1974 Joined Toyota Motor Sales Co., Ltd. 2003 Managing Officer of TMC 2007 Senior Managing Director of TMC 2010 Executive Vice President of TMC (important concurrent duties) Chairman of Toyota Motor Europe NV/SA Vice Chairman of Toyota Motor North America, Inc. Chairman of Toyota Motor Engineering & Manufacturing North America, Inc.	33,900

Nobuyori Kodaira (March 18, 1949)	Executive Vice President, Member of the Board	1972 Joined Ministry of International Trade and Industry 2004 Director-General, Agency for Natural Resources and Energy 2006 Retired from Director-General, Agency for Natural Resources and Energy 2008 Advisor of TMC 2009 Managing Officer of TMC 2010 Senior Managing Director of TMC 2011 Director and Senior Managing Officer of TMC 2012 Executive Vice President of TMC (important concurrent duties) Director of KDDI CORPORATION	12,000

Mitsuhisa Kato (March 2, 1953)	Executive Vice President, Member of the Board	1975 Joined TMC 2004 Managing Officer of TMC 2006 Toyota Technocraft Co., Ltd. President 2006 Advisor of TMC 2007 Retired from Advisor of TMC 2010 Retired from Toyota Technocraft Co., Ltd. President 2010 Senior Managing Director of TMC 2011 Senior Managing Officer of TMC 2012 Executive Vice President of TMC (important concurrent duties) Chairman of Toyota Motor Engineering & Manufacturing (China) Co., Ltd.	10,050

Masamoto Maekawa (October 17, 1949)	Executive Vice President, Member of the Board	1973 Joined Toyota Motor Sales Co., Ltd. 2003 Managing Officer of TMC 2007 Toyota Administa Corporation President 2007 Advisor of TMC 2009 Retired from Toyota Administa Corporation President 2009 Senior Managing Director of TMC 2011 Senior Managing Officer of TMC 2012 Executive Vice President of TMC (important concurrent duties) President and Representative Director of Toyota Marketing Japan Corporation	24,000


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Yasumori Ihara (November 17, 1951)	Executive Vice President, Member of the Board	1975 Joined TMC 2004 Managing Officer of TMC 2007 Toyota Transportation Co., Ltd. President 2007 Advisor of TMC 2008 Retired from Advisor of TMC 2009 Retired from Toyota Transportation Co., Ltd. President 2009 Senior Managing Director of TMC 2011 Director and Senior Managing Officer of TMC 2013 Executive Vice President of TMC (important concurrent duties) Chairman of Toyota Motor Technical Center (China) Co., Ltd. Executive Vice Chairman of FAW Toyota Research & Development Co., Ltd.	10,000

Seiichi Sudo (April 21, 1951)	Executive Vice President, Member of the Board	1974 Joined TMC 2003 Managing Officer of TMC 2005 President of Toyota Motor Manufacturing North America, Inc. 2006 Toyota Motor Manufacturing North America, Inc. and Toyota Technical Center U.S.A., Inc. merged and became Toyota Motor Engineering & Manufacturing North America, Inc. 2006 President of Toyota Motor Engineering & Manufacturing North America, Inc. 2008 President of Toyota Motor Kyushu, Inc. 2008 Advisor of TMC 2008 Retired from Toyota Motor Engineering & Manufacturing North America, Inc. President 2010 Retired from Advisor of TMC 2012 Retired from Toyota Motor Kyushu, Inc. President 2012 Senior Managing Officer of TMC 2013 Executive Vice President of TMC (important concurrent duties) Chairman of Toyota Motor (Changshu) Auto Parts Co., Ltd.	12,300

Mamoru Furuhashi (January 3, 1950)	Member of the Board	1973 Joined TMC 2003 Managing Officer of TMC 2007 Senior Managing Director of TMC 2011 Director and Senior Managing Officer of TMC 2013 Retired from Senior Managing Officer of TMC	30,305


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Kiyotaka Ise (March 2, 1955)	Member of the Board	1980 Joined TMC 2007 Managing Officer of TMC 2013 Senior Managing Officer of TMC 2013 Director and Senior Managing Officer of TMC (important concurrent duties) Chairman of Toyota Motorsport GmbH Corporate Auditor of TOKAI RIKA CO., LTD.		9,600

Koei Saga (February 1, 1951)	Member of the Board	1977 Joined TMC 2008 Managing Officer of TMC 2012 Senior Managing Officer of TMC 2013 Director and Senior Managing Officer of TMC (important concurrent duties) Corporate Auditor of JTEKT Corporation		6,300

Shigeki Terashi (February 16, 1955)	Member of the Board	1980 Joined TMC 2008 Managing Officer of TMC 2008 Executive Vice President of Toyota Motor Engineering & Manufacturing North America, Inc. 2011 President and COO of Toyota Motor Engineering & Manufacturing North America, Inc. 2012 President and CEO of Toyota Motor Engineering & Manufacturing North America, Inc. 2012 President and COO of Toyota Motor North America, Inc. 2013 Retired from Toyota Motor Engineering & Manufacturing North America, Inc. President and CEO 2013 Retired from Toyota Motor North America, Inc. President and COO 2013 Senior Managing Officer of TMC 2013 Director and Senior Managing Officer of TMC (important concurrent duties) Vice President of Calty Design Research Inc.		7,400

Yoshimasa Ishii (April 22, 1953)	Member of the Board	1976 Joined Toyota Motor Sales Co., Ltd. 2005 Managing Officer of TMC 2009 Senior Managing Director of TMC 2011 Senior Managing Officer of TMC 2013 Advisor of TMC 2013 President of Toyota Financial Services Corporation 2013 Director of TMC (important concurrent duties) President of Toyota Financial Services Corporation Chairman and CEO of Toyota Financial Service America		8,400


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Ikuo Uno (January 4, 1935)	Member of the Board	1959 Joined Nippon Life Insurance Company 1986 Director of Nippon Life Insurance Company 1988 Managing Director of Nippon Life Insurance Company 1992 Senior Managing Director of Nippon Life Insurance Company 1994 Vice President and Representative Director of Nippon Life Insurance Company 1997 President and Representative Director of Nippon Life Insurance Company 2005 Chairman and Representative Director of Nippon Life Insurance Company 2011 Advisor and Director of Nippon Life Insurance Company 2011 Advisor of Nippon Life Insurance Company 2013 Director of TMC (important concurrent duties) Advisor of Nippon Life Insurance Company Outside Director of Fuji Kyuko Co., Ltd. Outside Corporate Auditor of Odakyu Electric Railway Co., Ltd. Outside Corporate Auditor of West Japan Railway Company Outside Corporate Auditor of Tohoku Electric Power Co., Inc. Outside Director of Panasonic Corporation Outside Corporate Auditor of Sumitomo Mitsui Financial Group, Inc.		—

Haruhiko Kato (July 21, 1952)	Member of the Board	1975 Joined Ministry of Finance (Japan) 2007 Director of Taxation Bureau, Ministry of Finance (Japan) 2009 Director-General of National Tax Administration Agency 2010 Retired from National Tax Administration Agency Director-General 2011 Senior Managing Director of Japan Securities Depository Center, Inc. 2011 President and CEO of Japan Securities Depository Center, Inc. 2013 Director of TMC (important concurrent duties) President and CEO of Japan Securities Depository Center, Inc.		—


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Mark. T. Hogan (May 15, 1951)	Member of the Board	1973 Joined General Motors Corporation 2002 Vice President of General Motors Group 2004 Retired from General Motors Group Vice President 2004 President of Magna International Inc. 2007 Retired from Magna International Inc. President 2008 President and CEO of Vehicle Production Group LLC 2010 Retired from Vehicle Production Group LLC President and CEO 2010 President of Dewey Investments LLC 2013 Director of TMC (important concurrent duties) President of Dewey Investments LLC		—

Yoichiro Ichimaru (October 10, 1948)	Full-time Audit & Supervisory Board Member	1971 Joined Toyota Motor Sales Co., Ltd. 2001 Director of TMC 2003 Managing Officer of TMC 2005 Senior Managing Director of TMC 2009 Executive Vice President of TMC 2011 Audit & Supervisory Board Member of TMC		25,568

Masaki Nakatsugawa (January 29, 1953)	Full-time Audit & Supervisory Board Member	1976 Joined Toyota Motor Sales Co., Ltd. 2002 Dispatched to Toyota Motor Thailand Co., Ltd. 2004 General Manager for Accounting Div. of TMC 2006 Audit & Supervisory Board Member of TMC		5,800

Masahiro Kato (September 17, 1952)	Full-time Audit & Supervisory Board Member	1975 Joined TMC 2009 Toyota Motor (China) Investment Co., Ltd. President 2009 Managing Officer of TMC 2011 Retired from Toyota Motor (China) Investment Co., Ltd. President 2011 Audit & Supervisory Board Member of TMC		6,600

Yoichi Morishita (June 23, 1934)	Outside Audit & Supervisory Board Member	1957 Joined Matsushita Electric Industrial Co., Ltd. 1987 Director of the same 1989 Managing Director of the same 1990 Senior Managing Director of the same 1992 Executive Vice President of the same 1993 President of the same 2000 Chairman of the same 2006 Outside Audit & Supervisory Board Member of TMC 2006 Executive Advisor of Matsushita Electric Industrial Co., Ltd. 2008 Name of Matsushita Electric Industrial Co., Ltd. was changed to Panasonic Corporation 2008 Executive Advisor of Panasonic Corporation 2012 Special Corporate Advisor of Panasonic Corporation (important concurrent duties) Special Corporate Advisor of Panasonic Corporation Outside Corporate Auditor of The Kansai Electric Power Co., Inc.		—


Name (Date of birth)	Position	Brief career summary and important concurrent duties	Number of Shares
Akishige Okada (April 9, 1938)	Outside Audit & Supervisory Board Member	1963 Joined Mitsui Bank, Ltd. 1991 Director of Mitsui Taiyo Kobe Bank, Ltd. 1992 Director of Sakura Bank, Ltd. 1995 Managing Director of Sakura Bank, Ltd. 1996 Senior Managing Director of the same 1997 President of the same 2001 Chairman of Sumitomo Mitsui Banking Corporation 2002 Chairman of Sumitomo Mitsui Financial Group Inc. (concurrent) 2005 Retired from Chairman of Sumitomo Mitsui Financial Group Inc. 2005 Advisor of Sumitomo Mitsui Banking Corporation 2006 Outside Audit & Supervisory Board Member of TMC 2010 Honorary Advisor of Sumitomo Mitsui Banking Corporation (important concurrent duties) Honorary Advisor of Sumitomo Mitsui Banking Corporation Outside Corporate Auditor of Mitsui Fudosan Co., Ltd. Outside Director of Daicel Corporation Outside Corporate Auditor of YOMIURI LAND CO., LTD.	—

Kunihiro Matsuo (September 13, 1942)	Outside Audit & Supervisory Board Member	2004 Supreme Public Prosecutors Office Prosecutor-General 2006 Retired from Supreme Public Prosecutors Office Prosecutor-General 2006 Registered as Attorney 2007 Outside Audit & Supervisory Board Member of TMC (important concurrent duties) Outside Corporate Auditor of MITSUI & CO., LTD. Outside Corporate Auditor of KOMATSU LTD. Outside Corporate Auditor of Tokyo Stock Exchange, Inc. Outside Corporate Auditor of BROTHER INDUSTRIES, LTD. Outside Director of Japan Exchange Group, Inc. Outside Corporate Auditor of Seven Bank, Ltd. Outside Corporate Auditor of TV TOKYO Holdings Corporation	—

Yoko Wake (November 18, 1947)	Outside Audit & Supervisory Board Member	1970 Joined the Fuji Bank, Limited 1973 Retired from the same 1977 Instructor of Faculty of Business and Commerce of Keio University 1982 Associate Professor of the same 1993 Professor of the same 2011 Outside Audit & Supervisory Board Member of TMC 2013 Professor Emeritus of Faculty of Business and Commerce of Keio University	—

None of the persons listed above was selected as director, audit & supervisory board member or member of senior management pursuant to an arrangement or understanding with Toyota’s major shareholders, customers, suppliers or others.

6.B COMPENSATION

The aggregate amount of remuneration, including bonuses but excluding stock options, accrued for all directors and audit & supervisory board members as a group by Toyota for services in all capacities during fiscal 2013 was approximately ¥1,533 million. Directors and audit & supervisory board members of Toyota Motor Corporation receive year-end bonuses, the aggregate amount of which is approved at Toyota Motor Corporation’s ordinary general shareholders’ meeting and is based on Toyota Motor Corporation’s financial performance for the fiscal year. The amounts of the bonuses paid to individual directors and audit & supervisory board members are then determined based upon discussions at a meeting of Toyota Motor Corporation’s board of directors and the meeting of audit & supervisory board members.

In addition to the above form of compensation, Toyota has enacted stock option plans every year from 2006 until 2010. Under the 2006 plan, Toyota issued to its directors and audit & supervisory board members stock acquisition rights to purchase 302,000 shares of common stock at an exercise price of ¥6,140 and with an expiration date of July 31, 2014. Under the 2007 plan, Toyota issued to its directors and audit & supervisory board members stock acquisition rights to purchase 322,000 shares of common stock at an exercise price of ¥7,278 and with an expiration date of July 31, 2015. Under the 2008 plan, Toyota issued to its directors and audit & supervisory board members stock acquisition rights to purchase 335,000 shares of common stock at an exercise price of ¥4,726 and with an expiration date of July 31, 2016. Under the 2009 plan, Toyota issued to its directors and audit & supervisory board members stock acquisition rights to purchase 440,000 shares of common stock at an exercise price of ¥4,193 and with an expiration date of July 31, 2017. Under the 2010 plan, Toyota issued to its directors stock acquisition rights to purchase 400,000 shares of common stock at an exercise price of ¥3,183 and with an expiration date of July 31, 2018. See “Share Ownership — Stock Options” for a more detailed discussion of Toyota’s stock option plans.

Toyota’s Annual Securities Report filed with the Kanto Local Bureau of Finance on June 24, 2013, contained the following information concerning compensation in fiscal 2013 on a consolidated basis for directors and audit & supervisory board members whose total compensation exceeded ¥100 million during such period:

- Fujio Cho, Director: ¥159 million (¥105 million in base compensation, ¥50 million in bonus, and ¥3 million in stock options)

- Takeshi Uchiyamada, Director: ¥111 million (¥79 million in base compensation ¥28 million in bonus, and ¥3 million in stock options)

- Akio Toyoda, Director: ¥184 million (¥100 million in base compensation, ¥81 million in bonus, and ¥3 million in stock options)

The amounts above were recorded as expenses in fiscal 2013. The stock options are the fair market value calculated based on certain conditions as of the grant date.

6.C BOARD PRACTICES

Toyota’s articles of incorporation provide for a board of directors of not more than 20 members and for not more than seven audit & supervisory board members. Shareholders elect the directors and audit & supervisory board members at the general shareholders’ meeting. The normal term of office of a director is one year and of an audit & supervisory board member is four years. Directors and audit & supervisory board members may serve any number of consecutive terms.

The board of directors may appoint one Chairman of the Board and one President, as well as one or more Vice Chairmen of the Board and Executive Vice Presidents. The board of directors elects, pursuant to its

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resolutions, one or more Representative Directors. Each Representative Director represents Toyota generally in the conduct of its affairs. The board of directors has the ultimate responsibility for the administration of Toyota’s affairs. None of Toyota’s directors is party to a service contract with Toyota or any of its subsidiaries that provides for benefits upon termination of employment.

Under the Corporation Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of directors, exempt Directors (including former Directors) from their liabilities to Toyota arising in connection with their failure to execute their duties within the limits stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with each outside director which limits the maximum amount of their liabilities owed to Toyota arising in connection with their failure to execute their duties to an amount equal to the minimum liability limit amount prescribed in the laws and regulations.

Under the Corporation Act, Toyota must have at least three audit & supervisory board members. At least half of the audit & supervisory board members are required to be persons who have not been a Director, accounting counselor (or if an accounting counselor is a judicial person, a member of such judicial person who is in charge of its affairs), executive officer, general manager or employee of Toyota or any of its subsidiaries at any time during the past. The audit & supervisory board members may not at the same time be directors, accounting counselor (in case that an accounting counselor is a judicial person, a member of such judicial person who is in charge of its affairs), executive officers, general managers or employees of Toyota or any of its subsidiaries. Together, these audit & supervisory board members form an audit & supervisory board. The audit & supervisory board members have the duty to examine the financial statements and business reports which are submitted by the board of directors to the general shareholders’ meeting. The audit & supervisory board members also monitor the administration of Toyota’s affairs by the directors. Audit & supervisory board members are not required to be, and Toyota’s audit & supervisory board members are not, certified public accountants. They are required to participate in meetings of the board of directors but are not entitled to vote.

Under the Corporation Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of directors, exempt audit & supervisory board members (including former audit & supervisory board members) from their liabilities to Toyota arising in connection with their failure to execute their duties within the limits stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with each outside audit & supervisory board member which limits the maximum amount of their liabilities owed to Toyota arising in connection with their failure to execute their duties to an amount equal to the minimum liability limit amount prescribed in the laws and regulations.

Toyota does not have a remuneration committee.

6.D EMPLOYEES

The total number of Toyota employees, on a consolidated basis, as reported in Toyota’s annual Japanese securities report filed with the Director of the Kanto Local Finance Bureau was 333,498 at March 31, 2013, 325,905 at March 31, 2012 and 317,716 at March 31, 2011. The following tables set forth a breakdown of persons employed by business segment and by geographic location at March 31, 2013.


Segment	Number of Employees		Location	Number of Employees
Automotive		293,020	Japan		196,498
Financial services		8,989	North America		40,313
All other		26,780	Europe		19,304
Unallocated		4,709	Asia		52,733
			Other*		24,650

Total company		333,498	Total company		333,498

			* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

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Most regular employees of Toyota Motor Corporation and its consolidated subsidiaries in Japan, other than management, are required to become members of the labor unions that comprise the Federation of All Toyota Workers’ Unions. Approximately 87% of Toyota Motor Corporation’s regular employees in Japan are members of this union.

In Japan, basic wages and other working conditions are negotiated annually. In addition, in accordance with Japanese national custom, each employee is also paid a semi-annual bonus. Bonuses are negotiated at the time of wage negotiations and are based on Toyota’s financial results, prospects and other factors. The average wage increases per employee, excluding bonuses, in Japan have been approximately 2.1% per year for the past five fiscal years.

In general, Toyota considers its labor relations with all of its workers to be good. However, Toyota is currently a party to, and otherwise from time to time experiences, labor disputes in some of the countries in which it operates. Toyota does not expect any disputes to which it is currently a party to materially affect Toyota’s consolidated financial position.

Toyota’s average number of temporary employees on a consolidated basis was 83,190 during fiscal 2013.

6.E SHARE OWNERSHIP

For information on the number of shares of Toyota’s common stock held by each director and audit & supervisory board member as of June 2013, see “— Directors and Senior Management”. Each such director and audit & supervisory board member owns less than one percent of the issued and outstanding shares of common stock of Toyota. The shares held by each director and audit & supervisory board member do not include options that are exercisable for shares of Toyota’s common stock. For a description of these options, see “— Stock Options” below.

None of Toyota’s shares of common stock entitles the holder to any preferential voting rights.

Stock Options

Toyota enacted stock option plans every year from 2006 until 2010. Toyota will not enact any such plan after 2011. The plans for which stock options or stock acquisition rights are currently exercisable or will become exercisable in the future were approved by Toyota’s shareholders in June of 2006, 2007, 2008, 2009 and 2010. Under the 2006 plan, Toyota issued stock acquisition rights to purchase 3,176,000 shares of common stock to its directors and 580 officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliated company. Under the 2007 plan, Toyota issued stock acquisition rights to purchase 3,264,000 shares of common stock to its directors and 579 officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliated company. Under the 2008 plan, Toyota issued stock acquisition rights to purchase 3,494,000 shares of common stock to its directors and 597 officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliated company. Under the 2009 plan, Toyota issued stock acquisition rights to purchase 3,492,000 shares of common stock to its directors and 615 officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliated company. Under the 2010 plan, Toyota issued stock acquisition rights to purchase 3,600,000 shares of common stock to its directors and officers and employees, including directors, officers and employees of its subsidiaries and one Toyota affiliated company.

Pursuant to the provisions of the 2006, 2007, 2008, 2009 and 2010 plans, stock acquisition rights may be exercised during a six-year period that starts two years from the date of grant. The exercise price of each stock acquisition right is 1.025 times the closing price of Toyota’s common stock on the Tokyo Stock Exchange on the date of grant. The 2006, 2007, 2008, 2009 and 2010 plans provide that each director will be granted no more than 400 and no less than 300 stock acquisition rights, and each eligible officer or employee will be granted no more than 200 and no less than 20 stock acquisition rights. For each of the 2006, 2007, 2008, 2009 and 2010 plans, 100 shares will be issued or delivered upon the exercise of each stock acquisition right. The options are granted as of early August of each year for each plan.

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An option holder who retires while one’s options are still exercisable retains the right to exercise one’s options until the expiration of the exercise period described above. However, an option holder’s right to purchase common stock under each plan lapses automatically upon one’s death or upon taking position such as in the management with a competitor.

The following table summarizes information for options and the incentive plan outstanding and exercisable at March 31, 2013:


	Outstanding								Exercisable
Exercise price range	Number of shares		Weighted- average exercise price		Weighted- average exercise price		Weighted- average remaining life		Number of shares		Weighted- average exercise price		Weighted- average exercise price
(Yen)			(Yen)		(U.S. dollars)		(Years)				(Yen)		(U.S. dollars)
¥3,183 – 5,000		7,480,000	¥	4,068	$	43		4.31		7,480,000	¥	4,068	$	43
5,001 – 7,278		3,369,000		6,774		72		1.89		3,369,000		6,774		72

Toyota also has an employee stock ownership association in Japan for employees and full time and part time company advisors. Members of the employee stock ownership association set aside certain amounts from their monthly salary and bonuses to purchase Toyota’s common stock through the employee stock ownership association. As of March 31, 2013, the employee stock ownership association held 17,130,363 shares of Toyota’s common stock.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A MAJOR SHAREHOLDERS

As of March 31, 2013, 3,447,997,492 shares of Toyota’s common stock were issued, out of which, 280,568,824 shares were treasury stock and 3,167,428,668 shares were outstanding. Beneficial ownership of Toyota’s common stock in the table below was prepared from information known to Toyota or that could be ascertained from public filings, including filings made by Toyota’s shareholders regarding their ownership of Toyota’s common stock under the Financial Instruments and Exchange Law of Japan.

Under the Financial Instruments and Exchange Law, any person who becomes, beneficially and solely or jointly, a holder, including, but not limited to, a deemed holder who manages shares for another holder pursuant to a discretionary investment agreement, of more than 5% of the total issued shares of a company listed on a Japanese stock exchange (including ADSs representing such shares) must file a report concerning the shareholding with the Director of the relevant local finance bureau. A similar report must be filed, with certain exceptions, if the percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued shares of a company increases or decreases by 1% or more, or if any change to a material matter set forth in any previously filed reports occurs.

Based on information known to Toyota or can be ascertained from public filings, the following table sets forth the beneficial ownership of holders of more than 5% of Toyota’s common stock as of the most recent practicable date.


Name of Beneficial Owner	Number of Shares (in thousands)		Percentage of Shares Issued
Toyota Industries Corporation		218,515		6.34

According to The Bank of New York Mellon, depositary for Toyota’s ADSs, as of March 31, 2013, 82,399,279 shares of Toyota’s common stock were held in the form of ADRs and there were 2,097 ADR holders of record in the United States. According to Toyota’s register of shareholders, as of March 31, 2013, there were

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628,902 holders of common stock of record worldwide. As of March 31, 2013, there were 345 record holders of Toyota’s common stock with addresses in the United States, whose shareholdings represented approximately 14.2% of the issued common stock on that date. Because some of these shares were held by brokers or other nominees, the number of record holders with addresses in the United States might not fully show the number of beneficial owners in the United States.

None of Toyota’s shares of common stock entitles the holder to any preferential voting rights.

To the extent known to Toyota, Toyota is not owned or controlled, directly or indirectly, by another corporation, any foreign government or any natural or legal person.

Toyota knows of no arrangements the operation of which may at a later time result in a change of control.

7.B RELATED PARTY TRANSACTIONS

Business Relationships

Toyota purchases materials, supplies and services from numerous suppliers throughout the world in the ordinary course of business, including Toyota’s affiliated companies accounted for by the equity method and those firms with which certain members of Toyota’s board of directors are affiliated. Toyota purchased materials, supplies and services from these affiliated entities in the amount of ¥4,020.1 billion in fiscal 2013. Toyota also sells its products and services to Toyota’s affiliated companies accounted for by the equity method and firms with which certain members of Toyota’s board of directors are affiliated. Toyota sold products and services to these affiliated entities in the amount of ¥1,926.8 billion in fiscal 2013. See note 12 of Toyota’s consolidated financial statements for additional information regarding Toyota’s investments in and transactions with affiliated companies.

Loans

Toyota regularly has trade accounts and other receivables by, and accounts payable to, Toyota’s affiliated companies accounted for by the equity method and firms with which certain members of Toyota’s board of directors are affiliated. Toyota had outstanding trade accounts and other receivables by these affiliated entities in the amount of ¥252.7 billion as of March 31, 2013. Toyota had outstanding trade accounts and other payables to these affiliated entities in the amount of ¥592.0 billion as of March 31, 2013.

Toyota, from time to time, provides short- to medium-term loans to its affiliated companies, as well as loans under a loan program established by certain subsidiaries to assist their executives and directors with the purchase of homes. As of March 31, 2013, an aggregate amount of ¥1.1 billion in loans was outstanding to its affiliated companies accounted for by the equity method. As of March 31, 2013, an aggregate amount of ¥26.5 billion in loans was outstanding to those of its affiliated companies not accounted for by the equity method, which are 20% to 50% owned by Toyota. As of March 31, 2013, the largest loan outstanding to any such affiliated company accounted for by the equity method was a loan of ¥1.0 billion at a fixed rate of 0.46%. Toyota believes that each of these loans was entered into in the ordinary course of business.

7.C INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

1-3.	Consolidated Financial Statements. Toyota’s audited consolidated financial statements are included under “Item 18 — Financial Statements”. Except for Toyota’s consolidated financial statements included under Item 18, no other information in this annual report has been audited by Toyota’s auditors.

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4.	Not applicable.

5.	Not applicable.

6.	Export Sales. See “Operating and Financial Review and Prospects — Operating Results — Overview — Geographic Breakdown”.

7.	Legal and Arbitration Proceedings. See “Information on the Company — Business Overview — Legal Proceedings”.

8.	Dividend Policy. See “Key Information — Selected Financial Data — Dividend Information”.

8.B SIGNIFICANT CHANGES

Except as disclosed in this annual report, there have been no significant changes since the date of Toyota’s latest annual financial statements.

ITEM 9. THE OFFER AND LISTING

9.A LISTING DETAILS

The following table sets forth for the periods shown the reported high and low sales prices of the common stock on the Tokyo Stock Exchange and the ADSs on the New York Stock Exchange.


	Tokyo Stock Exchange				New York Stock Exchange
	Price per Share				Price per ADS
	High		Low		High		Low
Fiscal Year Ended March 31,
2009	¥	5,670	¥	2,650	$	106.74	$	57.68
2010		4,200		3,270		91.78		67.90
2011		3,955		2,800		93.90		67.56
2012		3,635		2,330		87.15		60.37
2013		5,050		2,795		106.00		72.04

Financial Quarter Ended:
June 30, 2011		3,425		3,095		84.00		75.85
September 30, 2011		3,480		2,562		85.49		66.34
December 31, 2011		2,710		2,330		69.81		60.37

Fiscal Year Ended March 31,
March 31, 2012		3,635		2,553		87.15		67.27
June 30, 2012		3,640		2,885		86.98		73.90
September 30, 2012		3,300		2,795		83.73		72.04
December 31, 2012		4,015		2,873		93.36		74.27
March 31, 2013		5,050		4,030		106.00		93.20

Month Ended:
December 31, 2012		4,015		3,460		93.36		84.95
January 31, 2013		4,390		4,030		97.55		93.20
February 28, 2013		5,050		4,415		106.00		97.19
March 31, 2013		5,050		4,700		104.64		101.48
April 30, 2013		5,790		4,610		116.81		99.70
May 31, 2013		6,760		5,460		130.99		112.84

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9.B PLAN OF DISTRIBUTION

Not applicable.

9.C MARKETS

The primary trading market for Toyota’s common stock is the Tokyo Stock Exchange. The common stock is also listed on the Nagoya Stock Exchange and three other regional stock exchanges in Japan.

Since September 29, 1999, American Depositary Shares, each equal to two shares of Toyota’s common stock and evidenced by American Depositary Receipts, have been traded and listed on the New York Stock Exchange through a sponsored ADR facility operated by The Bank of New York Mellon, as depositary. Prior to that time, Toyota’s ADSs were listed on the Nasdaq SmallCap Market through five unsponsored ADR facilities.

Toyota’s common stock is also listed on the London Stock Exchange.

9.D SELLING SHAREHOLDERS

Not applicable.

9.E DILUTION

Not applicable.

9.F EXPENSES OF THE ISSUE

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

10.A SHARE CAPITAL

Not applicable.

10.B MEMORANDUM AND ARTICLES OF ASSOCIATION

Except as otherwise stated, set forth below is information relating to Toyota’s common stock, including brief summaries of the relevant provisions of Toyota’s articles of incorporation and share handling regulations, as currently in effect, and of the Corporation Act, Act Concerning Book-Entry Transfer of Corporate Bonds, Shares and Other Securities (the “Book-Entry Transfer Act”) and related legislation.

General

Toyota’s authorized number of shares as of March 31, 2013 was 10,000,000,000 shares, of which 3,447,997,492 shares were issued. Toyota does not issue share certificates for its shares. In accordance with the Corporation Act, the Book-Entry Transfer Act and Toyota’s articles of incorporation, Toyota’s shares are recorded or registered on (i) Toyota’s register of shareholders and (ii) transfer account books of the Japan Securities Depository Center, Inc. (“JASDEC”) which is a book-entry transfer institution and securities firms, banks or other account management institutions. The transfer of shares will generally become effective once the transfer is recorded in the transferee’s account. In order to assert shareholders’ rights against Toyota, a shareholder must generally have his or her name and address recorded or registered on Toyota’s register of shareholders. A shareholder can assert minority shareholders’ rights (shareholders’ rights for which Toyota has not set a record date) against Toyota if JASDEC provides an individual shareholder notice to Toyota upon the shareholder’s request. The shareholder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert shareholders’ rights.

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A shareholder must have a transfer account to transfer shares. Shareholders who do not have a transfer account with JASDEC must have an account with an account management institution that directly or indirectly has a transfer account with JASDEC. Once Toyota decides on the record date for its shareholders’ meeting or makes a request to JASDEC based on justifiable grounds, JASDEC will promptly provide to Toyota names, addresses and other information with respect to Toyota’s shareholders who are recorded on the transfer account books of JASDEC or account management institutions. Upon receiving such information, Toyota will record or register such information received from JASDEC on its register of shareholders. Accordingly, holders of shares recorded or registered on Toyota’s register of shareholders will be treated as shareholders of Toyota and may exercise rights, such as voting rights, and will receive dividends (if any) and notices to shareholders directly from Toyota. Shareholders wishing to assert minority shareholders’ rights against Toyota must request an individual shareholder notice to JASDEC or the account management institution at which the shareholder has opened a transfer account. In response to such request, JASDEC will provide the individual shareholders notice to Toyota. The shareholder may assert his or her minority shareholders’ rights against Toyota for a period of four weeks after the date the individual shareholder notice is provided to Toyota. The shares held by a person who is deemed to hold additional shares according to the transfer account books are aggregated for these purposes.

Corporate Purpose

Article 2 of Toyota’s articles of incorporation states that its purpose is to engage in the following businesses:

•

the manufacture, sale, leasing and repair of:

•

motor vehicles, industrial vehicles, ships, aircraft, other transportation machinery and apparatus, spacecraft and space machinery and apparatus, and parts thereof;

•

industrial machinery and apparatus, other general machinery and apparatus, and parts thereof;

•

electrical machinery and apparatus, and parts thereof; and

•

measuring machinery and apparatus, medical machinery and apparatus, and parts thereof;

•

the manufacture and sale of ceramics and products of synthetic resins, and materials thereof;

•

the manufacture, sale and repair of construction materials and equipment, furnishings and fixtures for residential buildings;

•

the planning, designing, supervision, execution and undertaking of construction works, civil engineering works, land development, urban development and regional development;

•

the sale, purchase, leasing, brokerage and management of real estate;

•

the service of information processing, information communications and information supply and the development, sale and leasing of software;

•

the design and development of product sales systems that utilize networks such as the Internet;

•

the sale, leasing and maintenance of computers included within such systems, and sale of products by utilizing such systems;

•

the inland transportation, marine transportation, air transportation, stevedoring, warehousing and tourism businesses;

•

the printing, publishing, advertising and publicity, general leasing, security and workers dispatch businesses;

•

the credit card operations, purchase and sale of securities, investment consulting, investment trust operation, and other financial services;

•

the operation and management of such facilities as parking lots, showrooms, educational facilities, medical care facilities, sports facilities, marinas, airfields, food and drink stands and restaurants, lodging facilities, retail stores and others;

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•

the non-life insurance agency business and the life insurance agency business;

•

the production and processing by using biotechnology of agricultural products including trees, and the sale of such products;

•

the sale of goods related to each of the preceding items and mineral oil; and

•

the conducting of engineering, consulting, invention and research relating to each of the preceding items and the utilization of such invention and research, and any businesses incidental to or related to any of the preceding items.

Dividends

Dividends — General

In addition, under the Corporation Act, dividends may be paid to shareholders and pledgees of record as of any record date, other than those specified above, as set forth by Toyota’s articles of incorporation or as determined by its board of directors from time to time. Toyota’s articles of incorporation also permit Toyota to pay dividends, in addition to interim dividends mentioned in the preceding paragraph, by a resolution of its board of directors. Toyota has incorporated such a provision into its articles of incorporation in order to enable a flexible capital policy. Under the Corporation Act, dividends may be distributed in cash or (except in the case of interim dividends mentioned in the preceding paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.

Dividends — Distributable amount

Under the Corporation Act, Toyota is permitted to make distributions of surplus to the extent that the aggregate book value of the assets to be distributed to shareholders does not exceed the distributable amount provided for by the Corporation Act and the ordinance of the Ministry of Justice as at the effective date of such distribution of surplus.

The amount of surplus at any given time shall be the amount of Toyota’s assets and the book value of Toyota’s treasury stock after subtracting and adding the amounts of the items provided for by the Corporation Act and the ordinance of the Ministry of Justice.

Dividends — Prescription

Under its articles of incorporation, Toyota is not obligated to pay any dividends in cash which are left unclaimed for a period of three years after the date on which they first became payable.

Capital Accounts

The amount of the cash or assets paid or contributed by subscribers for new shares (with certain exceptions) is required to be accounted for as stated capital, although Toyota may account for an amount not exceeding one-half of such cash or assets as additional paid-in capital.

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Under the Corporation Act, Toyota may reduce its additional paid-in capital and legal reserve without limitation on the amount to be reduced, generally, by a resolution of a general shareholders’ meeting and if so decided by the same resolution, may account for the whole or any part of the amount of the reduction of additional paid-in capital as stated capital. The whole or any part of surplus which may be distributed as dividends may also be transferred to stated capital by a resolution of a general shareholders’ meeting.

Stock Splits

Toyota may at any time split the outstanding shares into a greater number of shares by a resolution of the board of directors. Toyota must give public notice of the stock split, specifying a record date for the stock split, not less than two weeks prior to the record date.

Consolidation of Shares

Toyota may at any time consolidate shares in issue into a smaller number of shares by a special shareholders resolution (as defined in “Voting Rights”). When a consolidation of shares is to be made, Toyota must give public notice of certain matters two weeks prior to the effective date of the consolidation. Toyota must disclose the reason for the consolidation of shares at a general shareholders’ meeting.

Japanese Unit Share System

General. Consistent with the requirements of the Corporation Act, Toyota’s articles of incorporation provide that 100 shares constitute one “unit”. Although the number of shares constituting a unit is included in the articles of incorporation, any amendment to the articles of incorporation reducing (but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit of shares may be made by a resolution of the board of directors rather than by a special shareholders resolution, which is otherwise required for amending the articles of incorporation. The number of shares constituting one unit, however, cannot exceed 1,000 shares.

Voting Rights under the Unit Share System. Under the unit share system, shareholders have one voting right for each unit of shares that they hold. Any number of shares less than a full unit will carry no voting rights.

Purchase by Toyota of Shares Constituting Less Than a Unit. A holder of shares constituting less than a full unit may require Toyota to purchase those shares at their market value in accordance with the provisions of Toyota’s share handling regulations.

Surrender of American Depositary Receipts. ADR holders will only be permitted to surrender ADRs and withdraw underlying shares constituting an integral number of a whole unit. If a holder surrenders an ADR including ADRs representing shares that do not constitute an integral number of whole units, the depositary will deliver to that holder only those shares which constitute a whole unit. The depositary will then issue to the holder a new ADR representing the remaining shares. Holders of an ADR that represents less than a whole unit of underlying shares will be unable to withdraw the underlying shares. As a result, those holders will be unable to require Toyota to purchase their shares to the extent those shares constitute less than one whole unit.

Voting Rights

Toyota holds its ordinary general shareholders’ meeting each year. In addition, Toyota may hold an extraordinary general shareholders’ meeting whenever necessary by giving at least two weeks’ advance notice. Under the Corporation Act, notice of any shareholders’ meeting must be given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his or her resident proxy or mailing address in Japan in accordance with Toyota’s share handling regulations, at least two weeks prior to the date of the meeting.

A holder of shares constituting one or more whole units is entitled to one vote per unit of shares subject to the limitations on voting rights set forth in this paragraph. In general, under the Corporation Act, a resolution can

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be adopted at a general shareholders’ meeting by a majority of the shares having voting rights represented at the meeting. The Corporation Act and Toyota’s articles of incorporation require a quorum for the election of directors and audit & supervisory board members of not less than one-third of the total number of outstanding shares having voting rights. Toyota’s shareholders are not entitled to cumulative voting in the election of directors. A corporate shareholder, the management of which is substantially under Toyota’s control as provided by an ordinance of the Ministry of Justice, either through the holding of voting rights or for any other reason, does not have voting rights.

Shareholders may exercise their voting rights by attending the general shareholders’ meeting or in writing by mail. Shareholders who choose to exercise their voting rights by mail must fill out and return to Toyota the voting right exercise form enclosed with the convocation notice of the general shareholders’ meeting by the date specified in such convocation notice. In addition, from the general shareholders’ meeting for fiscal 2009, shareholders may exercise their voting rights through the internet. Shareholders electing to exercise their voting rights through the internet must log on to the “Website to Exercise Voting Rights” using the login ID and temporary password provided in the voting right exercise form enclosed with the convocation notice and submit their votes by a date specified in the convocation notice, following instructions appearing on the website. Institutional investors may also use the Electronic Proxy Voting Platform operated by Investor Communications Japan (“ICJ”) to exercise their voting rights through the use of the Internet, if such institutional investor applies to use the platform in advance. Shareholders may also exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights. Toyota may refuse a shareholder having two or more proxies attend a general shareholders’ meeting.

The Corporation Act provides that a quorum of at least one-third of outstanding shares with voting rights must be present at a shareholders’ meeting to approve any material corporate actions such as:

(1)

any amendment of the articles of incorporation with certain exceptions in which a shareholders’ resolution is not required;

(2)

acquisition of its own shares from a specific party;

(3)

consolidation of shares;

(4)

any issue or transfer of its shares at a “specially favorable” price (or any issue of stock acquisition rights or bonds with stock acquisition rights at “specially favorable” conditions by Toyota) to any persons other than shareholders;

(5)

the removal of an audit & supervisory board member;

(6)

the exemption of liability of a director or audit & supervisory board member with certain exceptions;

(7)

a reduction of stated capital which meets certain requirements with certain exceptions;

(8)

a distribution of in-kind dividends which meets certain requirements;

(9)

dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is not required;

(10)

the transfer of the whole or a material part of the business;

(11)

the taking over of the entire business of any other corporation with certain exceptions in which a shareholders’ resolution is not required;

(12)

share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain exceptions in which a shareholders’ resolution is not required; or

(13)

company split with certain exceptions in which a shareholders’ resolution is not required.

At least two-thirds of the shares having voting rights represented at the meeting must approve these actions.

The voting rights of holders of ADSs are exercised by the depositary based on instructions from those holders.

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Rights to be Allotted Shares

Holders of shares have no preemptive rights under Toyota’s articles of incorporation. Under the Corporation Act, the board of directors may, however, determine that shareholders shall be given rights to be allotted shares or stock acquisition rights on request in connection with a particular issue or transfer of shares, or issue of stock acquisition rights, respectively. In this case, such rights must be given on uniform terms to all shareholders as of a specified record date by at least two weeks’ prior public notice to shareholders of the record date.

Rights to be allotted shares are nontransferable. However, a shareholder may be allotted stock acquisition rights without consideration thereto, and may transfer such rights.

Liquidation Rights

In the event of a liquidation of Toyota, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the shareholders in proportion to the respective number of shares they own.

Liability to Further Calls or Assessments

All of Toyota’s currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable.

Transfer Agent

Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for the shares. Mitsubishi UFJ Trust and Banking Corporation’s office is located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8212 Japan. Mitsubishi UFJ Trust and Banking Corporation maintains Toyota’s register of shareholders and records transfers of record ownership upon receiving notification from JASDEC.

Record Date

The close of business on March 31 is the record date for Toyota’s year-end dividends, if paid. A holder of shares constituting one or more whole units who is recorded or registered as a holder on Toyota’s register at the close of business as of March 31 is also entitled to exercise shareholders’ voting rights at the ordinary general shareholders’ meeting with respect to the business year ending on March 31. The close of business on September 30 of each year is the record date for interim dividends, if paid. In addition, Toyota may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges on the second business day before a record date (or if the record date is not a business day, the third business day prior thereto), for the purpose of dividends or rights offerings.

Acquisition by Toyota of Shares

Toyota may acquire its own shares (i) through a stock exchange on which such shares are listed or by way of tender offer (pursuant to an ordinary resolution of a general shareholders’ meeting or a resolution of the board of directors), (ii) by purchase from a specific party (pursuant to a special resolution of a general shareholders’ meeting) or (iii) from a subsidiary of Toyota (pursuant to a resolution of the board of directors). When such acquisition is made by Toyota from a specific party other than a subsidiary of Toyota, any other shareholder may make a demand to a representative director, more than five calendar days prior to the relevant shareholders’ meeting, that Toyota also purchase the shares held by such shareholder. However, the acquisition of its own shares at a price not exceeding the market price to be provided under an ordinance of the Ministry of Justice will not trigger the right of any shareholder to include him/her as the seller of his/her shares in such proposed purchase.

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Any such acquisition of shares must satisfy certain requirements that the total amount of the acquisition price may not exceed the amount of the distributable dividends. See “— Dividends”.

Shares acquired by Toyota may be held by it for any period or may be cancelled by resolution of the board of directors. Toyota may also transfer to any person the shares held by it, subject to a resolution of the board of directors, and subject also to other requirements applicable to the issuance of new shares. Toyota may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.

The Corporation Act generally prohibits any subsidiary of Toyota from acquiring shares of Toyota.

Acquisition or Disposition of Shares or ADS

Under the Foreign Exchange and Foreign Trade Law and the cabinet orders and ministerial ordinances thereunder (collectively, the “Foreign Exchange Regulations”), all aspects of regulations on foreign exchange and foreign trade transactions are, with minor exceptions (which are not generally applicable to the purchase and sale of Toyota’s shares), only subject to post transaction reporting requirements. Acquisitions and dispositions of shares of common stock or ADS by non-residents of Japan (including foreign corporations not resident in Japan) are generally not subject to this reporting requirement. However, the Minister of Finance has the power to impose a licensing requirement for transactions in limited circumstances.

Report of Substantial Shareholdings

The Financial Instruments and Exchange Law of Japan and regulations under the Law require any person who has become a holder (together with its related persons) of more than 5% of the total issued shares of a company listed on any Japanese stock exchange (including ADSs representing such shares) to file with the Director of a competent Local Finance Bureau, within five business days, a report concerning those shareholdings. A similar report must also be filed to reflect any change of 1% or more in any shareholding or any change in material matters set out in reports previously filed. Any such report shall be filed with the Director of a competent Local Finance Bureau through the Electronic Disclosure for Investor’s Network (“EDINET”) system. Copies of any report must also be furnished to the company. For this purpose, shares issuable to a shareholder upon exercise of stock acquisition rights are taken into account in determining both the number of shares held by that stock acquisition rights holder and the company’s total issued shares.

10.C MATERIAL CONTRACTS

All contracts concluded by Toyota during the two years preceding this filing were entered into in the ordinary course of business.

10.D EXCHANGE CONTROLS

The Foreign Exchange Regulations govern the acquisition and holding of shares of capital stock of Toyota by “exchange non-residents” and by “foreign investors”. The Foreign Exchange Regulations currently in effect do not, however, affect transactions between exchange non-residents to purchase or sell shares outside Japan using currencies other than Japanese yen.

Exchange non-residents are:

•

individuals who do not reside in Japan; and

•

corporations whose principal offices are located outside Japan.

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Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as residents of Japan. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Foreign investors are:

•

individuals who are exchange non-residents;

•

corporations or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside of Japan; and

•

corporations (1) of which 50% or more of their voting rights are held directly or indirectly by individuals who are exchange non-residents and/or corporations or other organizations (a) that are organized under the laws of foreign countries or (b) whose principal offices are located outside of Japan or (2) a majority of whose officers, or officers having the power of representation, are individuals who are exchange non-residents.

In general, the acquisition of shares of a Japanese company (such as the shares of capital stock of Toyota) by an exchange non-resident from a resident of Japan is not subject to any prior filing requirements. In certain limited circumstances, however, the Minister of Finance may require prior approval of an acquisition of this type. While prior approval, as described above, is not required, in the case where a resident of Japan transfers shares of a Japanese company (such as the shares of capital stock of Toyota) for consideration exceeding ¥100 million to an exchange non-resident, the resident of Japan who transfers the shares is required to report the transfer to the Minister of Finance within 20 days from the date of the transfer or the date of receipt of payment, whichever comes later, unless the transfer was made through a bank or financial instruments business operator licensed or registered under Japanese law.

If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock exchange (such as the shares of capital stock of Toyota) and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of the issued shares of the relevant company, the foreign investor, with certain exceptions, must file a report of the acquisition with the Minister of Finance and any other competent Ministers having jurisdiction over that Japanese company by the 15th day of the month following the month in which the date of the acquisition falls. In limited circumstances, such as where the foreign investor is in a country that is not listed on an exemption schedule in the Foreign Exchange Regulations, a prior notification of the acquisition must be filed with the Minister of Finance and any other competent Ministers, who may then modify or prohibit the proposed acquisition.

Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which Toyota’s ADSs are issued, the Depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holders of ADSs.

10.E TAXATION

The following discussion is a general summary of the principal U.S. federal income and Japanese national tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs. This summary does not purport to address all material tax consequences that may be relevant to holders of shares of common stock or ADSs, and does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, partnerships and other pass-through entities, investors liable for the

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U.S. alternative minimum tax, investors that own or are treated as owning 10% or more of Toyota’s voting stock, investors that hold shares of common stock or ADSs as part of a straddle, hedge, conversion transaction or other integrated transaction and U.S. Holders (as defined below) whose functional currency is not the U.S. dollar) may be subject to special tax rules. This summary is based on the tax laws and regulations of the United States and Japan, judicial decisions, published rulings and administrative pronouncements all as in effect on the date hereof, as well as on the current income tax convention between the United States and Japan (the “Treaty”), as described below, all of which are subject to change (possibly with retroactive effect), and to differing interpretations.

For purposes of this discussion, a “U.S. Holder” is any beneficial owner of shares of common stock or ADSs that, for U.S. federal income tax purposes, is:

an individual who is a citizen or resident of the United States,

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof, or the District of Columbia,

an estate the income of which is subject to U.S. federal income tax without regard to its source, or

a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

An “Eligible U.S. Holder” is a U.S. Holder that:

is a resident of the United States for purposes of the Treaty,

does not maintain a permanent establishment in Japan (a) with which the shares of common stock or ADSs are effectively connected and through which the U.S. holder carries on or has carried on business, or (b) of which the shares of common stock or ADSs form part of the business property, and

is eligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of common stock or ADSs.

This summary does not address any aspects of U.S. federal tax law other than income taxation, and does not discuss any aspects of Japanese tax law other than income taxation, as limited to national taxes, inheritance and gift taxation. This summary also does not cover any state or local, or non-U.S., non-Japanese tax considerations. Investors are urged to consult their tax advisors regarding the U.S. federal, state and local and Japanese and other tax consequences of acquiring, owning and disposing of shares of common stock or ADSs. In particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders. In addition, this summary is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement, and in any related agreement, will be performed in accordance with its terms.

In general, for purposes of the Treaty and for U.S. federal income and Japanese income tax purposes, owners of ADRs evidencing ADSs will be treated as the owners of the shares of common stock represented by those ADSs, and exchanges of shares of common stock for ADSs, and exchanges of ADSs for shares of common stock, will not be subject to U.S. federal income or Japanese income tax.

The discussion below is intended for general information only and does not constitute a complete analysis of all tax consequences relating to ownership of shares of common stock or ADSs. Prospective purchasers of shares of common stock or ADSs should consult their own tax advisors concerning the tax consequences of their particular situations.

Japanese Taxation

The following is a summary of the principal Japanese tax consequences (limited to national taxes) to non-residents of Japan or non-Japanese corporations without permanent establishments in Japan (“non-resident

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Holders”) who are holders of shares of common stock or of ADSs. The following information regarding taxation in Japan is based on the tax treaties and tax laws in force and their interpretation by Japan’s tax authorities as of the date of this annual report. Tax laws and treaties and their interpretations may change (including with retroactive effect). Toyota will not revise this summary on the basis of any such change occurring after the date of this annual report.

Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese corporations. Stock splits are, in general, not a taxable event.

In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-resident Holders is generally 20.42 percent, provided, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of common stock or ADSs of Toyota) to non-resident Holders, other than any individual shareholder who holds 3 percent or more of the total issued shares issued by the relevant Japanese corporation, the aforementioned 20.42 percent withholding tax rate is reduced to (i) 7.147 percent for dividends due and payable on or after January 1, 2013 but on or before December 31, 2013 and (ii) 15.315 percent for dividends due and payable on or after January 1, 2014. Due to the imposition of a special additional withholding tax (2.1 percent of the original withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake, the original withholding tax rate of 7 percent, 15 percent and 20 percent, as applicable, is effectively increased, respectively, to 7.147 percent, 15.315 percent and 20.42 percent, during the period beginning on January 1, 2013 and ending on December 31, 2037.

At the date of this annual report, Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, in most cases to 15 percent or 10 percent for portfolio investors (15 percent under the income tax treaties with, among other countries, Belgium, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore, Spain and Sweden, and 10 percent under the income tax treaties with, among other countries, Australia, France, Hong Kong, the Netherlands, Switzerland, the U.K. and the United States.)

Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paid by a Japanese corporation to an Eligible U.S. Holder that is a portfolio investor is generally reduced to 10 percent of the gross amount actually distributed, and dividends paid by a Japanese corporation to an Eligible U.S. Holder that is a pension fund are exempt from Japanese income tax by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.

If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Toyota to any particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law or if any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on shares of common stock by Toyota is required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax on Dividends (together with any other required forms and documents) in advance through the withholding agent to the relevant tax authority before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. In addition, a simplified special application filing procedure will be available for non-resident Holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax, with respect to dividends paid on or after January 1, 2014. With respect to ADSs, this reduced rate or exemption is applicable if the Depositary or its agent submits, together with other documents, two Application Forms (one before payment of dividends, the other within eight months after the recording date concerning such payment of dividends) to the Japanese tax authority. To claim this reduced rate or exemption, any relevant non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by

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the Depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit the required application in advance, will be entitled to claim the refund of withholding taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the whole of the withholding tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) by complying with a certain subsequent filing procedure. Toyota does not assume any responsibility to ensure withholding at the reduced rate, or exemption therefrom, for non-resident Holders who would be so eligible under an applicable tax treaty but where the required procedures as stated above are not followed.

Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident Holder holding such shares of common stock or ADSs as portfolio investors are, in general, not subject to Japanese income tax or corporation tax under Japanese law. Eligible U.S. Holders are not subject to Japanese income or corporation tax with respect to such gains under the Treaty so long as filings required under Japanese law are made.

Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired from another individual shares of common stock or ADSs as a legatee, heir or donee even though neither the individual nor the deceased nor donor is a Japanese resident.

Holders of shares of common stock or ADSs should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. Holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.

U.S. Federal Income Taxation

U.S. Holders

The following discussion is a summary of the principal U.S. federal income tax consequences to U.S. Holders that hold those shares of common stock or ADSs as capital assets (generally, for investment purposes).

Taxation of Dividends

Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any distribution made by Toyota in respect of shares of common stock or ADSs (without reduction for Japanese withholding taxes) will constitute a taxable dividend to the extent paid out of current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The U.S. dollar amount of such a dividend generally will be included in the gross income of a U.S. Holder, as ordinary income, when actually or constructively received by the U.S. Holder, in the case of shares of common stock, or by the depositary, in the case of ADSs. Dividends paid by Toyota will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

Dividends received on shares and ADSs of certain foreign corporations by non-corporate U.S. investors may be subject to U.S. federal income tax at lower rates than other types of ordinary income if certain conditions are met. Dividends received by non-corporate U.S. Holders with respect to shares of common stock or ADSs of Toyota are expected to be eligible for these reduced rates of tax. U.S. Holders should consult their own tax advisors regarding the eligibility of such dividends for a reduced rate of tax.

The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese yen/U.S. dollar exchange rate in effect on the date that the dividend is included in the gross income of the U.S. Holder, regardless of whether the payment is converted into U.S. dollars on that date. Generally, any gain or

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loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in the gross income of a U.S. Holder through the date that payment is converted into U.S. dollars (or otherwise disposed of) will be treated as U.S. source ordinary income or loss. U.S. Holders should consult their own tax advisors regarding the calculation and U.S. federal income tax treatment of foreign currency gain or loss.

To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of shares of common stock or ADSs exceeds Toyota’s current and accumulated earnings and profits, as determined under U.S. federal income tax principles, the distribution first will be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in those shares or ADSs, and thereafter will be treated as U.S. source capital gain.

Distributions of additional shares of common stock that are made to U.S. Holders with respect to their shares of common stock or ADSs, and that are part of a pro rata distribution to all of Toyota’s shareholders, generally will not be subject to U.S. federal income tax.

For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect of shares of common stock or ADSs will constitute income from sources outside the United States, and will generally be “passive category income” or, in the case of certain U.S. Holders, “general category income”. Subject to generally applicable limitations under U.S. federal income tax law and the Treaty, any Japanese withholding tax imposed in respect of a Toyota dividend may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, or alternatively as a deduction in the computation of such U.S. Holder’s taxable income, if the U.S. Holder does not elect to claim a credit for any foreign taxes paid or accrued for the taxable year. Special rules generally will apply to the calculation of foreign tax credits in respect of dividend income that qualifies for preferential U.S. federal income tax rates. Additionally, special rules apply to individuals whose foreign source income during the taxable year consists entirely of “qualified passive income” and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return). Further, under some circumstances, a U.S. Holder that:

(i) has held shares of common stock or ADSs for less than a specified minimum period, or

(ii) is obligated to make payments related to Toyota dividends,

will not be allowed a foreign tax credit for Japanese taxes imposed on Toyota dividends.

U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Taxation of Capital Gains and Losses

In general, upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S. Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in those shares of common stock or ADSs. A U.S. Holder generally will have an adjusted tax basis in a share of common stock or an ADS equal to its U.S. dollar cost. Subject to the PFIC rules discussed below, gain or loss recognized on the sale or other taxable disposition of shares of common stock or ADSs generally will be capital gain or loss and, if the U.S. Holder’s holding period for those shares or ADSs exceeds one year, will be long-term capital gain or loss. Non-corporate U.S. Holders, including individuals, currently are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. Under U.S. federal income tax law, the deduction of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder in respect of the sale or other disposition of shares of common stock or ADSs generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes.

Deposits and withdrawals of common stock in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

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Passive Foreign Investment Companies

A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying look-through rules, either (1) at least 75% of its gross income is passive income, or (2) on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. The PFIC determination is made annually and generally is based on the value of a non-U.S. corporation’s assets (including goodwill) and composition of its income.

Toyota does not believe that it was a PFIC for U.S. federal income tax purposes for its taxable year ended March 31, 2013, and currently intends to continue its operations in such a manner that it will not become a PFIC in the future. Because the PFIC determination is made annually and the application of the PFIC rules to a corporation such as Toyota (which among other things is engaged in leasing and financing through several subsidiaries) is not entirely clear, no assurances can be made regarding determination of its PFIC status in the current or any future taxable year. If Toyota is determined to be a PFIC, U.S. Holders could be subject to additional U.S. federal income taxes on gain recognized with respect to the shares of common stock or ADSs and on certain distributions. In addition, an interest charge may apply to the portion of the U.S. federal income tax liability on such gains or distributions treated under the PFIC rules as having been deferred by the U.S. Holder. Moreover, dividends that a non-corporate U.S. Holder receives from Toyota will not be eligible for the reduced U.S. federal income tax rates on dividends described above if Toyota is a PFIC either in the taxable year of the dividend or the preceding taxable year. If a U.S. Holder owns shares of common stock or ADSs in any taxable year in which Toyota is a PFIC, such U.S. Holder generally would be required to file Internal Revenue Service (“IRS”) Form 8621 (or other form specified by the U.S. Department of the Treasury) with the U.S. Holder’s U.S. federal income tax return in each year that Toyota is a PFIC. Toyota will inform U.S. Holders if it believes that it will be classified as a PFIC in any taxable year.

Prospective investors should consult their own tax advisors regarding the potential application of the PFIC rules to shares of common stock or ADSs.

Non-U.S. Holders

The following discussion is a summary of the principal U.S. federal income tax consequences to beneficial owners of shares of common stock or ADSs that are neither U.S. Holders nor partnerships, nor entities taxable as partnerships for U.S. federal income tax purposes (“Non-U.S. Holders”).

A Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax on distributions received in respect of shares of common stock or ADSs unless the distributions are effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (and, if an applicable tax treaty requires, are attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder).

A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale or other disposition of shares of common stock or ADSs, unless:

(i)

the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the United States (and, if an applicable tax treaty requires, is attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder), or

(ii)

the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in the taxable year of the disposition and other conditions are met.

Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an income tax treaty applies and so requires, is attributable to a U.S. permanent establishment or fixed base of the Non-U.S. Holder, generally will be taxed in the same manner as the income of a U.S. Holder. In addition, under certain

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circumstances, any effectively connected earnings and profits realized by a corporate Non-U.S. Holder may be subject to an additional “branch profits tax” at the rate of 30% or at a lower rate that may be prescribed by an applicable income tax treaty.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to dividends paid to a U.S. Holder in respect of shares of common stock or ADSs, and to the proceeds received upon the sale, exchange or redemption of the shares of common stock or ADSs within the United States by U.S. Holders. Furthermore, backup withholding may apply to those amounts (currently at a 28% rate) if a U.S. Holder fails to provide an accurate taxpayer identification number, to certify that such U.S. Holder is not subject to backup withholding or to otherwise comply with the applicable requirements of the backup withholding requirements.

Dividends paid to a Non-U.S. Holder in respect of shares of common stock or ADSs, and proceeds received upon the sale, exchange or redemption of shares of common stock or ADSs by a Non-U.S. Holder, generally are exempt from information reporting and backup withholding under current U.S. federal income tax law. However, a Non-U.S. Holder may be required to provide certification of non-U.S. status in order to obtain that exemption.

Persons required to establish their exempt status generally must provide such certification under penalty of perjury on IRS Form W-9, entitled Request for Taxpayer Identification Number and Certification, in the case of U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (or other appropriate IRS Form W-8), in the case of non-U.S. persons. Backup withholding is not an additional tax. The amount of backup withholding imposed on a payment generally may be claimed as a credit against the holder’s U.S. federal income tax liability provided that the required information is properly furnished to the IRS in a timely manner.

In addition, certain U.S. Holders who are individuals that hold certain foreign financial assets (which may include shares of common stock or ADSs) are required to report information relating to such assets, subject to certain exceptions. U.S. Holders should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of shares of common stock or ADSs.

THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE NATIONAL TAX CONSEQUENCES SET OUT ABOVE IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. PROSPECTIVE PURCHASERS OF COMMON STOCK OR ADSs ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING OR DISPOSING OF COMMON STOCK OR ADSs, BASED ON THEIR PARTICULAR CIRCUMSTANCES.

10.F DIVIDENDS AND PAYING AGENTS

Not applicable.

10.G STATEMENT BY EXPERTS

Not applicable.

10.H DOCUMENTS ON DISPLAY

Toyota files annual reports on Form 20-F and reports on Form 6-K with the SEC. You may read and copy this information at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 or by accessing the SEC’s home page (http://www.sec.gov). You can also request copies of the documents, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition,

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Toyota’s reports, proxy statements and other information may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Copies of the documents referred to herein may also be inspected at Toyota’s offices by contacting Toyota at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan, attention: Financial Reporting Department, Accounting Division, telephone number: 81-565-28-2121.

10.I SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk

Toyota is exposed to market risk from changes in foreign currency exchange rates, interest rates, certain commodity and equity security prices. In order to manage the risk arising from changes in foreign currency exchange rates and interest rates, Toyota enters into a variety of derivative financial instruments.

A description of Toyota’s accounting policies for derivative instruments is included in note 2 to the consolidated financial statements and further disclosure is provided in notes 20 and 26 to the consolidated financial statements.

Toyota monitors and manages these financial exposures as an integral part of its overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects on Toyota’s operating results.

The financial instruments included in the market risk analysis consist of all of Toyota’s cash and cash equivalents, marketable securities, finance receivables, securities investments, long-term and short-term debt and all derivative financial instruments. Toyota’s portfolio of derivative financial instruments consists of forward foreign currency exchange contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options. Anticipated transactions denominated in foreign currencies that are covered by Toyota’s derivative hedging are not included in the market risk analysis. Although operating leases are not required to be included, Toyota has included these instruments in determining interest rate risk.

Foreign Currency Exchange Rate Risk

Toyota has foreign currency exposures related to buying, selling and financing in currencies other than the local currencies in which it operates. Toyota is exposed to foreign currency risk related to future earnings or assets and liabilities that are exposed due to operating cash flows and various financial instruments that are denominated in foreign currencies. Toyota’s most significant foreign currency exposures relate to the U.S. dollar and the euro.

Toyota uses a value-at-risk analysis (“VAR”) to evaluate its exposure to changes in foreign currency exchange rates. The VAR of the combined foreign exchange position represents a potential loss in pre-tax earnings that was estimated to be ¥87.9 billion and ¥99.1 billion at March 31, 2012 and 2013, respectively. Based on Toyota’s overall currency exposure (including derivative positions), the risk during fiscal 2013 to pre-tax cash flow from currency movements was on average ¥99.1 billion, with a high of ¥129.5 billion and a low of ¥78.1 billion.

The VAR was estimated by using a Monte Carlo Simulation Method and assumed 95% confidence level on the realization date and a 10-day holding period.

Interest Rate Risk

Toyota is subject to market risk from exposures to changes in interest rates based on its financing, investing and cash management activities. Toyota enters into various financial instrument transactions to maintain the

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desired level of exposure to the risk of interest rate fluctuations and to minimize interest expense. The potential decrease in fair value resulting from a hypothetical 100 basis point upward shift in interest rates would be approximately ¥144.2 billion as of March 31, 2012 and ¥208.5 billion as of March 31, 2013.

There are certain shortcomings inherent to the sensitivity analyses presented. The model assumes that interest rate changes are instantaneous parallel shifts in the yield curve. However, in reality, changes are rarely instantaneous. Although certain assets and liabilities may have similar maturities or periods to repricing, they may not react correspondingly to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate with changes in market interest rates, while interest rates on other types of assets may lag behind changes in market rates. Finance receivables are less susceptible to prepayments when interest rates change and, as a result, Toyota’s model does not address prepayment risk for automotive related finance receivables. However, in the event of a change in interest rates, actual loan prepayments may deviate significantly from the assumptions used in the model.

Commodity Price Risk

Commodity price risk is the possibility of higher or lower costs due to changes in the prices of commodities, such as non-ferrous alloys (e.g., aluminum), precious metals (e.g., palladium, platinum and rhodium) and ferrous alloys, which Toyota uses in the production of motor vehicles. Toyota does not use derivative instruments to hedge the price risk associated with the purchase of those commodities and controls its commodity price risk by holding minimum stock levels.

Equity Price Risk

Toyota holds investments in various available-for-sale equity securities that are subject to price risk. The fair value of available-for-sale equity securities was ¥1,034.3 billion as of March 31, 2012 and ¥1,401.1 billion as of March 31, 2013. The potential change in the fair value of these investments, assuming a 10% change in prices, would be approximately ¥103.4 billion as of March 31, 2012 and ¥140.1 billion as of March 31, 2013.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A DEBT SECURITIES

Not applicable.

12.B WARRANTS AND RIGHTS

Not applicable.

12.C OTHER SECURITIES

Not applicable.

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12.D AMERICAN DEPOSITARY SHARES

Fees and Charges for Holders of American Depositary Receipts

The Bank of New York Mellon, as depositary for the ADSs (the “Depositary”) collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.


Persons depositing or withdrawing shares must pay:		For:

$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)		• Issuance of ADSs, including issuances resulting from a distribution, sale or exercise of shares or rights or other property • Cancellation of ADSs for the purpose of withdrawal including if the deposit agreement terminates

$0.02 (or less) per ADS		• Any cash distribution to ADS registered holders

A fee equivalent to the fee that would be payable if securities distributed to the ADR holder had been shares and the shares had been deposited for issuance of ADSs		• Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders

Registration fees		• Registration of transfer of shares on Toyota’s share register to the name of the depositary or its nominee or the custodian or its nominee when shares are deposited or withdrawn

Expenses of the depositary		• Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) • Converting foreign currency to U.S. dollars

Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS		• As necessary

Fees Incurred in Fiscal 2013

For fiscal 2013, Toyota received $200,000 from the Depositary for standard out-of-pocket maintenance costs for the ADRs (consisting of the expenses of postage and envelopes for mailing annual reports, printing and distributing dividend checks, stationery, postage, facsimile, and telephone calls) and expenses relating to Toyota’s annual general shareholders’ meeting that are incurred with respect to Toyota’s ADR holders. The Depositary also paid Toyota’s continuing annual stock exchange listing fees.

Fees to be Paid in the Future

The Depositary has agreed to reimburse Toyota for expenses Toyota incurs that are related to the maintenance of the ADS program. The Depositary has agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which includes the expenses of postage and envelopes for mailing annual reports, printing and distributing dividend checks, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse Toyota annually for investor relations expenses and any other program related expenses. There are limits on the amount of expenses for which the Depositary will reimburse Toyota, but the amount of reimbursement available to Toyota is not tied to the amount of fees investors pay to the Depositary.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

(a) DISCLOSURE CONTROLS AND PROCEDURES

Toyota performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the fiscal 2013. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Form 20-F that Toyota files under the Exchange Act is accumulated and communicated to its management, including the chief executive officer and the principal accounting and financial officer, to allow timely decision regarding required disclosure. The disclosure controls and procedures also ensures that the Form 20-F that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The evaluation was performed under the supervision of Toyota’s Chairman of the Board and the Executive Vice President. Toyota’s disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives. Managerial judgment was necessary to evaluate the cost-benefit relationship of possible controls and procedures. The Chairman of the Board and the Executive Vice President have concluded that Toyota’s disclosure controls and procedures are effective at the reasonable assurance level.

(b) MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Toyota’s management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Toyota’s internal control over financial reporting includes those policies and procedures that:

(i)

pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of Toyota’s assets;

(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that Toyota’s receipts and expenditures are being made only in accordance with authorizations of Toyota’s management and directors; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Toyota’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Toyota’s management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (1992)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

123

Based on this evaluation, management concluded that Toyota’s internal control over financial reporting was effective as of March 31, 2013.

PricewaterhouseCoopers Aarata, an independent registered public accounting firm that audited the consolidated financial statements included in this report, has also audited the effectiveness of Toyota’s internal control over financial reporting as of March 31, 2013, as stated in its report included herein.

(c) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

Toyota’s independent registered public accounting firm, PricewaterhouseCoopers Aarata, has issued an audit report on the effectiveness of Toyota’s internal control over financial reporting. This report appears in Item 18.

(d) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in Toyota’s internal control over financial reporting during fiscal 2013 that have materially affected, or are reasonably likely to materially affect, Toyota’s internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Toyota maintains an audit & supervisory board system, in accordance with the Corporation Act. Toyota’s audit & supervisory board is comprised of seven audit & supervisory board members, four of whom are outside audit & supervisory board members. Each audit & supervisory board member has been appointed at Toyota’s shareholders’ meetings and has certain statutory powers independently, including auditing the business affairs and accounts of Toyota.

Toyota’s audit & supervisory board has determined that it does not have an “audit committee financial expert” serving on the audit & supervisory board. The qualifications for, and powers of, the audit & supervisory board member delineated in the Corporation Act are different from those anticipated for any audit committee financial expert. Audit & supervisory board members have the authority to be given reports from a certified public accountant or an accounting firm concerning audits, including technical accounting matters. At the same time, each audit & supervisory board member has the authority to consult internal and external experts on accounting matters. Each audit & supervisory board member must fulfill the requirements under Japanese laws and regulations and otherwise follow Japanese corporate governance practices and, accordingly, Toyota’s audit & supervisory board has confirmed that it is not necessarily in Toyota’s best interest to nominate as audit & supervisory board member a person who meets the definition of audit committee financial experts. Although Toyota does not have an audit committee financial expert on its audit & supervisory board, Toyota believes that Toyota’s current corporate governance system, taken as a whole, including the audit & supervisory board members’ ability to consult internal and external experts, is fully equivalent to a system having an audit committee financial expert on its audit & supervisory board.

ITEM 16B. CODE OF ETHICS

Toyota has adopted a code of ethics that applies to its directors and managing officers, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of Toyota’s code of ethics is included as an exhibit to this annual report on Form 20-F.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers Aarata has audited the financial statements of Toyota included in this annual report on Form 20-F.

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The following table presents the aggregate fees for professional services and other services rendered by PricewaterhouseCoopers Aarata and the various network and member firms of PricewaterhouseCoopers to Toyota in fiscal 2012 and fiscal 2013.


	Yen in millions
	2012		2013
Audit Fees⁽¹⁾	¥	3,039	¥	3,120
Audit-related Fees⁽²⁾		81		81
Tax Fees⁽³⁾		411		388
All Other Fees⁽⁴⁾		276		122

Total	¥	3,807	¥	3,711

(1)

Audit Fees consist of fees billed for the annual audit services engagement and other audit services, which are those services that only the external auditor reasonably can provide, and include the services of annual audit, quarterly reviews and assessment and reviews of the effectiveness of internal controls over financial reporting of Toyota and its subsidiaries and affiliated companies; the services associated with SEC registration statements or other documents issued in connection with securities offerings such as comfort letters and consents; and consultations as to the accounting or disclosure treatment of transactions or events.

(2)

Audit-related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of its financial statements or that are traditionally performed by the external auditor, and mainly include services such as due diligence; agreed-upon or expanded audit procedures; internal control reviews and assistance; review of the information system; and financial statement audits of employee benefit plans.

(3)

Tax Fees include fees billed for tax compliance services, including services such as tax planning, advice and compliance of federal, state, local and international tax; the review of tax returns; assistance with tax audits and appeals; tax-only valuation services including transfer pricing and cost segregation studies; expatriate tax assistance and compliance.

(4)

All Other Fees primarily include fees billed for risk management advisory services of assessment and testing of security infrastructure controls; advisory services relating to establishment of a new subsidiary; assistance with continuing education and training; and services providing information related to automotive market conditions and sales networks.

Policies and Procedures of the Audit & Supervisory Board

Below is a summary of the current policies and procedures of the audit & supervisory board for the pre-approval of audit and permissible non-audit services performed by Toyota’s independent public accountants.

Under the policy, the Representative Directors submit a request for general pre-approval of audit and permissible non-audit services for the following fiscal year, which shall include details of the specific services and estimated fees for the services, to the audit & supervisory board, which reviews and determines whether or not to grant the request by the end of March of the fiscal year. Upon the general pre-approval of the audit & supervisory board, the Representative Directors are not required to obtain any specific pre-approval for audit and permissible non-audit services so long as those services fall within the scope of the general pre-approval provided.

The audit & supervisory board makes a further determination of whether or not to grant a request to revise the general pre-approval for the applicable fiscal year if such request is submitted by the Representative Directors. Such request may include (i) adding any audit or permissible non-audit services other than the ones listed in the general pre-approval and (ii) obtaining services that are listed in the general pre-approval but of which the total fee amount exceeds the amount affirmed by the general pre-approval. The determination of whether or not to grant a request to revise the general pre-approval noted in the foregoing may alternatively be

125

made by an audit & supervisory board member (full time), who is designated in advance by a resolution of the audit & supervisory board, in which case such audit & supervisory board member (full time) shall report such decision at the next meeting of the audit & supervisory board. The performance of audit and permissible non-audit services and the payment of fees are subject to review by the audit & supervisory board at least once every fiscal half year.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Toyota does not have an audit committee. Toyota is relying on the general exemption contained in Rule 10A-3(c)(3) under the Exchange Act, which provides an exemption from the NYSE’s listing standards relating to audit committees for foreign companies like Toyota that have an audit & supervisory board. Toyota’s reliance on Rule 10A-3(c)(3) does not, in its opinion, materially adversely affect the ability of its audit & supervisory board to act independently and to satisfy the other requirements of Rule 10A-3.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table sets forth purchases of Toyota’s common stock by Toyota and its affiliated purchasers during fiscal 2013:


Period	(a) Total Number of Shares Purchased⁽¹⁾		(b) Average Price Paid per Share (Yen)⁽¹⁾		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
April 1, 2012 – April 30, 2012		1,666	¥	3,402.94	—	—
May 1, 2012 – May 31, 2012		733		3,187.69	—	—
June 1, 2012 – June 30, 2012		800		3,014.46	—	—
July 1, 2012 – July 31, 2012		1,564		3,099.45	—	—
August 1, 2012 – August 31, 2012		1,716		3,166.86	—	—
September 1, 2012 – September 30, 2012		1,567		3,175.44	—	—
October 1, 2012 – October 31, 2012		1,780		3,041.16	—	—
November 1, 2012 – November 30, 2012		1,897		3,251.14	—	—
December 1, 2012 – December 31, 2012		2,735		3,557.44	—	—
January 1, 2013 – January 31, 2013		3,959		4,152.68	—	—
February 1, 2013 – February 28, 2013		3,478		4,710.11	—	—
March 1, 2013 – March 31, 2013		4,190		4,875.81	—	—

Total		26,085		—	—	—

(1)

A portion of the above purchases were made as a result of holders of shares constituting less than one unit, which is 100 shares of common stock, requesting Toyota to purchase shares that are a fraction of a unit, in accordance with Toyota’s share handling regulations. Toyota is required to comply with such requests pursuant to the Corporation Act. See “Additional Information — Memorandum and Articles of Association — Japanese Unit Share System”.

(2)	Toyota did not have any publicly announced plans or programs in place for fiscal 2013.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

126

ITEM 16G. CORPORATE GOVERNANCE

Significant Differences in Corporate Governance Practices between Toyota and U.S. Companies Listed on the NYSE

Pursuant to home country practices exemptions granted by the NYSE, Toyota is permitted to follow certain corporate governance practices complying with Japanese laws, regulations and stock exchange rules in lieu of the NYSE’s listing standards. The SEC approved changes to the NYSE’s listing standards related to corporate governance practices of listed companies (the “NYSE Corporate Governance Rules”) in November 2003, as further amended in November 2004. Toyota is exempt from the approved changes, except for requirements that (a) Toyota’s audit & supervisory board satisfies the requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (b) Toyota must disclose significant differences in its corporate governance practices as compared to those followed by domestic companies under the NYSE listing standards, (c) Toyota’s principal executive officer must notify the NYSE in writing after any executive officer of Toyota becomes aware of any non-compliance with (a) and (b), and (d) Toyota must submit annual and interim written affirmations to the NYSE. Toyota’s corporate governance practices and those followed by domestic companies under the NYSE Corporate Governance Rules have the following significant differences:

1. Directors. Toyota currently does not have any directors who will be deemed an “independent director” as required under the NYSE Corporate Governance Rules for U.S. listed companies. Unlike the NYSE Corporate Governance Rules, the Corporation Act does not require Japanese companies with an audit & supervisory board such as Toyota to have any independent directors on its board of directors. While the NYSE Corporate Governance Rules require that the non-management directors of each listed company meet at regularly scheduled executive sessions without management, Toyota currently has no non-management director on its board of directors. Unlike the NYSE Corporate Governance Rules, the Corporation Act does not require, and accordingly Toyota does not have, an internal corporate organ or committee comprised solely of independent directors.

Toyota currently has three outside directors under the Corporation Act. Under the Corporation Act, an “outside” director is any person who is not, and was not at any time during the past, an executive director (a director who engages in the execution of business), executive officer, manager or employee of Toyota or its subsidiaries. Such qualifications for an “outside” director are different from the director independence requirements under the NYSE Corporate Governance Rules.

In addition, pursuant to the regulations of the Japanese stock exchanges, Toyota is required to have one or more “independent director(s)/audit & supervisory board member(s),” defined under the relevant regulations of the Japanese stock exchanges as “outside directors” or “outside audit & supervisory board members” (as defined under the Corporation Act), who are unlikely to have any conflicts of interests with Toyota’s general shareholders. Each of the outside directors of Toyota satisfies the “independent director/audit & supervisory board member” requirements under the regulations of the Japanese stock exchanges. The definition of “independent director/audit & supervisory board member” is different from that of the definition of independent director under the NYSE Corporate Governance Rules.

2. Committees. Under the Corporation Act, Toyota has elected to structure its corporate governance system as a company with audit & supervisory board members, who are under a statutory duty to monitor, review and report on the management of the affairs of Toyota. Toyota, as with other Japanese companies with an audit & supervisory board, does not have certain committees that are required of U.S. listed companies subject to the NYSE Corporate Governance Rules, including those that are responsible for director nomination, corporate governance and executive compensation.

Pursuant to the Corporation Act, Toyota’s board of directors nominates and submits a proposal for the appointment of directors for shareholder approval. The shareholders vote on such nomination at the general shareholders’ meeting. The Corporation Act requires that the respective limits or calculation formula, and kind (in case that the remuneration, bonus and any other benefits in compensation for the execution of duties (“remuneration, etc.”) are to be paid in other than cash) of remuneration, etc. to be paid to directors, and limits of

127

remuneration, etc. to be paid to audit & supervisory board members, must be determined by a resolution of the general shareholders’ meeting, unless their remuneration, etc. is provided for in the articles of incorporation. The distribution of remuneration, etc. among each director is broadly delegated to the board of directors and the distribution of remuneration among each audit & supervisory board member is determined by consultation among the audit & supervisory board members.

3. Audit Committee. Toyota avails itself of paragraph (c)(3) of Rule 10A-3 of the Exchange Act, which provides a general exemption from the audit committee requirements to a foreign private issuer with an audit & supervisory board, subject to certain requirements which continue to be applicable under Rule 10A-3.

Pursuant to the requirements of the Corporation Act, Toyota elects its audit & supervisory board members through a resolution adopted at a general shareholders’ meeting. Toyota currently has seven audit & supervisory board members, which exceeds the minimum number of audit & supervisory board members required pursuant to the Corporation Act.

Unlike the NYSE Corporate Governance Rules, the Corporation Act, among others, does not require audit & supervisory board members to establish an expertise in accounting nor are they required to present other special knowledge and experience. Under the Corporation Act, the audit & supervisory board may determine the auditing policies and methods of investigating the conditions of Toyota’s business and assets, and may resolve other matters concerning the execution of the audit & supervisory board member’s duties. The audit & supervisory board also prepares auditors’ reports and gives consent to proposals of the nomination of audit & supervisory board members and accounting auditors.

Toyota currently has four outside audit & supervisory board members under the Corporation Act. Under the Corporation Act, at least half of the audit & supervisory board members must be “outside” audit & supervisory board members, which is any person who was not a director, accounting counselor (in the case that an accounting counselor is a legal entity, a member of such entity who is in charge of its affairs), executive officer, manager, or employee of Toyota or its subsidiaries at any time during the past. Such qualifications for an “outside” audit & supervisory board member are different from the audit committee independence requirement under the NYSE Corporate Governance Rules.

Each of the outside audit & supervisory board members of Toyota satisfies the “independent director/audit & supervisory board member” requirements under the regulations of the Japanese stock exchanges, as described above in “1. Directors.”

4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is not required to adopt corporate governance guidelines under Japanese laws and regulations, including the Corporation Act, the Financial Instruments and Exchange Law of Japan and stock exchange rules. However, Toyota is required to resolve the matters at the board of directors concerning provision of the system to ensure the execution of duties of the directors to comply with the laws, regulations and the articles of incorporation, and any other systems to ensure the adequacy of the business required under the ordinance of the Ministry of Justice (“internal control system” or “naibu-tosei”), and to disclose such matters resolved, policies and the present status of its corporate governance in its business reports, annual securities report and certain other disclosure documents in accordance with the regulations under the Financial Instruments and Exchange Law and stock exchange rules in respect of timely disclosure.

5. Code of Business Conduct and Ethics. Unlike the NYSE Corporate Governance Rules, under Japanese laws and regulations including the Corporation Act, the Financial Instruments and Exchange Law and stock exchange rules, Toyota is not required to adopt a code of business conduct and ethics for directors, officers and employees. Accordingly, Toyota is not required to adopt and disclose waivers of the code of business conduct and ethics for these individuals. However, Toyota resolved to maintain a code of business conduct and ethics as part of its “internal control system”, or “naibu-tosei”, pursuant to the Corporation Act, in order to ensure its employees’

128

comply with laws, regulations and the articles of incorporation, etc. Toyota additionally maintains guidelines and internal regulations such as “Guiding Principles at Toyota”, “Toyota Code of Conduct” and a code of ethics pursuant to Section 406 of the Sarbanes-Oxley Act. Please see “Code of Ethics” for additional information.

6. Shareholder Approval of Equity Compensation Plans. Unlike the NYSE Corporate Governance Rules, under which material revisions to equity-compensation plans of listed companies are subject to shareholder approval, pursuant to the Corporation Act, generally, the adoption of equity compensation plans for directors is required to be approved by a majority of shareholders at the general shareholders’ meeting as the remuneration, etc. in other than cash. In addition to such approval, if Toyota desires to adopt an equity-compensation plan under which stock acquisition rights are granted on specially favorable terms to the recipient (except where such rights are granted to all of its shareholders on a pro-rata basis at the same time), then Toyota obtains approval by super-majority (as defined in the Corporation Act) at the ordinary general shareholders’ meeting. Such approval is applicable only to stock acquisition rights to be granted within one year from the date of the approval.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

129

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this annual report on Form 20-F.

130

TOYOTA MOTOR CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page

Report of Independent Registered Public Accounting Firm		F - 2

Consolidated balance sheets at March 31, 2012 and 2013		F - 3

Consolidated statements of income for the years ended March 31, 2011, 2012 and 2013		F - 5

Consolidated statements of comprehensive income for the years ended March 31, 2011, 2012 and 2013		F - 6

Consolidated statements of shareholders’ equity for the years ended March 31, 2011, 2012 and 2013		F - 7

Consolidated statements of cash flows for the years ended March 31, 2011, 2012 and 2013		F - 9

Notes to consolidated financial statements		F - 11

All financial statements schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.

Financial statements of 50% or less owned persons accounted for by the equity method have been omitted because the registrant’s proportionate share of the income from continuing operations before income taxes is less than 20% of consolidated income (loss) from continuing operations before income taxes and the investment in and advances to each company is less than 20% of consolidated total assets.

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Toyota Jidosha Kabushiki Kaisha

(“Toyota Motor Corporation”)

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Toyota Motor Corporation and its subsidiaries at March 31, 2012 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2013 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 15(b). Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

/s/ PricewaterhouseCoopers Aarata

Nagoya, Japan

June 24, 2013

F-2

TOYOTA MOTOR CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Current assets
Cash and cash equivalents	¥	1,679,200		¥	1,718,297		$	18,270
Time deposits		80,301			106,700			1,135
Marketable securities		1,181,070			1,445,663			15,371
Trade accounts and notes receivable, less allowance for doubtful accounts of ¥13,004 million in 2012 and ¥15,875 million ($169 million) in 2013		1,999,827			1,971,659			20,964
Finance receivables, net		4,114,897			5,117,660			54,414
Other receivables		408,547			432,693			4,601
Inventories		1,622,282			1,715,786			18,243
Deferred income taxes		718,687			749,398			7,968
Prepaid expenses and other current assets		516,378			527,034			5,604

Total current assets		12,321,189			13,784,890			146,570

Noncurrent finance receivables, net		5,602,462			6,943,766			73,830

Investments and other assets
Marketable securities and other securities investments		4,053,572			5,176,582			55,041
Affiliated companies		1,920,987			2,103,283			22,363
Employees receivables		56,524			53,741			571
Other		460,851			569,816			6,059

Total investments and other assets		6,491,934			7,903,422			84,034

Property, plant and equipment
Land		1,243,261			1,303,611			13,861
Buildings		3,660,912			3,874,279			41,194
Machinery and equipment		9,094,399			9,716,180			103,308
Vehicles and equipment on operating leases		2,575,353			3,038,011			32,302
Construction in progress		275,357			291,539			3,100

Total property, plant and equipment, at cost		16,849,282			18,223,620			193,765
Less - Accumulated depreciation		(10,613,902	)		(11,372,381	)		(120,918	)

Total property, plant and equipment, net		6,235,380			6,851,239			72,847

Total assets	¥	30,650,965		¥	35,483,317		$	377,281

The accompanying notes are an integral part of these consolidated financial statements.

F-3

TOYOTA MOTOR CORPORATION

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Current liabilities
Short-term borrowings	¥	3,450,649		¥	4,089,528		$	43,482
Current portion of long-term debt		2,512,620			2,704,428			28,755
Accounts payable		2,242,583			2,113,778			22,475
Other payables		629,093			721,065			7,667
Accrued expenses		1,828,523			2,185,537			23,238
Income taxes payable		133,778			156,266			1,662
Other current liabilities		984,328			941,918			10,015

Total current liabilities		11,781,574			12,912,520			137,294

Long-term liabilities
Long-term debt		6,042,277			7,337,824			78,020
Accrued pension and severance costs		708,402			766,112			8,146
Deferred income taxes		908,883			1,385,927			14,736
Other long-term liabilities		143,351			308,078			3,276

Total long-term liabilities		7,802,913			9,797,941			104,178

Shareholders’ equity
Toyota Motor Corporation shareholders’ equity
Common stock, no par value, authorized: 10,000,000,000 shares in 2012 and 2013; issued: 3,447,997,492 shares in 2012 and 2013		397,050			397,050			4,222
Additional paid-in capital		550,650			551,040			5,859
Retained earnings		11,917,074			12,689,206			134,920
Accumulated other comprehensive income (loss)		(1,178,833	)		(356,123	)		(3,787	)
Treasury stock, at cost, 281,187,739 shares in 2012 and 280,568,824 shares in 2013		(1,135,680	)		(1,133,138	)		(12,048	)

Total Toyota Motor Corporation shareholders’ equity		10,550,261			12,148,035			129,166

Noncontrolling interests		516,217			624,821			6,643

Total shareholders’ equity		11,066,478			12,772,856			135,809

Commitments and contingencies
Total liabilities and shareholders’ equity	¥	30,650,965		¥	35,483,317		$	377,281

The accompanying notes are an integral part of these consolidated financial statements.

F-4

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF INCOME


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Net revenues
Sales of products	¥	17,820,520		¥	17,511,916		¥	20,914,150		$	222,373
Financing operations		1,173,168			1,071,737			1,150,042			12,228

Total net revenues		18,993,688			18,583,653			22,064,192			234,601

Costs and expenses
Cost of products sold		15,985,783			15,795,918			18,010,569			191,500
Cost of financing operations		629,543			592,646			630,426			6,703
Selling, general and administrative		1,910,083			1,839,462			2,102,309			22,353

Total costs and expenses		18,525,409			18,228,026			20,743,304			220,556

Operating income		468,279			355,627			1,320,888			14,045

Other income (expense)
Interest and dividend income		90,771			99,865			98,673			1,049
Interest expense		(29,318	)		(22,922	)		(22,967	)		(244	)
Foreign exchange gain, net		14,305			37,105			5,551			59
Other income (loss), net		19,253			(36,802	)		1,504			16

Total other income (expense)		95,011			77,246			82,761			880

Income before income taxes and equity in earnings of affiliated companies		563,290			432,873			1,403,649			14,925

Provision for income taxes		312,821			262,272			551,686			5,866
Equity in earnings of affiliated companies		215,016			197,701			231,519			2,461

Net income		465,485			368,302			1,083,482			11,520

Less: Net income attributable to noncontrolling interests		(57,302	)		(84,743	)		(121,319	)		(1,290	)

Net income attributable to Toyota Motor Corporation	¥	408,183		¥	283,559		¥	962,163		$	10,230


	Yen									U.S. dollars
Net income attributable to Toyota Motor Corporation per share
- Basic	¥	130.17		¥	90.21		¥	303.82		$	3.23

- Diluted	¥	130.16		¥	90.20		¥	303.78		$	3.23

Cash dividends per share	¥	50.00		¥	50.00		¥	90.00		$	0.96

The accompanying notes are an integral part of these consolidated financial statements.

F-5

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Net income	¥	465,485		¥	368,302		¥	1,083,482		$	11,520
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(299,578	)		(93,292	)		461,754			4,910
Unrealized gains (losses) on securities, net of reclassification adjustments		(27,657	)		131,794			374,209			3,979
Pension liability adjustments		11,454			(65,110	)		14,711			156

Total other comprehensive income (loss)		(315,781	)		(26,608	)		850,674			9,045

Comprehensive income		149,704			341,694			1,934,156			20,565

Less: Comprehensive income attributable to noncontrolling interests		(39,407	)		(85,744	)		(149,283	)		(1,587	)

Comprehensive income attributable to Toyota Motor Corporation	¥	110,297		¥	255,950		¥	1,784,873		$	18,978

The accompanying notes are an integral part of these consolidated financial statements.

F-6

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


	Yen in millions
	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock, at cost			Total Toyota Motor Corporation shareholders’ equity			Noncontrolling interests			Total shareholders’ equity
Balances at March 31, 2010	¥	397,050	¥	501,331	¥	11,568,602		¥	(846,835	)	¥	(1,260,425	)	¥	10,359,723		¥	570,720		¥	10,930,443

Equity transaction with noncontrolling interests and other				2,310											2,310			5,183			7,493
Issuance during the year				2,119											2,119						2,119
Comprehensive income
Net income						408,183									408,183			57,302			465,485
Other comprehensive income (loss)
Foreign currency translation adjustments									(287,613	)					(287,613	)		(11,965	)		(299,578	)
Unrealized gains (losses) on securities, net of reclassification adjustments									(26,058	)					(26,058	)		(1,599	)		(27,657	)
Pension liability adjustments									15,785						15,785			(4,331	)		11,454

Total comprehensive income															110,297			39,407			149,704

Dividends paid to Toyota Motor Corporation shareholders						(141,120	)								(141,120	)					(141,120	)
Dividends paid to noncontrolling interests																		(27,657	)		(27,657	)
Purchase and reissuance of common stock												(958	)		(958	)					(958	)

Balances at March 31, 2011	¥	397,050	¥	505,760	¥	11,835,665		¥	(1,144,721	)	¥	(1,261,383	)	¥	10,332,371		¥	587,653		¥	10,920,024

Equity transaction with noncontrolling interests and other				43,311		(45,365	)		(6,503	)		125,819			117,262			(119,824	)		(2,562	)
Issuance during the year				1,483											1,483						1,483
Comprehensive income
Net income						283,559									283,559			84,743			368,302
Other comprehensive income (loss)
Foreign currency translation adjustments									(87,729	)					(87,729	)		(5,563	)		(93,292	)
Unrealized gains (losses) on securities, net of reclassification adjustments									129,328						129,328			2,466			131,794
Pension liability adjustments									(69,208	)					(69,208	)		4,098			(65,110	)

Total comprehensive income															255,950			85,744			341,694

Dividends paid to Toyota Motor Corporation shareholders						(156,785	)								(156,785	)					(156,785	)
Dividends paid to noncontrolling interests																		(37,356	)		(37,356	)
Purchase and reissuance of common stock				96								(116	)		(20	)					(20	)

Balances at March 31, 2012	¥	397,050	¥	550,650	¥	11,917,074		¥	(1,178,833	)	¥	(1,135,680	)	¥	10,550,261		¥	516,217		¥	11,066,478

The accompanying notes are an integral part of these consolidated financial statements.

F-7

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)


	Yen in millions
	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock, at cost			Total Toyota Motor Corporation shareholders’ equity			Noncontrolling interests			Total shareholders’ equity
Balances at March 31, 2012	¥	397,050	¥	550,650		¥	11,917,074		¥	(1,178,833	)	¥	(1,135,680	)	¥	10,550,261		¥	516,217		¥	11,066,478

Equity transaction with noncontrolling interests and other				675												675			4,961			5,636
Issuance during the year
Comprehensive income
Net income							962,163									962,163			121,319			1,083,482
Other comprehensive income (loss)
Foreign currency translation adjustments										434,638						434,638			27,116			461,754
Unrealized gains (losses) on securities, net of reclassification adjustments										368,507						368,507			5,702			374,209
Pension liability adjustments										19,565						19,565			(4,854	)		14,711

Total comprehensive income																1,784,873			149,283			1,934,156

Dividends paid to Toyota Motor Corporation shareholders							(190,008	)								(190,008	)					(190,008	)
Dividends paid to noncontrolling interests																			(45,640	)		(45,640	)
Purchase and reissuance of common stock				(285	)		(23	)					2,542			2,234						2,234

Balances at March 31, 2013	¥	397,050	¥	551,040		¥	12,689,206		¥	(356,123	)	¥	(1,133,138	)	¥	12,148,035		¥	624,821		¥	12,772,856


	U.S. dollars in millions
	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock, at cost			Total Toyota Motor Corporation shareholders’ equity			Noncontrolling interests			Total shareholders’ equity
Balances at March 31, 2012	$	4,222	$	5,855		$	126,710		$	(12,535	)	$	(12,075	)	$	112,177		$	5,489		$	117,666

Equity transaction with noncontrolling interests and other				7												7			53			60
Issuance during the year
Comprehensive income
Net income							10,230									10,230			1,290			11,520
Other comprehensive income (loss)
Foreign currency translation adjustments										4,622						4,622			288			4,910
Unrealized gains (losses) on securities, net of reclassification adjustments										3,918						3,918			61			3,979
Pension liability adjustments										208						208			(52	)		156

Total comprehensive income																18,978			1,587			20,565

Dividends paid to Toyota Motor Corporation shareholders							(2,020	)								(2,020	)					(2,020	)
Dividends paid to noncontrolling interests																			(486	)		(486	)
Purchase and reissuance of common stock				(3	)		(0	)					27			24						24

Balances at March 31, 2013	$	4,222	$	5,859		$	134,920		$	(3,787	)	$	(12,048	)	$	129,166		$	6,643		$	135,809

The accompanying notes are an integral part of these consolidated financial statements.

F-8

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Cash flows from operating activities
Net income	¥	465,485		¥	368,302		¥	1,083,482		$	11,520
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		1,175,573			1,067,830			1,105,109			11,750
Provision for doubtful accounts and credit losses		4,140			9,623			27,367			291
Pension and severance costs, less payments		(23,414	)		16,711			(20,429	)		(217	)
Losses on disposal of fixed assets		36,214			33,528			32,221			343
Unrealized losses on available-for-sale securities, net		7,915			53,831			2,104			22
Deferred income taxes		85,710			6,395			160,008			1,701
Equity in earnings of affiliated companies		(215,016	)		(197,701	)		(231,519	)		(2,461	)
Changes in operating assets and liabilities, and other
(Increase) decrease in accounts and notes receivable		421,423			(585,464	)		(168,260	)		(1,789	)
(Increase) decrease in inventories		51,808			(344,923	)		50,483			537
(Increase) decrease in other current assets		38,307			(180,529	)		(47,033	)		(500	)
Increase (decrease) in accounts payable		(406,210	)		756,363			(209,284	)		(2,225	)
Increase (decrease) in accrued income taxes		(40,629	)		20,943			22,127			235
Increase in other current liabilities		239,319			316,366			280,083			2,978
Other		183,384			111,160			364,857			3,879

Net cash provided by operating activities		2,024,009			1,452,435			2,451,316			26,064

Cash flows from investing activities
Additions to finance receivables		(8,438,785	)		(8,333,248	)		(10,004,928	)		(106,379	)
Collection of finance receivables		7,934,364			8,007,711			9,063,011			96,364
Proceeds from sales of finance receivables		69,576			53,999			39,845			424
Additions to fixed assets excluding equipment leased to others		(629,326	)		(723,537	)		(854,561	)		(9,086	)
Additions to equipment leased to others		(1,061,865	)		(808,545	)		(1,119,591	)		(11,904	)
Proceeds from sales of fixed assets excluding equipment leased to others		51,342			36,633			39,191			417
Proceeds from sales of equipment leased to others		486,695			431,313			533,441			5,672
Purchases of marketable securities and security investments		(4,421,807	)		(3,173,634	)		(3,412,423	)		(36,283	)
Proceeds from sales of marketable securities and security investments		189,037			162,160			35,178			374
Proceeds upon maturity of marketable securities and security investments		3,527,119			2,694,665			2,633,913			28,005
Payment for additional investments in affiliated companies, net of cash acquired		(299	)		(147	)		16,216			172
Changes in investments and other assets, and other		177,605			209,972			3,396			36

Net cash used in investing activities	¥	(2,116,344	)	¥	(1,442,658	)	¥	(3,027,312	)	$	(32,188	)

The accompanying notes are an integral part of these consolidated financial statements.

F-9

TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Cash flows from financing activities
Proceeds from issuance of long-term debt	¥	2,931,436		¥	2,394,807		¥	3,191,223		$	33,931
Payments of long-term debt		(2,489,632	)		(2,867,572	)		(2,682,136	)		(28,518	)
Increase in short-term borrowings		162,260			311,651			201,261			2,139
Dividends paid		(141,120	)		(156,785	)		(190,008	)		(2,020	)
Purchase of common stock, and other		(28,617	)		(37,448	)		(43,098	)		(458	)

Net cash provided by (used in) financing activities		434,327			(355,347	)		477,242			5,074

Effect of exchange rate changes on cash and cash equivalents		(127,029	)		(55,939	)		137,851			1,466

Net increase (decrease) in cash and cash equivalents		214,963			(401,509	)		39,097			416
Cash and cash equivalents at beginning of year		1,865,746			2,080,709			1,679,200			17,854

Cash and cash equivalents at end of year	¥	2,080,709		¥	1,679,200		¥	1,718,297		$	18,270

The accompanying notes are an integral part of these consolidated financial statements.

F-10

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations:

Toyota is primarily engaged in the design, manufacture, and sale of sedans, minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories throughout the world. In addition, Toyota provides financing, vehicle and equipment leasing and certain other financial services primarily to its dealers and their customers to support the sales of vehicles and other products manufactured by Toyota.

2. Summary of significant accounting policies:

The parent company and its subsidiaries in Japan and its foreign subsidiaries maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan and those of their countries of domicile. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform to U.S.GAAP.

Significant accounting policies after reflecting adjustments for the above are as follows:

Basis of consolidation and accounting for investments in affiliated companies -

The consolidated financial statements include the accounts of the parent company and those of its majority-owned subsidiary companies. All significant intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which Toyota exercises significant influence, but which it does not control, are stated at cost plus equity in undistributed earnings. Consolidated net income includes Toyota’s equity in current earnings of such companies, after elimination of unrealized intercompany profits. Investments in such companies are reduced to net realizable value if a decline in market value is determined other-than-temporary. Investments in non-public companies in which Toyota does not exercise significant influence (generally less than a 20% ownership interest) are stated at cost. The accounts of variable interest entities as defined by U.S.GAAP are included in the consolidated financial statements, if applicable.

Estimates -

The preparation of Toyota’s consolidated financial statements in conformity with U.S.GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The more significant estimates include: product warranties, liabilities accrued for recalls and other safety measures, allowance for doubtful accounts and credit losses, residual values for leased assets, impairment of long-lived assets, pension costs and obligations, fair value of derivative financial instruments, other-than-temporary losses on marketable securities, litigation liabilities and valuation allowance for deferred tax assets.

Translation of foreign currencies -

All asset and liability accounts of foreign subsidiaries and affiliated companies are translated into Japanese yen at appropriate year-end current exchange rates and all income and expense accounts of those subsidiaries are translated at the average exchange rates for each period. The foreign currency translation adjustments are included as a component of accumulated other comprehensive income.

Foreign currency receivables and payables are translated at appropriate year-end current exchange rates and the resulting transaction gains or losses are recorded in operations currently.

F-11

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue recognition -

Revenues from sales of vehicles and parts are generally recognized upon delivery which is considered to have occurred when the dealer has taken title to the product and the risk and reward of ownership have been substantively transferred, except as described below.

Toyota’s sales incentive programs principally consist of cash payments to dealers calculated based on vehicle volume or a model sold by a dealer during a certain period of time. Toyota accrues these incentives as revenue reductions upon the sale of a vehicle corresponding to the program by the amount determined in the related incentive program.

Revenues from the sales of vehicles under which Toyota conditionally guarantees the minimum resale value are recognized on a pro rata basis from the date of sale to the first exercise date of the guarantee in a manner similar to operating lease accounting. The underlying vehicles of these transactions are recorded as assets and are depreciated in accordance with Toyota’s depreciation policy.

Revenues from retail financing contracts and finance leases are recognized using the effective yield method. Revenues from operating leases are recognized on a straight-line basis over the lease term.

The sale of certain vehicles includes a determinable amount for the contract, which entitles customers to free vehicle maintenance. Such revenues from free maintenance contracts are deferred and recognized as revenue over the period of the contract, which approximates the pattern of the related costs.

Other costs -

Advertising and sales promotion costs are expensed as incurred. Advertising costs were ¥308,903 million, ¥304,713 million and ¥330,870 million ($3,518 million) for the years ended March 31, 2011, 2012 and 2013, respectively.

In addition to product warranties above, Toyota accrues for costs of recalls and other safety measures based on management’s estimates when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Toyota employs an estimation model, to accrue at the time of vehicle sale, an amount that represents management’s best estimate of expenses related to future recalls and other safety measures. The estimation model for recalls and other safety measures takes into account Toyota’s historical experience of recalls and other safety measures.

Litigation liabilities are established to cover probable losses on various lawsuits based on the information currently available. Attorneys’ fees are expensed as incurred.

Research and development costs are expensed as incurred. Research and development costs were ¥730,340 million, ¥779,806 million and ¥807,454 million ($8,585 million) for the years ended March 31, 2011, 2012 and 2013, respectively.

F-12

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash and cash equivalents -

Cash and cash equivalents include all highly liquid investments with original maturities of three months or less, that are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.

Marketable securities -

Marketable securities consist of debt and equity securities. Debt and equity securities designated as available-for-sale are carried at fair value with unrealized gains or losses included as a component of accumulated other comprehensive income in shareholders’ equity, net of applicable taxes. Individual securities classified as available-for-sale are reduced to net realizable value for other-than-temporary declines in market value. In determining if a decline in value is other-than-temporary, Toyota considers the length of time and the extent to which the fair value has been less than the carrying value, the financial condition and prospects of the company and Toyota’s ability and intent to retain its investment in the company for a period of time sufficient to allow for any anticipated recovery in market value. Realized gains and losses, which are determined on the average-cost method, are reflected in the consolidated statements of income when realized.

Security investments in non-public companies -

Security investments in non-public companies are carried at cost as fair value is not readily determinable. If the value of a non-public security investment is estimated to have declined and such decline is judged to be other-than-temporary, Toyota recognizes the impairment of the investment and the carrying value is reduced to its fair value. Determination of impairment is based on the consideration of such factors as operating results, business plans and estimated future cash flows. Fair value is determined principally through the use of the latest financial information.

Finance receivables -

Finance receivables recorded on Toyota’s consolidated balance sheets are comprised of the unpaid principal balance, plus accrued interest, less charge-offs, net of any unearned income and deferred origination costs and the allowance for credit losses. Deferred origination costs are amortized so as to approximate a level rate of return over the term of the related contracts.

The determination of portfolio segments is based primarily on the qualitative consideration of the nature of Toyota’s business operations and finance receivables. The three portfolio segments within finance receivables are as follows:

Retail receivables portfolio segment -

The retail receivables portfolio segment consists of retail installment sales contracts acquired mainly from dealers (“auto loans”) including credit card loans. These contracts acquired must first meet specified credit standards. Thereafter, Toyota retains responsibility for contract collection and administration.

The contract periods of auto loans primarily range from 2 to 7 years. Toyota acquires security interests in the vehicles financed and has the right to repossess vehicles if customers fail to meet their contractual obligations. Almost all auto loans are non-recourse, which relieves the dealers from financial responsibility in the event of repossession.

F-13

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Toyota classifies retail receivables portfolio segment into one class based on common risk characteristics associated with the underlying finance receivables, the similarity of the credit risks, and the quantitative materiality.

Finance lease receivables portfolio segment -

Toyota acquires new vehicle lease contracts originated primarily through dealers. The contract periods of these primarily range from 2 to 5 years. Lease contracts acquired must first meet specified credit standards after which Toyota assumes ownership of the leased vehicle. Toyota is responsible for contract collection and administration during the lease period.

Toyota is generally permitted to take possession of the vehicle upon a default by the lessee. The residual value is estimated at the time the vehicle is first leased. Vehicles returned to Toyota at the end of their leases are sold by auction.

Toyota classifies finance lease receivables portfolio segment into one class based on common risk characteristics associated with the underlying finance receivables and the similarity of the credit risks.

Wholesale and other dealer loan receivables portfolio segment -

Toyota provides wholesale financing to qualified dealers to finance inventories. Toyota acquires security interests in vehicles financed at wholesale. In cases where additional security interests would be required, Toyota takes dealership assets or personal assets, or both, as additional security. If a dealer defaults, Toyota has the right to liquidate any assets acquired and seek legal remedies.

Toyota also makes term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements. These loans are typically secured with liens on real estate, other dealership assets and/or personal assets of the dealers.

Toyota classifies wholesale and other dealer loan receivables portfolio segment into three classes of wholesale, real estate and working capital, based on the risk characteristics associated with the underlying finance receivables.

A receivable account balance is considered impaired when, based on current information and events, it is probable that Toyota will be unable to collect all amounts due according to the terms of the contract. Factors such as payment history, compliance with terms and conditions of the underlying loan agreement and other subjective factors related to the financial stability of the borrower are considered when determining whether a loan is impaired. Impaired finance receivables include certain nonaccrual receivables for which a specific reserve has been assessed. An account modified as a troubled debt restructuring is considered to be impaired. A troubled debt restructuring occurs when an account is modified through a concession to a borrower experiencing financial difficulty.

All classes of wholesale and other dealer loan receivables portfolio segment are placed on nonaccrual status when full payment of principal or interest is in doubt, or when principal or interest is 90 days or more contractually past due, whichever occurs first. Collateral dependent loans are placed on nonaccrual status if collateral is insufficient to cover principal and interest. Interest accrued but not collected at the date a receivable is placed on nonaccrual status is reversed against interest income. In addition, the amortization of net deferred fees is suspended.

F-14

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest income on nonaccrual receivables is recognized only to the extent it is received in cash. Accounts are restored to accrual status only when interest and principal payments are brought current and future payments are reasonably assured. Receivable balances are written-off against the allowance for credit losses when it is probable that a loss has been realized. Retail receivables class and finance lease receivables class are not placed generally on nonaccrual status when principal or interest is 90 days or more past due. However, these receivables are generally written-off against the allowance for credit losses when payments due are no longer expected to be received or the account is 120 days contractually past due, whichever occurs first.

As of March 31, 2012 and 2013, finance receivables on nonaccrual status were as follows:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Retail	¥	2,822	¥	4,443	$	47
Finance leases		958		1,135		12
Wholesale		5,485		1,985		21
Real estate		11,736		4,354		46
Working capital		37		70		1

	¥	21,038	¥	11,987	$	127

As of March 31, 2012 and 2013, finance receivables past due over 90 days and still accruing were as follows:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Retail	¥	24,263	¥	18,442	$	196
Finance leases		7,674		3,464		37

	¥	31,937	¥	21,906	$	233

Allowance for credit losses -

Allowance for credit losses is established to cover probable losses on finance receivables and vehicles and equipment on operating leases, resulting from the inability of customers to make required payments. Provision for credit losses is included in selling, general and administrative expenses.

The allowance for credit losses is based on a systematic, ongoing review and evaluation performed as part of the credit-risk evaluation process, historical loss experience, the size and composition of the portfolios, current economic events and conditions, the estimated fair value and adequacy of collateral and other pertinent factors. Vehicles and equipment on operating leases are not within the scope of accounting guidance governing the disclosure of portfolio segments.

Retail receivables portfolio segment -

Toyota calculates allowance for credit losses to cover probable losses on retail receivables by applying reserve rates to such receivables. Reserve rates are calculated mainly by historical loss experience, current economic events and conditions and other pertinent factors.

F-15

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Finance lease receivables portfolio segment -

Toyota calculates allowance for credit losses to cover probable losses on finance lease receivables by applying reserve rates to such receivables. Reserve rates are calculated mainly by historical loss experience, current economic events and conditions and other pertinent factors such as used car markets.

Wholesale and other dealer loan receivables portfolio segment -

Toyota calculates allowance for credit losses to cover probable losses on wholesale and other dealer loan receivables by applying reserve rates to such receivables. Reserve rates are calculated mainly by financial conditions of the dealers, terms of collateral setting, current economic events and conditions and other pertinent factors.

Toyota establishes specific reserves to cover the estimated losses on individually impaired receivables within the wholesale and other dealer loan receivables portfolio segment. Specific reserves on impaired receivables are determined by the present value of expected future cash flows or the fair value of collateral when it is probable that such receivables will be unable to be fully collected. The fair value of the underlying collateral is used if the receivable is collateral-dependent. The receivable is determined collateral-dependent if the repayment of the loan is expected to be provided by the underlying collateral. For the receivables in which the fair value of the underlying collateral was in excess of the outstanding balance, no allowance was provided.

Troubled debt restructurings in the retail receivables and finance lease receivables portfolio segments are specifically identified as impaired and aggregated with their respective portfolio segments when determining the allowance for credit losses. Impaired loans in the retail receivables and finance lease receivables portfolio segments are insignificant for individual evaluation and Toyota has determined that allowance for credit losses for each of the retail receivables and finance lease receivables portfolio segments would not be materially different if they had been individually evaluated for impairment.

Specific reserves on impaired receivables within the wholesale and other dealer loan receivables portfolio segment are recorded by an increase to the allowance for credit losses based on the related measurement of impairment. Related collateral, if recoverable, is repossessed and sold and the account balance is written-off.

Any shortfall between proceeds received and the carrying cost of repossessed collateral is charged to the allowance. Recoveries are reversed from the allowance for credit losses.

Allowance for residual value losses -

Toyota is exposed to risk of loss on the disposition of off-lease vehicles to the extent that sales proceeds are not sufficient to cover the carrying value of the leased asset at lease termination. Toyota maintains an allowance to cover probable estimated losses related to unguaranteed residual values on its owned portfolio. The allowance is evaluated considering projected vehicle return rates and projected loss severity. Factors considered in the determination of projected return rates and loss severity include historical and market information on used vehicle sales, trends in lease returns and new car markets, and general economic conditions. Management evaluates the foregoing factors, develops several potential loss scenarios, and reviews allowance levels to determine whether reserves are considered adequate to cover the probable range of losses.

The allowance for residual value losses is maintained in amounts considered by Toyota to be appropriate in relation to the estimated losses on its owned portfolio. Upon disposal of the assets, the allowance for residual losses is adjusted for the difference between the net book value and the proceeds from sale.

F-16

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Inventories -

Inventories are valued at cost, not in excess of market, cost being determined on the “average-cost” basis, except for the cost of finished products carried by certain subsidiary companies which is determined on the “specific identification” basis or “last-in, first-out” (“LIFO”) basis. Inventories valued on the LIFO basis totaled ¥220,582 million and ¥220,082 million ($2,340 million) at March 31, 2012 and 2013, respectively. Had the “first-in, first-out” basis been used for those companies using the LIFO basis, inventories would have been ¥56,799 million and ¥66,979 million ($712 million) higher than reported at March 31, 2012 and 2013, respectively.

Property, plant and equipment -

Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation of property, plant and equipment is mainly computed on the declining-balance method for the parent company and Japanese subsidiaries and on the straight-line method for foreign subsidiary companies at rates based on estimated useful lives of the respective assets according to general class, type of construction and use. The estimated useful lives range from 2 to 65 years for buildings and from 2 to 20 years for machinery and equipment.

Vehicles and equipment on operating leases to third parties are originated by dealers and acquired by certain consolidated subsidiaries. Such subsidiaries are also the lessors of certain property that they acquire directly. Vehicles and equipment on operating leases are depreciated primarily on a straight-line method over the lease term, generally from 2 to 5 years, to the estimated residual value. Incremental direct costs incurred in connection with the acquisition of operating lease contracts are capitalized and amortized on a straight-line method over the lease term.

Long-lived assets -

Toyota reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset group exceeds the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the carrying value of the asset group over its fair value. Fair value is determined mainly using a discounted cash flow valuation method.

Goodwill and intangible assets -

Goodwill is not material to Toyota’s consolidated balance sheets.

Intangible assets consist mainly of software. Intangible assets with a definite life are amortized on a straight-line basis with estimated useful lives mainly of 5 years. Intangible assets with an indefinite life are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable.

An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows used in determining the fair value of the asset. The amount of the impairment loss to be recorded is generally determined by the difference between the fair value of the asset using a discounted cash flow valuation method and the current book value.

F-17

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Employee benefit obligations -

Toyota has both defined benefit and defined contribution plans for employees’ retirement benefits. Retirement benefit obligations are measured by actuarial calculations in accordance with U.S.GAAP. The funded status of the defined benefit postretirement plans is recognized on the consolidated balance sheets as prepaid pension and severance costs or accrued pension and severance costs, and the funded status change is recognized in the year in which it occurs through other comprehensive income.

Environmental matters -

Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures relating to existing conditions caused by past operations, which do not contribute to current or future revenues, are expensed. Liabilities for remediation costs are recorded when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or Toyota’s commitment to a plan of action. The cost of each environmental liability is estimated by using current technology available and various engineering, financial and legal specialists within Toyota based on current law. Such liabilities do not reflect any offset for possible recoveries from insurance companies and are not discounted. There were no material changes in these liabilities for all periods presented.

Income taxes -

The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Derivative financial instruments -

Toyota employs derivative financial instruments, including forward foreign currency exchange contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. All derivative financial instruments are recorded on the consolidated balance sheets at fair value, taking into consideration the effects of legally enforceable master netting agreements that allow us to net settle positive and negative positions and offset cash collateral held with the same counterparty on a net basis. Toyota does not use derivatives for speculation or trading purposes. Changes in the fair value of derivatives are recorded each period in current earnings or through other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and the type of hedge transaction. The ineffective portion of all hedges is recognized currently in operations.

Net income attributable to Toyota Motor Corporation per share -

Basic net income attributable to Toyota Motor Corporation per common share is calculated by dividing net income attributable to Toyota Motor Corporation by the weighted-average number of shares outstanding during the reported period. The calculation of diluted net income attributable to Toyota Motor Corporation per common share is similar to the calculation of basic net income attributable to Toyota Motor Corporation per share, except that the weighted-average number of shares outstanding includes the additional dilution from the assumed exercise of dilutive stock options.

F-18

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-based compensation -

Toyota measures compensation expense for its stock-based compensation plan based on the grant-date fair value of the award, and accounts for the award.

Other comprehensive income -

Other comprehensive income refers to revenues, expenses, gains and losses that, under U.S.GAAP are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity. Toyota’s other comprehensive income is primarily comprised of unrealized gains/losses on marketable securities designated as available-for-sale, foreign currency translation adjustments and adjustments attributed to pension liabilities associated with Toyota’s defined benefit pension plans.

Accounting changes -

In June 2011, FASB issued updated guidance on the presentation of comprehensive income. This guidance requires to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statements of comprehensive income or in two separate but consecutive statements. Toyota adopted this guidance from the interim period within the fiscal year, begun after December 15, 2011. The adoption of this guidance did not have a material impact on Toyota’s consolidated financial statements.

Recent pronouncements to be adopted in future periods -

In February 2013, FASB issued updated guidance on the presentation of items reclassified out of accumulated other comprehensive income. This guidance requires to present, either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified out of each component of accumulated other comprehensive income based on its source. This guidance is effective for fiscal year beginning on or after December 15, 2012, and for interim period within the fiscal year. Management does not expect this guidance to have a material impact on Toyota’s consolidated financial statements.

Reclassifications -

Certain prior year amounts have been reclassified to conform to the presentations as of and for the year ended March 31, 2013.

3. U.S. dollar amounts:

U.S. dollar amounts presented in the consolidated financial statements and related notes are included solely for the convenience of the reader and are unaudited. These translations should not be construed as representations that the yen amounts actually represent, or have been or could be converted into, U.S. dollars. For this purpose, the rate of ¥94.05 = U.S. $1, the approximate current exchange rate at March 31, 2013, was used for the translation of the accompanying consolidated financial amounts of Toyota as of and for the year ended March 31, 2013.

F-19

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Supplemental cash flow information:

Cash payments for income taxes were ¥211,487 million, ¥282,440 million and ¥331,007 million ($3,519 million) for the years ended March 31, 2011, 2012 and 2013, respectively. Interest payments during the years ended March 31, 2011, 2012 and 2013 were ¥382,903 million, ¥365,109 million and ¥325,575 million ($3,462 million), respectively.

Capital lease obligations of ¥10,478 million, ¥5,847 million and ¥3,749 million ($40 million) were incurred for the years ended March 31, 2011, 2012 and 2013, respectively.

5. Acquisitions and dispositions:

During the years ended March 31, 2011, 2012 and 2013, Toyota made several acquisitions and dispositions, however the assets and liabilities acquired or transferred were not material.

6. Marketable securities and other securities investments:

Marketable securities and other securities investments include public and corporate bonds and common stocks for which the aggregate cost, gross unrealized gains and losses and fair value are as follows:


	Yen in millions
	March 31, 2012
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Available-for-sale
Public and corporate bonds	¥	3,606,290	¥	74,357	¥	51,147	¥	3,629,500
Common stocks		605,889		444,073		15,643		1,034,319
Other		449,393		19,974		11		469,356

Total	¥	4,661,572	¥	538,404	¥	66,801	¥	5,133,175

Securities not practicable to determine fair value
Public and corporate bonds	¥	22,047
Common stocks		79,420

Total	¥	101,467


	Yen in millions
	March 31, 2013
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Available-for-sale
Public and corporate bonds	¥	4,350,942	¥	211,070	¥	8,866	¥	4,553,146
Common stocks		599,371		804,405		2,593		1,401,183
Other		537,272		31,416		2		568,686

Total	¥	5,487,585	¥	1,046,891	¥	11,461	¥	6,523,015

Securities not practicable to determine fair value
Public and corporate bonds	¥	20,148
Common stocks		79,082

Total	¥	99,230

F-20

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	U.S. dollars in millions
	March 31, 2013
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Available-for-sale
Public and corporate bonds	$	46,262	$	2,244	$	94	$	48,412
Common stocks		6,373		8,553		28		14,898
Other		5,713		334		0		6,047

Total	$	58,348	$	11,131	$	122	$	69,357

Securities not practicable to determine fair value
Public and corporate bonds	$	214
Common stocks		841

Total	$	1,055

Public and corporate bonds included in available-for-sale represent 60% of Japanese bonds, and 40% of U.S., European and other bonds as of March 31, 2012, and 49% of Japanese bonds, and 51% of U.S., European and other bonds as of March 31, 2013. Listed stocks on the Japanese stock markets represent 83% and 85% of common stocks which are included in available-for-sale as of March 31, 2012 and 2013, respectively. Public and corporate bonds include primarily government bonds, and “Other” includes primarily investment trusts.

Unrealized losses continuing over a 12 month period or more in the aggregate were not material at March 31, 2012 and 2013.

As of March 31, 2012 and 2013, maturities of public and corporate bonds and other included in available-for-sale are mainly from 1 to 10 years.

Proceeds from sales of available-for-sale securities were ¥189,037 million, ¥162,160 million and ¥35,178 million ($374 million) for the years ended March 31, 2011, 2012 and 2013, respectively. On those sales, gross realized gains were ¥8,974 million, ¥4,822 million and ¥1,048 million ($11 million) and gross realized losses were ¥87 million, ¥15 million and ¥31 million ($0 million), respectively.

During the years ended March 31, 2011, 2012 and 2013, Toyota recognized impairment losses on available-for-sale securities of ¥7,915 million, ¥53,831 million and ¥2,104 million ($22 million), respectively, which are included in “Other income (loss), net” in the accompanying consolidated statements of income.

In the ordinary course of business, Toyota maintains long-term investment securities, included in “Marketable securities and other securities investments” and issued by a number of non-public companies which are recorded at cost, as their fair values were not readily determinable. Management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial viability of the underlying companies and the prevailing market conditions in which these companies operate to determine if Toyota’s investment in each individual company is impaired and whether the impairment is other-than-temporary. Toyota periodically performs this impairment test for significant investments recorded at cost. If the impairment is determined to be other-than-temporary, the carrying value of the investment is written-down by the impaired amount and the losses are recognized currently in operations.

F-21

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

7. Finance receivables:

Finance receivables consist of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Retail	¥	7,248,793		¥	9,047,782		$	96,202
Finance leases		955,430			1,029,887			10,950
Wholesale and other dealer loans		2,033,954			2,615,728			27,812

		10,238,177			12,693,397			134,964
Deferred origination costs		105,533			135,398			1,439
Unearned income		(494,123	)		(628,340	)		(6,681	)
Allowance for credit losses
Retail		(77,353	)		(83,858	)		(892	)
Finance leases		(30,637	)		(28,928	)		(307	)
Wholesale and other dealer loans		(24,238	)		(26,243	)		(279	)

Total allowance for credit losses		(132,228	)		(139,029	)		(1,478	)

Total finance receivables, net		9,717,359			12,061,426			128,244
Less - Current portion		(4,114,897	)		(5,117,660	)		(54,414	)

Noncurrent finance receivables, net	¥	5,602,462		¥	6,943,766		$	73,830

Finance receivables were geographically distributed as follows: in North America 58.1%, in Japan 12.0%, in Europe 10.3%, in Asia 7.1% and in Other 12.5% as of March 31, 2012, and in North America 57.6%, in Europe 10.0%, in Japan 9.9%, in Asia 9.5% and in Other 13.0% as of March 31, 2013.

The contractual maturities of retail receivables, the future minimum lease payments on finance leases and the contractual maturities of wholesale and other dealer loans at March 31, 2013 are summarized as follows:


	Yen in millions						U.S. dollars in millions
Years ending March 31,	Retail		Finance leases		Wholesale and other dealer loans		Retail		Finance leases		Wholesale and other dealer loans
2014	¥	3,032,542	¥	285,324	¥	2,040,442	$	32,244	$	3,034	$	21,695
2015		2,218,871		192,978		149,091		23,593		2,052		1,585
2016		1,721,430		162,639		115,640		18,303		1,729		1,230
2017		1,127,558		65,767		125,180		11,989		699		1,331
2018		609,255		29,716		119,497		6,478		316		1,271
Thereafter		338,126		6,447		65,878		3,595		69		700

	¥	9,047,782	¥	742,871	¥	2,615,728	$	96,202	$	7,899	$	27,812

F-22

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Finance leases consist of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Minimum lease payments	¥	688,642		¥	742,871		$	7,899
Estimated unguaranteed residual values		266,788			287,016			3,051

		955,430			1,029,887			10,950
Deferred origination costs		3,722			3,577			38
Less - Unearned income		(90,887	)		(87,537	)		(931	)
Less - Allowance for credit losses		(30,637	)		(28,928	)		(307	)

Finance leases, net	¥	837,628		¥	916,999		$	9,750

Toyota is exposed to credit risk on Toyota’s finance receivables. Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with Toyota or otherwise fail to perform as agreed. Toyota estimates allowance for credit losses by variety of credit-risk evaluation process to cover probable and estimable losses above.

The table below shows the amount of the finance receivables segregated into aging categories based on the number of days outstanding as of March 31, 2012 and 2013:


	Yen in millions
	March 31, 2012
	Retail		Finance leases		Wholesale		Real estate		Working capital
Current	¥	7,146,365	¥	939,345	¥	923,642	¥	535,296	¥	574,671
31-60 days past due		64,314		5,766		3		—		70
61-90 days past due		13,851		2,645		—		—		—
Over 90 days past due		24,263		7,674		53		98		121

Total	¥	7,248,793	¥	955,430	¥	923,698	¥	535,394	¥	574,862


	Yen in millions
	March 31, 2013
	Retail		Finance leases		Wholesale		Real estate		Working capital
Current	¥	8,923,588	¥	1,021,074	¥	1,305,953	¥	658,114	¥	651,553
31-60 days past due		84,354		3,106		45		63		—
61-90 days past due		17,312		1,661		—		—		—
Over 90 days past due		22,528		4,046		—		—		—

Total	¥	9,047,782	¥	1,029,887	¥	1,305,998	¥	658,177	¥	651,553


	U.S. dollars in millions
	March 31, 2013
	Retail		Finance leases		Wholesale		Real estate		Working capital
Current	$	94,881	$	10,857	$	13,886	$	6,997	$	6,928
31-60 days past due		897		33		0		1		—
61-90 days past due		184		17		—		—		—
Over 90 days past due		240		43		—		—		—

Total	$	96,202	$	10,950	$	13,886	$	6,998	$	6,928

F-23

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The tables below show the recorded investment for each credit quality of the finance receivable within the wholesale and other dealer loan receivables portfolio segment in the United States and other regions as of March 31, 2012 and 2013:

United States

The wholesale and other dealer loan receivables portfolio segment is primarily segregated into credit qualities below based on internal risk assessments by dealers.

Performing: Account not classified as either Credit Watch, At Risk or Default

Credit Watch: Account designated for elevated attention

At Risk:

Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors

Default:

Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements


	Yen in millions
	March 31, 2012
	Wholesale		Real estate		Working capital		Total
Performing	¥	513,632	¥	307,867	¥	116,871	¥	938,370
Credit Watch		55,513		38,382		5,014		98,909
At Risk		6,394		12,157		618		19,169
Default		466		30		423		919

Total	¥	576,005	¥	358,436	¥	122,926	¥	1,057,367


	Yen in millions
	March 31, 2013
	Wholesale		Real estate		Working capital		Total
Performing	¥	720,308	¥	373,176	¥	152,048	¥	1,245,532
Credit Watch		93,643		54,801		7,485		155,929
At Risk		3,114		2,651		2,641		8,406
Default		106		131		193		430

Total	¥	817,171	¥	430,759	¥	162,367	¥	1,410,297


	U.S. dollars in millions
	March 31, 2013
	Wholesale		Real estate		Working capital		Total
Performing	$	7,659	$	3,968	$	1,616	$	13,243
Credit Watch		996		583		80		1,659
At Risk		33		28		28		89
Default		1		1		2		4

Total	$	8,689	$	4,580	$	1,726	$	14,995

F-24

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other regions

Credit qualities of the wholesale and other dealer loan receivables portfolio segment in other regions are also monitored based on internal risk assessments by dealers on a consistent basis as in the United States. These accounts classified as “Credit Watch” or “At Risk” were not significant in other regions, and consequently the tables below summarize information for two categories, “Performing” and “Default”.


	Yen in millions
	March 31, 2012
	Wholesale		Real estate		Working capital		Total
Performing	¥	330,264	¥	170,886	¥	451,505	¥	952,655
Default		17,429		6,072		431		23,932

Total	¥	347,693	¥	176,958	¥	451,936	¥	976,587


	Yen in millions
	March 31, 2013
	Wholesale		Real estate		Working capital		Total
Performing	¥	485,464	¥	225,808	¥	488,679	¥	1,199,951
Default		3,363		1,610		507		5,480

Total	¥	488,827	¥	227,418	¥	489,186	¥	1,205,431


	U.S. dollars in millions
	March 31, 2013
	Wholesale		Real estate		Working capital		Total
Performing	$	5,161	$	2,401	$	5,196	$	12,758
Default		36		17		6		59

Total	$	5,197	$	2,418	$	5,202	$	12,817

F-25

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The tables below summarize information about impaired finance receivables:


	Yen in millions
	Recorded investment				Unpaid principal balance				Individually evaluated allowance
	March 31,				March 31,				March 31,
	2012		2013		2012		2013		2012		2013
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	¥	8,105	¥	11,967	¥	8,105	¥	11,967	¥	2,716	¥	1,450
Real estate		16,429		6,726		16,429		6,726		4,252		1,721
Working capital		995		5,246		995		5,246		573		3,691

Total	¥	25,529	¥	23,939	¥	25,529	¥	23,939	¥	7,541	¥	6,862

Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	¥	14,015	¥	6,236	¥	14,015	¥	6,236
Real estate		15		9,165		15		9,165
Working capital		38		496		38		496

Total	¥	14,068	¥	15,897	¥	14,068	¥	15,897

Impaired account balances aggregated and evaluated for impairment:
Retail	¥	42,438	¥	40,487	¥	41,790	¥	39,797
Finance leases		325		103		180		85

Total	¥	42,763	¥	40,590	¥	41,970	¥	39,882

Total impaired account balances:
Retail	¥	42,438	¥	40,487	¥	41,790	¥	39,797
Finance leases		325		103		180		85
Wholesale		22,120		18,203		22,120		18,203
Real estate		16,444		15,891		16,444		15,891
Working capital		1,033		5,742		1,033		5,742

Total	¥	82,360	¥	80,426	¥	81,567	¥	79,718


	Yen in millions
	Average impaired finance receivables				Interest income recognized
	For the years ended March 31,				For the years ended March 31,
	2012		2013		2012		2013
Total impaired account balances:
Retail	¥	44,362	¥	39,616	¥	3,700	¥	3,056
Finance leases		279		161		7		1
Wholesale		18,734		20,618		79		166
Real estate		16,137		15,574		395		415
Working capital		2,592		3,820		79		83

Total	¥	82,104	¥	79,789	¥	4,260	¥	3,721

F-26

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	U.S. dollars in millions
	March 31, 2013
	Recorded investment		Unpaid principal balance		Individually evaluated allowance
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	127	$	127	$	16
Real estate		72		72		18
Working capital		56		56		39

Total	$	255	$	255	$	73

Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	67	$	67
Real estate		97		97
Working capital		5		5

Total	$	169	$	169

Impaired account balances aggregated and evaluated for impairment:
Retail	$	430	$	423
Finance leases		1		1

Total	$	431	$	424

Total impaired account balances:
Retail	$	430	$	423
Finance leases		1		1
Wholesale		194		194
Real estate		169		169
Working capital		61		61

Total	$	855	$	848


	U.S. dollars in millions
	For the year ended March 31, 2013
	Average impaired finance receivables		Interest income recognized
Total impaired account balances:
Retail	$	421	$	33
Finance leases		2		0
Wholesale		219		2
Real estate		165		4
Working capital		41		1

Total	$	848	$	40

The amount of finance receivables modified as a troubled debt restructuring for the year ended March 31, 2013 was not significant for all classes of finance receivables. Finance receivables modified as troubled debt restructurings for the year ended March 31, 2013 and for which there was a payment default were not significant for all classes of such receivables.

F-27

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Other receivables:

Other receivables relate to arrangements with certain component manufacturers whereby Toyota procures inventory for these component manufactures and is reimbursed for the related purchases.

9. Inventories:

Inventories consist of the following:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Finished goods	¥	981,612	¥	1,007,659	$	10,714
Raw materials		347,878		388,780		4,134
Work in process		221,036		235,476		2,504
Supplies and other		71,756		83,871		891

Total	¥	1,622,282	¥	1,715,786	$	18,243

10. Vehicles and equipment on operating leases:

Vehicles and equipment on operating leases consist of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Vehicles	¥	2,536,595		¥	2,999,294		$	31,890
Equipment		87,848			104,351			1,110
Less - Deferred income and other		(49,090	)		(65,634	)		(698	)

		2,575,353			3,038,011			32,302
Less - Accumulated depreciation		(667,406	)		(749,238	)		(7,966	)
Less - Allowance for credit losses		(8,135	)		(8,020	)		(86	)

Vehicles and equipment on operating leases, net	¥	1,899,812		¥	2,280,753		$	24,250

Rental income from vehicles and equipment on operating leases was ¥475,472 million, ¥451,361 million and ¥476,935 million ($5,071 million) for the years ended March 31, 2011, 2012 and 2013, respectively. Future minimum rentals from vehicles and equipment on operating leases are due in installments as follows:


Years ending March 31,	Yen in millions		U.S. dollars in millions
2014	¥	460,685	$	4,898
2015		302,690		3,218
2016		140,865		1,498
2017		38,042		405
2018		11,164		119
Thereafter		4,126		44

Total minimum future rentals	¥	957,572	$	10,182

The future minimum rentals as shown above should not be considered indicative of future cash collections.

F-28

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

11. Allowance for doubtful accounts and credit losses:

An analysis of activity within the allowance for doubtful accounts relating to trade accounts and notes receivable for the years ended March 31, 2011, 2012 and 2013 is as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Allowance for doubtful accounts at beginning of year	¥	46,706		¥	44,047		¥	44,097		$	469
Provision for doubtful accounts, net of reversal		1,806			5,843			1,745			19
Write-offs		(2,690	)		(699	)		(457	)		(5	)
Other		(1,775	)		(5,094	)		759			8

Allowance for doubtful accounts at end of year	¥	44,047		¥	44,097		¥	46,144		$	491

The other amount includes the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest and currency translation adjustments for the years ended March 31, 2011, 2012 and 2013.

A portion of the allowance for doubtful accounts balance at March 31, 2012 and 2013 totaling ¥31,093 million and ¥30,269 million ($322 million), respectively, is attributed to certain non-current receivable balances which are reported as other assets in the consolidated balance sheets.

An analysis of the allowance for credit losses relating to finance receivables and vehicles and equipment on operating leases for the years ended March 31, 2011, 2012 and 2013 is as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Allowance for credit losses at beginning of year	¥	232,479		¥	167,615		¥	140,363		$	1,493
Provision for credit losses, net of reversal		2,334			3,780			25,622			272
Charge-offs		(86,115	)		(51,578	)		(56,701	)		(603	)
Recoveries		18,268			16,415			14,690			156
Other		649			4,131			23,075			246

Allowance for credit losses at end of year	¥	167,615		¥	140,363		¥	147,049		$	1,564

The other amount primarily includes the impact of currency translation adjustments for the years ended March 31, 2011, 2012 and 2013.

F-29

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

An analysis of the allowance for credit losses above relating to retail receivables portfolio segment, finance lease receivables portfolio segment and wholesale and other dealer loan receivables portfolio segment for the years ended March 31, 2012 and 2013 are as follows:


	Yen in millions
	For the year ended March 31, 2012
	Retail			Finance leases			Wholesale and Other dealer loans
Allowance for credit losses at beginning of year	¥	92,199		¥	36,024		¥	28,580
Provision for credit losses, net of reversal		13,569			(4,508	)		(4,767	)
Charge-offs		(44,742	)		(2,499	)		(305	)
Recoveries		14,051			718			16
Other		2,276			902			714

Allowance for credit losses at end of year	¥	77,353		¥	30,637		¥	24,238


	Yen in millions
	For the year ended March 31, 2013
	Retail			Finance leases			Wholesale and Other dealer loans
Allowance for credit losses at beginning of year	¥	77,353		¥	30,637		¥	24,238
Provision for credit losses, net of reversal		29,079			(4,063	)		(2,006	)
Charge-offs		(48,528	)		(2,775	)		(110	)
Recoveries		12,795			590			3
Other		13,159			4,539			4,118

Allowance for credit losses at end of year	¥	83,858		¥	28,928		¥	26,243


	U.S. dollars in millions
	For the year ended March 31, 2013
	Retail			Finance leases			Wholesale and Other dealer loans
Allowance for credit losses at beginning of year	$	823		$	326		$	257
Provision for credit losses, net of reversal		309			(43	)		(21	)
Charge-offs		(516	)		(30	)		(1	)
Recoveries		136			6			0
Other		140			48			44

Allowance for credit losses at end of year	$	892		$	307		$	279

F-30

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

12. Affiliated companies and variable interest entities:

Investments in and transactions with affiliated companies -

Summarized financial information for affiliated companies accounted for by the equity method is shown below:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Current assets	¥	9,112,895	¥	9,634,769	$	102,443
Noncurrent assets		6,914,208		8,495,078		90,325

Total assets	¥	16,027,103	¥	18,129,847	$	192,768

Current liabilities	¥	5,847,495	¥	6,366,002	$	67,687
Long-term liabilities and noncontrolling interests		4,032,045		4,541,328		48,286
Affiliated companies accounted for by the equity method shareholders’ equity		6,147,563		7,222,517		76,795

Total liabilities and shareholders’ equity	¥	16,027,103	¥	18,129,847	$	192,768

Toyota’s share of affiliated companies accounted for by the equity method shareholders’ equity	¥	1,914,129	¥	2,102,584	$	22,356

Number of affiliated companies accounted for by the equity method at end of period		57		56


	Yen in millions						U.S. dollars in millions
	For the years ended March 31,						For the year ended March 31,
	2011		2012		2013		2013
Net revenues	¥	21,874,143	¥	22,211,233	¥	24,242,046	$	257,757

Gross profit	¥	2,342,706	¥	2,297,660	¥	2,620,892	$	27,867

Net income attributable to affiliated companies accounted for by the equity method	¥	641,771	¥	554,983	¥	705,249	$	7,499

Equity in earnings of affiliated companies attributable to Toyota Motor Corporation	¥	215,016	¥	197,701	¥	231,519	$	2,461

F-31

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Entities comprising a significant portion of Toyota’s investment in affiliated companies and percentage of ownership are presented below:


	Percentage of ownership
	March 31,
Name of affiliated companies	2012			2013
Denso Corporation		24.9	%		24.9	%
Toyota Industries Corporation		24.8	%		24.8	%
Aisin Seiki Co., Ltd.		23.4	%		23.4	%
Toyota Tsusho Corporation		22.1	%		22.1	%
Toyoda Gosei Co., Ltd.		43.1	%		43.0	%

Certain affiliated companies accounted for by the equity method with carrying amounts of ¥1,467,575 million and ¥1,582,988 million ($16,831 million) at March 31, 2012 and 2013, respectively, were quoted on various established markets at an aggregate value of ¥1,477,413 million and ¥1,954,347 million ($20,780 million), respectively. Toyota evaluated its investments in affiliated companies, considering the length of time and the extent to which the quoted market prices have been less than the carrying amounts, the financial condition and near-term prospects of the affiliated companies and Toyota’s ability and intent to retain those investments in the companies for a period of time. Toyota did not recognize any impairment loss for the years ended March 31, 2011, 2012 and 2013.

Account balances and transactions with affiliated companies are presented below:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Trade accounts and notes receivable, and other receivables	¥	283,497	¥	252,708	$	2,687
Accounts payable and other payables		707,955		592,027		6,295


	Yen in millions						U.S. dollars in millions
	For the years ended March 31,						For the year ended March 31,
	2011		2012		2013		2013
Net revenues	¥	1,612,397	¥	1,536,326	¥	1,926,854	$	20,488
Purchases		3,655,185		3,785,284		4,020,138		42,745

Dividends from affiliated companies accounted for by the equity method for the years ended March 31, 2011, 2012 and 2013 were ¥103,169 million, ¥122,950 million and ¥126,977 million ($1,350 million), respectively.

Toyota does not have any significant related party transactions other than transactions with affiliated companies in the ordinary course of business.

Variable Interest Entities -

Toyota enters into securitization transactions using special-purpose entities, that are considered variable interest entities (“VIEs”). Although the finance receivables and vehicles on operating leases related to

F-32

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

securitization transactions have been legally sold to the VIEs, Toyota has both the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance and the obligation to absorb losses of the VIEs or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As a result, Toyota is considered the primary beneficiary of the VIEs and therefore consolidates the VIEs.

The consolidated securitization VIEs have ¥1,208,136 million in retail finance receivables, ¥65,541 million in restricted cash and ¥1,040,816 million in secured debt as of March 31, 2012 and have ¥1,135,513 million ($12,074 million) in retail finance receivables, ¥41,664 million ($443 million) in vehicles on operating leases, ¥58,770 million ($625 million) in restricted cash and ¥978,095 million ($10,400 million) in secured debt as of March 31, 2013. Risks to which Toyota is exposed including credit, interest rate, and/or prepayment risks are not incremental compared with the situation before Toyota enters into securitization transactions.

As for VIEs other than those specified above, neither the aggregate size of these VIEs nor Toyota’s involvements in these VIEs are material to Toyota’s consolidated financial statements.

13. Short-term borrowings and long-term debt:

Short-term borrowings at March 31, 2012 and 2013 consist of the following:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Loans, principally from banks, with a weighted-average interest at March 31, 2012 and March 31, 2013 of 1.93% and of 2.31% per annum, respectively	¥	1,158,556	¥	1,062,233	$	11,294
Commercial paper with a weighted-average interest at March 31, 2012 and March 31, 2013 of 0.72% and of 0.52% per annum, respectively		2,292,093		3,027,295		32,188

	¥	3,450,649	¥	4,089,528	$	43,482

As of March 31, 2013, Toyota has unused short-term lines of credit amounting to ¥2,063,263 million ($21,938 million) of which ¥455,180 million ($4,840 million) related to commercial paper programs. Under these programs, Toyota is authorized to obtain short-term financing at prevailing interest rates for periods not in excess of 360 days.

F-33

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-term debt at March 31, 2012 and 2013 comprises the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Unsecured loans, representing obligations principally to banks, due 2012 to 2029 in 2012 and due 2013 to 2029 in 2013 with interest ranging from 0.00% to 32.00% per annum in 2012 and from 0.00% to 27.30% per annum in 2013	¥	3,064,785		¥	3,142,411		$	33,412
Secured loans, representing obligations principally to finance receivables securitization due 2012 to 2050 in 2012 and due 2013 to 2050 in 2013 with interest ranging from 0.37% to 11.23% per annum in 2012 and from 0.10% to 11.75% per annum in 2013		855,015			993,019			10,558
Medium-term notes of consolidated subsidiaries, due 2012 to 2047 in 2012 and due 2013 to 2047 in 2013 with interest ranging from 0.13% to 8.50% per annum in 2012 and from 0.13% to 9.40% per annum in 2013		3,137,289			4,502,787			47,876
Unsecured notes of parent company, due 2012 to 2019 in 2012 and due 2013 to 2019 in 2013 with interest ranging from 1.07% to 3.00% per annum in 2012 and from 0.19% to 3.00% per annum in 2013		530,000			460,000			4,891
Unsecured notes of consolidated subsidiaries, due 2012 to 2031 in 2012 and due 2013 to 2031 in 2013 with interest ranging from 0.17% to 24.90% per annum in 2012 and from 0.13% to 23.00% per annum in 2013		946,460			922,636			9,810
Long-term capital lease obligations, due 2012 to 2030 in 2012 and due 2013 to 2030 in 2013 with interest ranging from 0.38% to 14.40% per annum in 2012 and from 0.40% to 14.73% per annum in 2013		21,348			21,399			228

		8,554,897			10,042,252			106,775
Less - Current portion due within one year		(2,512,620	)		(2,704,428	)		(28,755	)

	¥	6,042,277		¥	7,337,824		$	78,020

As of March 31, 2013, approximately 40%, 17%, 13% and 30% of long-term debt are denominated in U.S. dollars, Japanese yen, Australian dollars and other currencies, respectively.

As of March 31, 2013, property, plant and equipment with a book value of ¥91,834 million ($976 million) and in addition, other assets aggregating ¥1,141,199 million ($12,134 million) were pledged as collateral mainly for certain debt obligations of subsidiaries. These other assets principally consist of securitized finance receivables.

The aggregate amounts of annual maturities of long-term debt during the next five years are as follows:


Years ending March 31,	Yen in millions		U.S. dollars in millions
2014	¥	2,704,428		$28,755
2015		1,703,219		18,110
2016		2,090,251		22,225
2017		1,207,091		12,835
2018		1,341,901		14,268

F-34

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Standard agreements with certain banks in Japan include provisions that collateral (including sums on deposit with such banks) or guarantees will be furnished upon the banks’ request and that any collateral furnished, pursuant to such agreements or otherwise, will be applicable to all present or future indebtedness to such banks. During the year ended March 31, 2013, Toyota has not received any significant such requests from these banks.

As of March 31, 2013, Toyota has unused long-term lines of credit amounting to ¥7,252,081 million ($77,109 million).

14. Product warranties and recalls and other safety measures:

Toyota provides product warranties for certain defects mainly resulting from manufacturing based on warranty contracts with its customers at the time of sale of products. Toyota accrues estimated warranty costs to be incurred in the future in accordance with the warranty contracts. In addition to product warranties, Toyota initiates recalls and other safety measures to repair or to replace parts which might be expected to fail from products safety perspectives or customer satisfaction standpoints. Toyota accrues for costs of recalls and other safety measures at the time of vehicle sale based on the amount estimated from historical experience.

Liabilities for product warranties and liabilities for recalls and other safety measures have been combined into a single table showing an aggregate liability for quality assurances due to the fact that both are liabilities for costs to repair or replace defects of vehicles and the amounts incurred for recalls and other safety measures may affect the amounts incurred for product warranties and vice versa.

Liabilities for quality assurances are included in “Accrued expenses” in the consolidated balance sheets.

The net changes in liabilities for quality assurances above for the years ended March 31, 2011, 2012 and 2013 consist of the following:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Liabilities for quality assurances at beginning of year	¥	680,408		¥	764,369		¥	839,834		$	8,930
Payments made during year		(476,771	)		(348,214	)		(344,279	)		(3,661	)
Provision for quality assurances		588,224			436,891			491,542			5,226
Changes relating to pre-existing quality assurances		(1,701	)		(7,827	)		(8,383	)		(89	)
Other		(25,791	)		(5,385	)		24,309			259

Liabilities for quality assurances at end of year	¥	764,369		¥	839,834		¥	1,003,023		$	10,665

The other amount primarily includes the impact of currency translation adjustments and the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest.

F-35

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below shows the net changes in liabilities for recalls and other safety measures which are comprised in liabilities for quality assurances above for the years ended March 31, 2011, 2012 and 2013.


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Liabilities for recalls and other safety measures at beginning of year	¥	301,422		¥	389,499		¥	468,697		$	4,984
Payments made during year		(263,096	)		(159,344	)		(180,925	)		(1,924	)
Provision for recalls and other safety measures		356,749			237,907			270,883			2,880
Other		(5,576	)		635			7,751			82

Liabilities for recalls and other safety measures at end of year	¥	389,499		¥	468,697		¥	566,406		$	6,022

15. Other payables:

Other payables are mainly related to purchases of property, plant and equipment and non-manufacturing purchases.

16. Income taxes:

The components of income (loss) before income taxes comprise the following:


	Yen in millions								U.S. dollars in millions
	For the years ended March 31,								For the year ended March 31,
	2011			2012			2013		2013
Income (loss) before income taxes:
Parent company and domestic subsidiaries	¥	(278,229	)	¥	(177,852	)	¥	651,852	$	6,931
Foreign subsidiaries		841,519			610,725			751,797		7,994

	¥	563,290		¥	432,873		¥	1,403,649	$	14,925

F-36

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The provision for income taxes consists of the following:


	Yen in millions								U.S. dollars in millions
	For the years ended March 31,								For the year ended March 31,
	2011			2012			2013		2013
Current income tax expense:
Parent company and domestic subsidiaries	¥	85,290		¥	111,363		¥	178,662	$	1,900
Foreign subsidiaries		141,821			144,514			213,016		2,265

Total current		227,111			255,877			391,678		4,165

Deferred income tax expense (benefit):
Parent company and domestic subsidiaries		(44,268	)		(57,940	)		140,041		1,489
Foreign subsidiaries		129,978			64,335			19,967		212

Total deferred		85,710			6,395			160,008		1,701

Total provision	¥	312,821		¥	262,272		¥	551,686	$	5,866

Toyota is subject to a number of different income taxes which, in the aggregate, indicate a statutory rate in Japan of approximately 40.2%, 40.2% and 37.6% for the years ended March 31, 2011, 2012 and 2013, respectively. The statutory tax rates in effect for the year in which the temporary differences are expected to reverse are used to calculate the tax effects of temporary differences which are expected to reverse in the future years. Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:


	For the years ended March 31,
	2011			2012			2013
Statutory tax rate		40.2	%		40.2	%		37.6	%
Increase (reduction) in taxes resulting from:
Non-deductible expenses		2.2			1.7			0.6
Deferred tax liabilities on undistributed earnings of foreign subsidiaries		4.8			4.7			1.8
Deferred tax liabilities on undistributed earnings of affiliated companies accounted for by the equity method		12.6			9.2			4.1
Valuation allowance		8.1			14.9			1.7
Tax credits		(2.6	)		(1.8	)		(3.1	)
The difference between the statutory tax rate in Japan and that of foreign subsidiaries		(9.3	)		(9.6	)		(4.8	)
Unrecognized tax benefits adjustments		(0.6	)		2.5			0.1
Other		0.1			(1.2	)		1.3

Effective income tax rate		55.5	%		60.6	%		39.3	%

F-37

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Significant components of deferred tax assets and liabilities are as follows:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Deferred tax assets
Accrued pension and severance costs	¥	236,978		¥	230,021		$	2,446
Accrued expenses and liabilities for quality assurances		369,985			480,428			5,108
Other accrued employees’ compensation		106,265			108,599			1,155
Operating loss carryforwards for tax purposes		337,992			160,936			1,711
Tax credit carryforwards		108,426			101,251			1,076
Property, plant and equipment and other assets		147,906			151,043			1,606
Other		296,934			227,596			2,420

Gross deferred tax assets		1,604,486			1,459,874			15,522
Less - Valuation allowance		(309,268	)		(284,835	)		(3,028	)

Total deferred tax assets		1,295,218			1,175,039			12,494

Deferred tax liabilities
Unrealized gains on securities		(210,475	)		(388,901	)		(4,135	)
Undistributed earnings of foreign subsidiaries		(27,581	)		(25,713	)		(274	)
Undistributed earnings of affiliated companies accounted for by the equity method		(504,776	)		(567,054	)		(6,029	)
Basis difference of acquired assets		(34,120	)		(35,647	)		(379	)
Lease transactions		(576,809	)		(650,389	)		(6,915	)
Other		(54,749	)		(66,923	)		(712	)

Gross deferred tax liabilities		(1,408,510	)		(1,734,627	)		(18,444	)

Net deferred tax liability	¥	(113,292	)	¥	(559,588	)	$	(5,950	)

The deferred tax assets and liabilities above that comprise the net deferred tax liability are included in the consolidated balance sheets as follows:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Deferred tax assets
Deferred income taxes (Current assets)	¥	718,687		¥	749,398		$	7,968
Investments and other assets - Other		91,857			100,199			1,065
Deferred tax liabilities
Other current liabilities		(14,953	)		(23,258	)		(247	)
Deferred income taxes (Long-term liabilities)		(908,883	)		(1,385,927	)		(14,736	)

Net deferred tax liability	¥	(113,292	)	¥	(559,588	)	$	(5,950	)

F-38

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating loss carryforwards for tax purposes as of March 31, 2013 in Japan and foreign countries were ¥76,280 million ($811 million) and ¥422,133 million ($4,488 million), respectively, and are available as an offset against future taxable income. The majority of these carryforwards in Japan and foreign countries expire in years 2014 to 2022 and expire in years 2014 to 2033, respectively. Tax credit carryforwards as of March 31, 2013 in Japan and foreign countries were ¥90,439 million ($961 million) and ¥10,812 million ($115 million), respectively, and the majority of these carryforwards in Japan and foreign countries expire in years 2014 to 2016 and expire in years 2014 to 2033, respectively.

The valuation allowance mainly relates to deferred tax assets of operating loss and foreign tax credit carryforwards for tax purposes that are not expected to be realized. The net changes in the total valuation allowance for deferred tax assets for the years ended March 31, 2011, 2012 and 2013 consist of the following:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Valuation allowance at beginning of year	¥	239,269		¥	280,685		¥	309,268		$	3,288
Additions		55,791			96,754			38,285			407
Deductions		(10,077	)		(65,566	)		(70,986	)		(755	)
Other		(4,298	)		(2,605	)		8,268			88

Valuation allowance at end of year	¥	280,685		¥	309,268		¥	284,835		$	3,028

The other amount includes the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest and currency translation adjustments during the years ended March 31, 2011, 2012 and 2013.

Because management intends to reinvest undistributed earnings of foreign subsidiaries to the extent not expected to be remitted in the foreseeable future, management has made no provision for income taxes on those undistributed earnings aggregating ¥2,718,554 million ($28,905 million) as of March 31, 2013. Toyota estimates an additional tax provision of ¥118,998 million ($1,265 million) would be required if the full amount of those undistributed earnings were remitted.

F-39

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A summary of the gross unrecognized tax benefits changes for the years ended March 31, 2011, 2012 and 2013 is as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Balance at beginning of year	¥	23,965		¥	15,453		¥	16,901		$	180
Additions based on tax positions related to the current year		213			4,187			2,401			26
Additions for tax positions of prior years		12,564			10,801			4,339			46
Reductions for tax positions of prior years		(16,133	)		(363	)		(1,619	)		(17	)
Reductions for tax positions related to lapse of statute of limitations		—			—			—			—
Reductions for settlements		(2,794	)		(12,820	)		(2,776	)		(30	)
Other		(2,362	)		(357	)		3,201			34

Balance at end of year	¥	15,453		¥	16,901		¥	22,447		$	239

The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was not material at March 31, 2011, 2012 and 2013, respectively. Toyota does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

Interest and penalties related to income tax liabilities are included in “Other income (loss), net”. The amounts of interest and penalties accrued as of and recognized for the years ended March 31, 2011, 2012 and 2013, respectively, were not material.

Toyota remains subject to income tax examination for the tax returns related to the years beginning on and after April 1, 2006 and January 1, 2000, with various tax jurisdictions in Japan and foreign countries, respectively.

17. Shareholders’ equity:

Changes in the number of shares of common stock issued have resulted from the following:


	For the years ended March 31,
	2011		2012		2013
Common stock issued
Balance at beginning of year		3,447,997,492		3,447,997,492		3,447,997,492
Issuance during the year		—		—		—
Purchase and retirement		—		—		—

Balance at end of year		3,447,997,492		3,447,997,492		3,447,997,492

The Companies Act provides that an amount equal to 10% of distributions from surplus paid by the parent company and its Japanese subsidiaries be appropriated as a capital reserve or a retained earnings reserve. No further appropriations are required when the total amount of the capital reserve and the retained earnings reserve reaches 25% of stated capital.

F-40

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The retained earnings reserve included in retained earnings as of March 31, 2012 and 2013 was ¥173,711 million and ¥175,735 million ($1,869 million), respectively. The Companies Act provides that the retained earnings reserve of the parent company and its Japanese subsidiaries is restricted and unable to be used for dividend payments, and is excluded from the calculation of the profit available for dividend.

The amounts of statutory retained earnings of the parent company available for dividend payments to shareholders were ¥5,348,279 million and ¥5,858,551 million ($62,292 million) as of March 31, 2012 and 2013, respectively. In accordance with customary practice in Japan, the distributions from surplus are not accrued in the financial statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained. Retained earnings at March 31, 2013 include amounts representing year-end cash dividends of ¥190,046 million ($2,020 million), ¥60 ($0.64) per share, which were approved at the Ordinary General Shareholders’ Meeting, held on June 14, 2013.

Retained earnings at March 31, 2013 include ¥1,576,055 million ($16,758 million) relating to equity in undistributed earnings of affiliated companies accounted for by the equity method.

On January 1, 2012, the parent company implemented share exchanges as a result of which the parent company became a wholly-owning parent company and each of Toyota Auto Body Co., Ltd. and Kanto Auto Works, Ltd. became a wholly-owned subsidiary, and the parent company acquired additional shares of each subsidiary. As a result of these share exchanges, the parent company issued 31,151,148 shares of treasury stock, and treasury stock decreased by ¥125,819 million and losses on disposal of treasury stock occurred in the amount of ¥45,916 million. As a result, additional paid-in capital decreased by ¥551 million and retained earnings decreased by ¥45,365 million, respectively. As a result of acquiring additional shares of each subsidiary, noncontrolling interests decreased by ¥117,881 million, accumulated other comprehensive income (loss) decreased by ¥6,503 million and additional paid-in capital increased by ¥44,481 million.

F-41

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Detailed components of accumulated other comprehensive income (loss) in Toyota Motor Corporation shareholders’ equity at March 31, 2012 and 2013 and the related changes, net of taxes for the years ended March 31, 2011, 2012 and 2013 consist of the following:


	Yen in millions
	Foreign currency translation adjustments			Unrealized gains (losses) on securities			Pension liability adjustments			Accumulated other comprehensive income (loss)
Balances at March 31, 2010	¥	(872,776	)	¥	194,285		¥	(168,344	)	¥	(846,835	)
Other comprehensive income (loss)		(287,613	)		(26,058	)		15,785			(297,886	)

Balances at March 31, 2011		(1,160,389	)		168,227			(152,559	)		(1,144,721	)
Equity transaction with noncontrolling interests and other		—			751			(7,254	)		(6,503	)
Other comprehensive income (loss)		(87,729	)		129,328			(69,208	)		(27,609	)

Balances at March 31, 2012		(1,248,118	)		298,306			(229,021	)		(1,178,833	)
Other comprehensive income (loss)		434,638			368,507			19,565			822,710

Balances at March 31, 2013	¥	(813,480	)	¥	666,813		¥	(209,456	)	¥	(356,123	)


	U.S. dollars in millions
	Foreign currency translation adjustments			Unrealized gains (losses) on securities			Pension liability adjustments			Accumulated other comprehensive income (loss)
Balances at March 31, 2012	$	(13,271	)	$	3,171		$	(2,435	)	$	(12,535	)
Other comprehensive income (loss)		4,622			3,918			208			8,748

Balances at March 31, 2013	$	(8,649	)	$	7,089		$	(2,227	)	$	(3,787	)

F-42

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Tax effects allocated to each component of other comprehensive income (loss) for the years ended March 31, 2011, 2012 and 2013 are as follows:


	Yen in millions
	Pre-tax amount			Tax amount			Net-of-tax amount
For the year ended March 31, 2011
Foreign currency translation adjustments	¥	(294,279	)	¥	6,666		¥	(287,613	)
Unrealized gains (losses) on securities:
Unrealized net holding gains (losses) arising for the year		(31,899	)		9,643			(22,256	)
Less: reclassification adjustments for (gains) losses included in net income attributable to Toyota Motor Corporation		(6,358	)		2,556			(3,802	)
Pension liability adjustments		26,681			(10,896	)		15,785

Other comprehensive income (loss)	¥	(305,855	)	¥	7,969		¥	(297,886	)

For the year ended March 31, 2012
Equity transaction with noncontrolling interests and other	¥	(10,874	)	¥	4,371		¥	(6,503	)
Foreign currency translation adjustments		(95,677	)		7,948			(87,729	)
Unrealized gains (losses) on securities:
Unrealized net holding gains (losses) arising for the year		164,872			(65,642	)		99,230
Less: reclassification adjustments for (gains) losses included in net income attributable to Toyota Motor Corporation		50,332			(20,234	)		30,098
Pension liability adjustments		(111,722	)		42,514			(69,208	)

Other comprehensive income (loss)	¥	(3,069	)	¥	(31,043	)	¥	(34,112	)

For the year ended March 31, 2013
Foreign currency translation adjustments	¥	447,302		¥	(12,664	)	¥	434,638
Unrealized gains (losses) on securities:
Unrealized net holding gains (losses) arising for the year		517,169			(175,839	)		341,330
Less: reclassification adjustments for (gains) losses included in net income attributable to Toyota Motor Corporation		45,253			(18,076	)		27,177
Pension liability adjustments		30,232			(10,667	)		19,565

Other comprehensive income (loss)	¥	1,039,956		¥	(217,246	)	¥	822,710


	U.S. dollars in millions
	Pre-tax amount			Tax amount			Net-of-tax amount
For the year ended March 31, 2013
Foreign currency translation adjustments	$	4,756		$	(134	)	$	4,622
Unrealized gains (losses) on securities:
Unrealized net holding gains (losses) arising for the year		5,499			(1,870	)		3,629
Less: reclassification adjustments for (gains) losses included in net income attributable to Toyota Motor Corporation		481			(192	)		289
Pension liability adjustments		321			(113	)		208

Other comprehensive income (loss)	$	11,057		$	(2,309	)	$	8,748

F-43

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18. Stock-based compensation:

In June 1997, the parent company’s shareholders approved a stock option plan for board members. In June 2001, the shareholders approved an amendment of the plan to include both board members and key employees. Each year until June 2010, since the plans’ inception, the shareholders have approved the authorization for the grant of options for the purchase of Toyota’s common stock. Authorized shares for each year that remain ungranted are unavailable for grant in future years. Stock options granted in and after August 2006 have terms of 8 years and an exercise price equal to 1.025 times the closing price of Toyota’s common stock on the date of grant. These options generally vest 2 years from the date of grant.

For the years ended March 31, 2011, 2012 and 2013, Toyota recognized stock-based compensation expenses for stock options of ¥2,522 million, ¥1,539 million and ¥325 million ($3 million) as selling, general and administrative expenses.

The weighted-average grant-date fair value of options granted during the year ended March 31, 2011 was ¥724 per share. The fair value of options granted is amortized over the option vesting period in determining net income attributable to Toyota Motor Corporation in the consolidated statements of income. The grant-date fair value of options granted is estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:


	2011
Dividend rate		1.5	%
Risk-free interest rate		0.3	%
Expected volatility		32	%
Expected holding period (years)		5.0

The following table summarizes Toyota’s stock option activity:


				Yen				Yen in millions
	Number of shares			Weighted- average exercise price		Weighted- average remaining contractual life in years		Aggregate intrinsic value
Options outstanding at March 31, 2010		13,716,700		¥	5,363		5.23	¥	—
Granted		3,435,000			3,183
Exercised		—			—
Canceled		(1,364,900	)		4,759

Options outstanding at March 31, 2011		15,786,800			4,941		5.04	¥	565
Granted		—			—
Exercised		—			—
Canceled		(3,256,800	)		5,059

Options outstanding at March 31, 2012		12,530,000			4,910		4.55	¥	1,065
Granted		—			—
Exercised		(645,000	)		3,328
Canceled		(1,036,000	)		5,907

Options outstanding at March 31, 2013		10,849,000		¥	4,909		3.56	¥	5,921

Options exercisable at March 31, 2011		9,347,800		¥	5,821		3.79	¥	—
Options exercisable at March 31, 2012		9,778,000		¥	5,396		4.05	¥	—
Options exercisable at March 31, 2013		10,849,000		¥	4,909		3.56	¥	5,921

F-44

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

No options were exercised for the years ended March 31, 2011 and 2012. The total intrinsic value of options exercised for the year ended March 31, 2013 was ¥364 million ($4 million).

No cash was received from the exercise of stock options for the years ended March 31, 2011 and 2012. Cash received from the exercise of stock options for the year ended March 31, 2013 was ¥2,147 million ($23 million).

The following table summarizes information for options outstanding and options exercisable at March 31, 2013:


	Outstanding								Exercisable
Exercise price range	Number of shares		Weighted- average exercise price		Weighted- average exercise price		Weighted- average remaining life		Number of shares		Weighted- average exercise price		Weighted- average exercise price
Yen	Number of shares		Yen		U.S. dollars		Years		Number of shares		Yen		U.S. dollars
¥3,183 – 5,000		7,480,000	¥	4,068	$	43		4.31		7,480,000	¥	4,068	$	43
5,001 – 7,278		3,369,000		6,774		72		1.89		3,369,000		6,774		72

3,183 – 7,278		10,849,000		4,909		52		3.56		10,849,000		4,909		52

19. Employee benefit plans:

Pension and severance plans -

Upon terminations of employment, employees of the parent company and subsidiaries in Japan are entitled, under the retirement plans of each company, to lump-sum indemnities or pension payments, based on current rates of pay and lengths of service or the number of “points” mainly determined by those. Under normal circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement. Employees receive additional benefits on involuntary retirement, including retirement at the age limit.

Effective October 1, 2004, the parent company amended its retirement plan to introduce a “point” based retirement benefit plan. Under the new plan, employees are entitled to lump-sum or pension payments determined based on accumulated “points” vested in each year of service.

There are three types of “points” that vest in each year of service consisting of “service period points” which are attributed to the length of service, “job title points” which are attributed to the job title of each employee, and “performance points” which are attributed to the annual performance evaluation of each employee. Under normal circumstances, the minimum payment prior to retirement age is an amount reflecting an adjustment rate applied to represent voluntary retirement. Employees receive additional benefits upon involuntary retirement, including retirement at the age limit.

Effective October 1, 2005, the parent company partly amended its retirement plan and introduced the quasi cash-balance plan under which benefits are determined based on the variable-interest crediting rate rather than the fixed-interest crediting rate as was in the pre-amended plan.

The parent company and most subsidiaries in Japan have contributory funded defined benefit pension plans, which are pursuant to the Corporate Defined Benefit Pension Plan Law (CDBPPL). The contributions to the plans are funded with several financial institutions in accordance with the applicable laws and regulations. These pension plan assets consist principally of common stocks, government bonds and insurance contracts.

F-45

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of their employees under which the cost of benefits are currently invested or accrued. The benefits for these plans are based primarily on lengths of service and current rates of pay.

Toyota uses a March 31 measurement date for its benefit plans.

Information regarding Toyota’s defined benefit plans is as follows:

Japanese plans


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Change in benefit obligation
Benefit obligation at beginning of year	¥	1,362,053		¥	1,480,387		$	15,740
Service cost		57,241			60,261			641
Interest cost		30,660			27,804			296
Plan participants’ contributions		834			918			10
Plan amendments		632			(3,462	)		(37	)
Net actuarial loss		67,098			90,667			964
Acquisition and other		27,435			(776	)		(8	)
Benefits paid		(65,566	)		(61,388	)		(653	)

Benefit obligation at end of year		1,480,387			1,594,411			16,953

Change in plan assets
Fair value of plan assets at beginning of year		885,741			927,545			9,862
Actual return on plan assets		1,493			145,141			1,543
Acquisition and other		27,947			(264	)		(3	)
Employer contributions		50,423			53,906			573
Plan participants’ contributions		834			918			10
Benefits paid		(38,893	)		(36,988	)		(393	)

Fair value of plan assets at end of year		927,545			1,090,258			11,592

Funded status	¥	552,842		¥	504,153		$	5,361

Amounts recognized in the consolidated balance sheets as of March 31, 2012 and 2013 are comprised of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Accrued expenses (Accrued pension and severance costs)	¥	19,553		¥	25,160		$	268
Accrued pension and severance costs		553,096			582,491			6,193
Investments and other assets - Other (Prepaid pension and severance costs)		(19,807	)		(103,498	)		(1,100	)

Net amount recognized	¥	552,842		¥	504,153		$	5,361

F-46

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amounts recognized in accumulated other comprehensive income (loss) as of March 31, 2012 and 2013 are comprised of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Net actuarial loss	¥	(381,770	)	¥	(333,203	)	$	(3,543	)
Prior service costs		57,930			53,360			567
Net transition obligation		—			—			—

Net amount recognized	¥	(323,840	)	¥	(279,843	)	$	(2,976	)

The accumulated benefit obligation for all defined benefit pension plans was ¥1,379,373 million and ¥1,494,011 million ($15,885 million) at March 31, 2012 and 2013, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which the accumulated benefit obligations exceed plan assets are as follows:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Projected benefit obligation	¥	728,469	¥	749,561	$	7,970
Accumulated benefit obligation		639,196		685,763		7,291
Fair value of plan assets		153,945		165,262		1,757

Components of the net periodic pension cost are as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Service cost	¥	61,134		¥	57,241		¥	60,261		$	641
Interest cost		31,782			30,660			27,804			296
Expected return on plan assets		(21,200	)		(21,558	)		(22,352	)		(238	)
Amortization of prior service costs		(24,421	)		(16,326	)		(8,033	)		(86	)
Recognized net actuarial loss		15,029			28,342			16,619			177
Amortization of net transition obligation		1,944			1,626			—			—

Net periodic pension cost	¥	64,268		¥	79,985		¥	74,299		$	790

F-47

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Net actuarial gain (loss)	¥	(15,734	)	¥	(87,163	)	¥	32,122		$	341
Recognized net actuarial loss		15,029			28,342			16,619			177
Prior service costs		1,287			(632	)		3,462			37
Amortization of prior service costs		(24,421	)		(16,326	)		(8,033	)		(86	)
Amortization of net transition obligation		1,944			1,626			—			—
Other		10,529			63			(173	)		(2	)

Total recognized in other comprehensive income (loss)	¥	(11,366	)	¥	(74,090	)	¥	43,997		$	467

The other amount includes the impact of transition to defined contribution pension plans and consolidation and deconsolidation of certain entities due to changes in ownership interest during the years ended March 31, 2011, 2012 and 2013.

The estimated prior service costs and net actuarial loss that will be amortized from accumulated other comprehensive income (loss) into net periodic pension cost during the year ending March 31, 2014 are ¥(5,000) million ($(53) million) and ¥12,200 million ($130 million), respectively.

Weighted-average assumptions used to determine benefit obligations as of March 31, 2012 and 2013 are as follows:


	March 31,
	2012			2013
Discount rate		2.0	%		1.7	%
Rate of compensation increase		2.3	%		2.2	%

As of March 31, 2012 and 2013, the parent company and certain subsidiaries in Japan employ “point” based retirement benefit plans and do not use the rates of compensation increase to determine benefit obligations.

Weighted-average assumptions used to determine net periodic pension cost for the years ended March 31, 2011, 2012 and 2013 are as follows:


	For the years ended March 31,
	2011			2012			2013
Discount rate		2.3	%		2.3	%		2.0	%
Expected return on plan assets		2.3	%		2.5	%		2.5	%
Rate of compensation increase		2.3	%		2.3	%		2.3	%

During the years ended March 31, 2011, 2012 and 2013, the parent company and certain subsidiaries in Japan employ “point” based retirement benefit plans and do not use the rates of compensation increase to determine net periodic pension cost.

F-48

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The expected rate of return on plan assets is determined after considering several applicable factors including, the composition of plan assets held, assumed risks of asset management, historical results of the returns on plan assets, Toyota’s principal policy for plan asset management, and forecasted market conditions.

Toyota’s policy and objective for plan asset management is to maximize returns on plan assets to meet future benefit payment requirements under risks which Toyota considers permissible. Asset allocations under the plan asset management are determined based on plan asset management policies of each plan which are established to achieve the optimized asset compositions in terms of the long-term overall plan asset management. Excepting equity securities contributed by Toyota, approximately 50% of the plan assets is invested in equity securities, approximately 30% is invested in debt securities, and the rest of them is invested in insurance contracts and other products. When actual allocations are not in line with target allocations, Toyota rebalances its investments in accordance with the policies. Prior to making individual investments, Toyota performs in-depth assessments of corresponding factors including category of products, industry type, currencies and liquidity of each potential investment under consideration to mitigate concentrations of risks such as market risk and foreign currency exchange rate risk. To assess performance of the investments, Toyota establishes bench mark return rates for each individual investment, combines these individual bench mark rates based on the asset composition ratios within each asset category, and compares the combined rates with the corresponding actual return rates on each asset category.

The following table summarizes the fair value of classes of plan assets as of March 31, 2012 and 2013. See note 26 to the consolidated financial statements for three levels of input which are used to measure fair value.


	Yen in millions
	March 31, 2012
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	¥	353,282	¥	—	¥	—	¥	353,282
Commingled funds		—		158,027		—		158,027

		353,282		158,027		—		511,309

Debt securities
Government bonds		63,327		—		—		63,327
Commingled funds		—		176,596		—		176,596
Other		—		20,155		591		20,746

		63,327		196,751		591		260,669

Insurance contracts		—		83,993		—		83,993
Other		27,006		4,503		40,065		71,574

Total	¥	443,615	¥	443,274	¥	40,656	¥	927,545

F-49

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2013
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	¥	440,971	¥	—	¥	—	¥	440,971
Commingled funds		—		184,879		—		184,879

		440,971		184,879		—		625,850

Debt securities
Government bonds		81,867		—		—		81,867
Commingled funds		—		203,933		—		203,933
Other		—		23,594		441		24,035

		81,867		227,527		441		309,835

Insurance contracts		—		91,326		—		91,326
Other		17,789		3,923		41,535		63,247

Total	¥	540,627	¥	507,655	¥	41,976	¥	1,090,258


	U.S. dollars in millions
	March 31, 2013
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	$	4,689	$	—	$	—	$	4,689
Commingled funds		—		1,966		—		1,966

		4,689		1,966		—		6,655

Debt securities
Government bonds		870		—		—		870
Commingled funds		—		2,168		—		2,168
Other		—		251		5		256

		870		2,419		5		3,294

Insurance contracts		—		971		—		971
Other		189		42		441		672

Total	$	5,748	$	5,398	$	446	$	11,592

The following is description of the assets, information about the valuation techniques used to measure fair value, key inputs and significant assumptions:

Quoted market prices for identical securities are used to measure fair value of common stocks. Common stocks include 69% of Japanese stocks and 31% of foreign stocks as of March 31, 2012, and 71% of Japanese stocks and 29% of foreign stocks as of March 31, 2013.

Quoted market prices for identical securities are used to measure fair value of government bonds. Government bonds include 35% of Japanese government bonds and 65% of foreign government bonds as of March 31, 2012, and 44% of Japanese government bonds and 56% of foreign government bonds as of March 31, 2013.

F-50

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Commingled funds are beneficial interests of collective trust. The fair values of commingled funds are measured using the net asset value (“NAV”) provided by the administrator of the fund, and are categorized by the ability to redeem investments at the measurement day.

The fair values of insurance contracts are measured using contracted amount with accrued interest.

Other consists of cash equivalents, other private placement investment funds and other assets. The fair values of other private placement investment funds are measured using the NAV provided by the administrator of the fund, and are categorized by the ability to redeem investments at the measurement day.

The following tables summarize the changes in Level 3 plan assets measured at fair value for the years ended March 31, 2011, 2012 and 2013:


	Yen in millions
	For the year ended March 31, 2011
	Debt securities			Other			Total
Balance at beginning of year	¥	928		¥	37,421		¥	38,349
Actual return on plan assets		7			934			941
Purchases, sales and settlements		(189	)		19			(170	)
Other		—			—			—

Balance at end of year	¥	746		¥	38,374		¥	39,120


	Yen in millions
	For the year ended March 31, 2012
	Debt securities			Other			Total
Balance at beginning of year	¥	746		¥	38,374		¥	39,120
Actual return on plan assets		5			(1,762	)		(1,757	)
Purchases, sales and settlements		(160	)		3,453			3,293
Other		—			—			—

Balance at end of year	¥	591		¥	40,065		¥	40,656


	Yen in millions
	For the year ended March 31, 2013
	Debt securities			Other			Total
Balance at beginning of year	¥	591		¥	40,065		¥	40,656
Actual return on plan assets		3			438			441
Purchases, sales and settlements		(153	)		1,032			879
Other		—			—			—

Balance at end of year	¥	441		¥	41,535		¥	41,976


	U.S. dollars in millions
	For the year ended March 31, 2013
	Debt securities			Other			Total
Balance at beginning of year	$	6		$	426		$	432
Actual return on plan assets		0			4			4
Purchases, sales and settlements		(1	)		11			10
Other		—			—			—

Balance at end of year	$	5		$	441		$	446

F-51

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Toyota expects to contribute ¥54,094 million ($575 million) to its pension plans in the year ending March 31, 2014.

The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


Years ending March 31,	Yen in millions		U.S. dollars in millions
2014	¥	62,508	$	665
2015		64,803		689
2016		66,445		706
2017		66,497		707
2018		67,780		721
from 2019 to 2023		379,369		4,034

Total	¥	707,402	$	7,522

Foreign plans


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Change in benefit obligation
Benefit obligation at beginning of year	¥	367,125		¥	467,000		$	4,965
Service cost		21,298			27,943			297
Interest cost		21,739			24,300			258
Plan participants’ contributions		221			246			3
Plan amendments		108			(43	)		(0	)
Net actuarial loss		50,222			38,986			415
Acquisition and other		13,061			82,907			881
Benefits paid		(6,774	)		(8,179	)		(87	)

Benefit obligation at end of year		467,000			633,160			6,732

Change in plan assets
Fair value of plan assets at beginning of year		297,644			343,226			3,649
Actual return on plan assets		14,816			46,359			493
Acquisition and other		19,600			60,138			640
Employer contributions		16,125			35,354			376
Plan participants’ contributions		221			246			3
Benefits paid		(5,180	)		(6,084	)		(65	)

Fair value of plan assets at end of year		343,226			479,239			5,096

Funded status	¥	123,774		¥	153,921		$	1,636

F-52

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amounts recognized in the consolidated balance sheets as of March 31, 2012 and 2013 are comprised of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Accrued expenses (Accrued pension and severance costs)	¥	1,523		¥	1,762		$	18
Accrued pension and severance costs		155,306			183,621			1,953
Investments and other assets - Other (Prepaid pension and severance costs)		(33,055	)		(31,462	)		(335	)

Net amount recognized	¥	123,774		¥	153,921		$	1,636

Amounts recognized in accumulated other comprehensive income (loss) as of March 31, 2012 and 2013 are comprised of the following:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Net actuarial loss	¥	(75,069	)	¥	(96,151	)	$	(1,022	)
Prior service costs		(2,333	)		(1,921	)		(20	)
Net transition obligation		—			—			—

Net amount recognized	¥	(77,402	)	¥	(98,072	)	$	(1,042	)

The accumulated benefit obligation for all defined benefit pension plans was ¥385,348 million and ¥533,551 million ($5,673 million) at March 31, 2012 and 2013, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which the accumulated benefit obligations exceed plan assets are as follows:


	Yen in millions				U.S. dollars in millions
	March 31,				March 31,
	2012		2013		2013
Projected benefit obligation	¥	229,015	¥	251,596	$	2,675
Accumulated benefit obligation		190,422		213,934		2,275
Fair value of plan assets		52,123		43,277		460

F-53

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Components of the net periodic pension cost are as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Service cost	¥	21,288		¥	21,298		¥	27,943		$	297
Interest cost		20,720			21,739			24,300			258
Expected return on plan assets		(21,164	)		(22,864	)		(23,177	)		(246	)
Amortization of prior service costs		389			351			369			4
Recognized net actuarial loss		1,066			1,783			2,884			31
Amortization of net transition obligation		—			—			—			—

Net periodic pension cost	¥	22,299		¥	22,307		¥	32,319		$	344

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Net actuarial loss	¥	(6,244	)	¥	(58,270	)	¥	(15,804	)	$	(168	)
Recognized net actuarial loss		1,066			1,783			2,884			31
Prior service costs		142			(108	)		43			0
Amortization of prior service costs		389			351			369			4
Amortization of net transition obligation		—			—			—			—
Other		30,466			5,888			(8,162	)		(87	)

Total recognized in other comprehensive income (loss)	¥	25,819		¥	(50,356	)	¥	(20,670	)	$	(220	)

The estimated prior service costs and net actuarial loss that will be amortized from accumulated other comprehensive income (loss) into net periodic pension cost during the year ending March 31, 2014 are ¥300 million ($3 million) and ¥4,400 million ($47 million), respectively.

Weighted-average assumptions used to determine benefit obligations as of March 31, 2012 and 2013 are as follows:


	March 31,
	2012			2013
Discount rate		5.0	%		4.5	%
Rate of compensation increase		4.5	%		4.6	%

F-54

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Weighted-average assumptions used to determine net periodic pension cost for the years ended March 31, 2011, 2012 and 2013 are as follows:


	For the years ended March 31,
	2011			2012			2013
Discount rate		6.2	%		5.7	%		5.0	%
Expected return on plan assets		7.4	%		7.3	%		7.0	%
Rate of compensation increase		4.5	%		4.4	%		4.5	%

Toyota’s policy and objective for plan asset management is to maximize returns on plan assets to meet future benefit payment requirements under risks which Toyota considers permissible. Asset allocations under the plan asset management are determined based on plan asset management policies of each plan which are established to achieve the optimized asset compositions in terms of the long-term overall plan asset management. Excepting equity securities contributed by Toyota, approximately 60% of the plan assets is invested in equity securities, approximately 30% is invested in debt securities, and the rest of them is invested in other products. When actual allocations are not in line with target allocations, Toyota rebalances its investments in accordance with the policies. Prior to making individual investments, Toyota performs in-depth assessments of corresponding factors including category of products, industry type, currencies and liquidity of each potential investment under consideration to mitigate concentrations of risks such as market risk and foreign currency exchange rate risk. To assess performance of the investments, Toyota establishes bench mark return rates for each individual investment, combines these individual bench mark rates based on the asset composition ratios within each asset category, and compares the combined rates with the corresponding actual return rates on each asset category.


	Yen in millions
	March 31, 2012
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	¥	114,955	¥	—	¥	—	¥	114,955
Commingled funds		—		74,815		—		74,815

		114,955		74,815		—		189,770

Debt securities
Government bonds		25,084		—		—		25,084
Commingled funds		—		43,062		—		43,062
Other		—		29,278		—		29,278

		25,084		72,340		—		97,424

Insurance contracts		—		—		—		—
Other		21,184		3,471		31,377		56,032

Total	¥	161,223	¥	150,626	¥	31,377	¥	343,226

F-55

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2013
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	¥	183,611	¥	—	¥	—	¥	183,611
Commingled funds		—		86,539		—		86,539

		183,611		86,539		—		270,150

Debt securities
Government bonds		47,083		—		—		47,083
Commingled funds		—		42,754		—		42,754
Other		—		40,486		—		40,486

		47,083		83,240		—		130,323

Insurance contracts		—		1,202		—		1,202
Other		30,739		6,218		40,607		77,564

Total	¥	261,433	¥	177,199	¥	40,607	¥	479,239


	U.S. dollars in millions
	March 31, 2013
	Level 1		Level 2		Level 3		Total
Equity securities
Common stocks	$	1,952	$	—	$	—	$	1,952
Commingled funds		—		920		—		920

		1,952		920		—		2,872

Debt securities
Government bonds		501		—		—		501
Commingled funds		—		455		—		455
Other		—		430		—		430

		501		885		—		1,386

Insurance contracts		—		13		—		13
Other		327		66		432		825

Total	$	2,780	$	1,884	$	432	$	5,096

The following is description of the assets, information about the valuation techniques used to measure fair value, key inputs and significant assumptions:

Quoted market prices for identical securities are used to measure fair value of common stocks. Common stocks include mainly foreign stocks as of March 31, 2012 and 2013.

Quoted market prices for identical securities are used to measure fair value of government bonds. Government bonds include mainly foreign government bonds as of March 31, 2012 and 2013.

Commingled funds are beneficial interests of collective trust. The fair values of commingled funds are measured using the NAV provided by the administrator of the fund, and are categorized by the ability to redeem investments at the measurement day.

F-56

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables summarize the changes in Level 3 plan assets measured at fair value for the years ended March 31, 2011, 2012 and 2013:


	Yen in millions
	For the year ended March 31, 2011
	Debt securities			Other			Total
Balance at beginning of year	¥	2,663		¥	9,097		¥	11,760
Actual return on plan assets		305			974			1,279
Purchases, sales and settlements		(2,759	)		11,471			8,712
Other		(209	)		(1,065	)		(1,274	)

Balance at end of year	¥	—		¥	20,477		¥	20,477


	Yen in millions
	For the year ended March 31, 2012
	Debt securities			Other			Total
Balance at beginning of year	¥	—		¥	20,477		¥	20,477
Actual return on plan assets		—			1,243			1,243
Purchases, sales and settlements		—			9,514			9,514
Other		—			143			143

Balance at end of year	¥	—		¥	31,377		¥	31,377


	Yen in millions
	For the year ended March 31, 2013
	Debt securities			Other			Total
Balance at beginning of year	¥	—		¥	31,377		¥	31,377
Actual return on plan assets		—			2,472			2,472
Purchases, sales and settlements		—			2,599			2,599
Other		—			4,159			4,159

Balance at end of year	¥	—		¥	40,607		¥	40,607


	U.S. dollars in millions
	For the year ended March 31, 2013
	Debt securities			Other			Total
Balance at beginning of year	$	—		$	334		$	334
Actual return on plan assets		—			26			26
Purchases, sales and settlements		—			28			28
Other		—			44			44

Balance at end of year	$	—		$	432		$	432

Toyota expects to contribute ¥8,688 million ($92 million) to its pension plans in the year ending March 31, 2014.

F-57

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


Years ending March 31,	Yen in millions		U.S. dollars in millions
2014	¥	8,535	$	91
2015		9,264		99
2016		9,955		106
2017		10,660		113
2018		11,491		122
from 2019 to 2023		73,651		783

Total	¥	123,556	$	1,314

Postretirement benefits other than pensions and postemployment benefits -

Toyota’s U.S. subsidiaries provide certain health care and life insurance benefits to eligible retired employees. In addition, Toyota provides benefits to certain former or inactive employees after employment, but before retirement. These benefits are provided through various insurance companies, health care providers and others. The costs of these benefits are recognized over the period the employee provides credited service to Toyota. Toyota’s obligations under these arrangements are not material.

20. Derivative financial instruments:

Toyota employs derivative financial instruments, including foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Toyota does not use derivatives for speculation or trading.

Fair value hedges -

Toyota enters into interest rate swaps and interest rate currency swap agreements mainly to convert its fixed-rate debt to variable-rate debt. Toyota uses interest rate swap agreements in managing interest rate risk exposure. Interest rate swap agreements are executed as either an integral part of specific debt transactions or on a portfolio basis. Toyota uses interest rate currency swap agreements to hedge exposure to currency exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. Notes and loans payable issued in foreign currencies are hedged by concurrently executing interest rate currency swap agreements, which involve the exchange of foreign currency principal and interest obligations for each functional currency obligations at agreed-upon currency exchange and interest rates.

For the years ended March 31, 2011, 2012 and 2013, the ineffective portion of Toyota’s fair value hedge relationships was not material. For fair value hedging relationships, the components of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

Undesignated derivative financial instruments -

Toyota uses foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements, and interest rate options, to manage its exposure to foreign currency exchange rate fluctuations and interest rate fluctuations from an economic perspective, and for which Toyota is unable or has elected not to apply hedge accounting.

F-58

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair value and gains or losses on derivative financial instruments -

The following table summarizes the fair values of derivative financial instruments as of March 31, 2012 and 2013:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Derivative financial instruments designated as hedging instruments
Interest rate and currency swap agreements
Prepaid expenses and other current assets	¥	7,166		¥	10,769		$	114
Investments and other assets - Other		61,174			39,569			421

Total	¥	68,340		¥	50,338		$	535

Other current liabilities	¥	(2,060	)	¥	(2,554	)	$	(27	)
Other long-term liabilities		(303	)		(143	)		(2	)

Total	¥	(2,363	)	¥	(2,697	)	$	(29	)

Undesignated derivative financial instruments
Interest rate and currency swap agreements
Prepaid expenses and other current assets	¥	61,983		¥	27,731		$	295
Investments and other assets - Other		157,642			139,419			1,482

Total	¥	219,625		¥	167,150		$	1,777

Other current liabilities	¥	(38,338	)	¥	(37,133	)	$	(395	)
Other long-term liabilities		(120,666	)		(122,420	)		(1,301	)

Total	¥	(159,004	)	¥	(159,553	)	$	(1,696	)

Foreign exchange forward and option contracts
Prepaid expenses and other current assets	¥	9,531		¥	7,340		$	78
Investments and other assets - Other		—			—			—

Total	¥	9,531		¥	7,340		$	78

Other current liabilities	¥	(21,736	)	¥	(36,087	)	$	(384	)
Other long-term liabilities		(70	)		(5	)		(0	)

Total	¥	(21,806	)	¥	(36,092	)	$	(384	)

As of March 31, 2012 and 2013, the amounts of counterparty netting and cash collateral received that partially offset derivative assets were ¥218,509 million and ¥158,807 million ($1,689 million), respectively. The amounts of counterparty netting and cash collateral pledged that partially offset derivative liabilities were ¥(90,963) million and ¥(86,477) million ($(919) million), respectively. These amounts included in the above table were offset in the consolidated balance sheets.

F-59

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the notional amounts of derivative financial instruments as of March 31, 2012 and 2013:


	Yen in millions								U.S. dollars in millions
	March 31,								March 31,
	2012				2013				2013
	Designated derivative financial instruments		Undesignated derivative financial instruments		Designated derivative financial instruments		Undesignated derivative financial instruments		Designated derivative financial instruments		Undesignated derivative financial instruments
Interest rate and currency swap agreements	¥	344,623	¥	10,607,666	¥	235,219	¥	12,689,774	$	2,501	$	134,926
Foreign exchange forward and option contracts		—		2,199,627		—		2,104,048		—		22,371

Total	¥	344,623	¥	12,807,293	¥	235,219	¥	14,793,822	$	2,501	$	157,297

The following table summarizes the gains and losses on derivative financial instruments and hedged items reported in the consolidated statements of income for the years ended March 31, 2011, 2012 and 2013:


	Yen in millions
	For the years ended March 31,
	2011						2012
	Gains or (losses) on derivative financial instruments			Gains or (losses) on hedged items			Gains or (losses) on derivative financial instruments			Gains or (losses) on hedged items
Derivative financial instruments designated as hedging instruments - Fair value hedge
Interest rate and currency swap agreements
Cost of financing operations	¥	71,491		¥	(68,741	)	¥	(1,354	)	¥	2,999
Interest expense		(166	)		166			—			—

Undesignated derivative financial instruments
Interest rate and currency swap agreements
Cost of financing operations	¥	72,082		¥	—		¥	35,834		¥	—
Foreign exchange gain (loss), net		(1,393	)		—			(28	)		—
Foreign exchange forward and option contracts
Cost of financing operations		(2,693	)		—			(3,815	)		—
Foreign exchange gain (loss), net		110,211			—			53,272			—

F-60

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions					U.S. dollars in millions
	For the year ended March 31,					For the year ended March 31,
	2013					2013
	Gains or (losses) on derivative financial instruments			Gains or (losses) on hedged items		Gains or (losses) on derivative financial instruments			Gains or (losses) on hedged items
Derivative financial instruments designated as hedging instruments - Fair value hedge
Interest rate and currency swap agreements
Cost of financing operations	¥	(23,965	)	¥	24,738	$	(255	)	$	263
Interest expense		—			—		—			—

Undesignated derivative financial instruments
Interest rate and currency swap agreements
Cost of financing operations	¥	(24,204	)	¥	—	$	(257	)	$	—
Foreign exchange gain (loss), net		1,617			—		17			—
Foreign exchange forward and option contracts
Cost of financing operations		(4,572	)		—		(49	)		—
Foreign exchange gain (loss), net		(49,239	)		—		(524	)		—

Undesignated derivative financial instruments are used to manage risks of fluctuations in interest rates to certain borrowing transactions and in foreign currency exchange rates of certain currency receivables and payables. Toyota accounts for these derivative financial instruments as economic hedges with changes in the fair value recorded directly into current period earnings.

Unrealized gains or (losses) on undesignated derivative financial instruments reported in the cost of financing operations for the years ended March 31, 2011, 2012 and 2013 were ¥93,370 million, ¥(14,934) million and ¥(60,727) million ($(646) million) those reported in foreign exchange gain (loss), net were ¥(240) million, ¥(5,543) million and ¥(7,447) million ($(79) million), respectively.

Cash flows from transactions of derivative financial instruments are included in cash flows from operating activities in the consolidated statements of cash flows.

Credit risk related contingent features -

Toyota enters into International Swaps and Derivatives Association Master Agreements with counterparties. These Master Agreements contain a provision requiring either Toyota or the counterparty to settle the contract or to post assets to the other party in the event of a ratings downgrade below a specified threshold.

The aggregate fair value amount of derivative financial instruments that contain credit risk related contingent features that are in a net liability position after being offset by cash collateral as of March 31, 2013 is ¥3,289 million ($35 million). The aggregate fair value amount of assets that are already posted as cash collateral as of March 31, 2013 is ¥17,305 million ($184 million). If the ratings of Toyota decline below specified thresholds, the maximum amount of assets to be posted or for which Toyota could be required to settle the contracts is ¥3,289 million ($35 million) as of March 31, 2013.

F-61

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

21. Other financial instruments:

Toyota has certain financial instruments, including financial assets and liabilities which arose in the normal course of business. These financial instruments are executed with creditworthy financial institutions, and virtually all foreign currency contracts are denominated in U.S. dollars, euros and other currencies of major developed countries. Financial instruments involve, to varying degrees, market risk as instruments are subject to price fluctuations, and elements of credit risk in the event a counterparty should default. In the unlikely event the counterparties fail to meet the contractual terms of a foreign currency or an interest rate instrument, Toyota’s risk is limited to the fair value of the instrument. Although Toyota may be exposed to losses in the event of non-performance by counterparties on financial instruments, it does not anticipate significant losses due to the nature of its counterparties. Counterparties to Toyota’s financial instruments represent, in general, international financial institutions. Additionally, Toyota does not have a significant exposure to any individual counterparty. Toyota believes that the overall credit risk related to its financial instruments is not significant.

The following table summarizes the estimated fair values of Toyota’s financial instruments, excluding marketable securities and other securities investments, affiliated companies and derivative financial instruments. See note 26 to the consolidated financial statements for three levels of input which are used to measure fair value.


	Yen in millions
	March 31, 2012
				Estimated fair value
	Carrying amount			Level 1		Level 2			Level 3			Total
Assets (Liabilities)
Cash and cash equivalents	¥	1,679,200		¥	1,444,276	¥	234,924		¥	—		¥	1,679,200
Time deposits		80,301			—		80,301			—			80,301
Total finance receivables, net		8,879,731			—		—			9,137,936			9,137,936
Other receivables		408,547			—		—			408,547			408,547
Short-term borrowings		(3,450,649	)		—		(3,256,078	)		(194,571	)		(3,450,649	)
Long-term debt including the current portion		(8,533,549	)		—		(7,835,970	)		(847,223	)		(8,683,193	)


	Yen in millions
	March 31, 2013
				Estimated fair value
	Carrying amount			Level 1		Level 2			Level 3			Total
Assets (Liabilities)
Cash and cash equivalents	¥	1,718,297		¥	1,342,356	¥	375,941		¥	—		¥	1,718,297
Time deposits		106,700			—		106,700			—			106,700
Total finance receivables, net		11,144,427			—		—			11,434,936			11,434,936
Other receivables		432,693			—		—			432,693			432,693
Short-term borrowings		(4,089,528	)		—		(4,089,528	)		—			(4,089,528	)
Long-term debt including the current portion		(10,020,853	)		—		(9,244,942	)		(979,196	)		(10,224,138	)

F-62

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	U.S. dollars in millions
	March 31, 2013
				Estimated fair value
	Carrying amount			Level 1		Level 2			Level 3			Total
Assets (Liabilities)
Cash and cash equivalents	$	18,270		$	14,273	$	3,997		$	—		$	18,270
Time deposits		1,135			—		1,135			—			1,135
Total finance receivables, net		118,495			—		—			121,584			121,584
Other receivables		4,601			—		—			4,601			4,601
Short-term borrowings		(43,482	)		—		(43,482	)		—			(43,482	)
Long-term debt including the current portion		(106,548	)		—		(98,298	)		(10,412	)		(108,710	)

Cash and cash equivalents and time deposits -

In the normal course of business, substantially all cash and cash equivalents and time deposits are highly liquid and are carried at amounts which approximate fair value due to its short duration. Cash equivalents and time deposits include negotiable certificate of deposit measured at fair value on a recurring basis. Where money market funds produce a daily net asset value in an active market, this value is used to determine the fair value of the fund investment, and the investment is classified in Level 1. All other types of cash and cash equivalents and time deposits are classified in Level 2.

Finance receivables, net -

The fair values of finance receivables are estimated by discounting expected cash flows to present value using internal assumptions, including prepayment speeds, expected credit losses and collateral value. Certain impaired finance receivables are measured at fair value on a nonrecurring basis based on collateral values.

As unobservable inputs are utilized, finance receivables are classified in Level 3.

Other receivables -

Other receivables are short-term receivables. These receivables are carried at amounts which approximate fair value, and the difference between the carrying amount and the fair value is not material. These receivables are classified in Level 3.

Short-term borrowings and long-term debt -

The fair values of short-term borrowings and long-term debt including the current portion, except for secured loans provided by securitization transactions using special-purpose entities, are estimated based on the discounted amounts of future cash flows using Toyota’s current borrowing rates for similar liabilities. As these inputs are observable, these debts are classified in Level 2.

The fair values of the secured loans provided by securitization transactions are estimated based on current market rates and credit spreads for debt with similar maturities. Internal assumptions including prepayment speeds and expected credit losses are used to estimate the timing of cash flows to be paid on the underlying securitized assets. As these valuations utilize unobservable inputs, the secured loans are classified in Level 3. See note 12 to the consolidated financial statements for information regarding the secured loans.

F-63

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

22. Lease commitments:

Toyota leases certain assets under capital lease and operating lease arrangements.

An analysis of leased assets under capital leases is as follows:


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Class of property
Building	¥	12,230		¥	13,999		$	149
Machinery and equipment		31,698			32,252			343
Less - Accumulated depreciation		(20,284	)		(23,843	)		(254	)

	¥	23,644		¥	22,408		$	238

Amortization expenses under capital leases for the years ended March 31, 2011, 2012 and 2013 were ¥5,966 million, ¥5,572 million and ¥5,265 million ($56 million), respectively.

Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of March 31, 2013 are as follows:


Years ending March 31,	Yen in millions			U.S. dollars in millions
2014	¥	4,993		$	53
2015		3,542			38
2016		2,790			30
2017		2,409			25
2018		2,049			22
Thereafter		12,926			137

Total minimum lease payments		28,709			305
Less - Amount representing interest		(7,310	)		(77	)

Present value of net minimum lease payments		21,399			228
Less - Current obligations		(4,096	)		(44	)

Long-term capital lease obligations	¥	17,303		$	184

Rental expenses under operating leases for the years ended March 31, 2011, 2012 and 2013 were ¥89,029 million, ¥91,052 million and ¥90,081 million ($958 million), respectively.

F-64

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The minimum rental payments required under operating leases relating primarily to land, buildings and equipment having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2013 are as follows:


Years ending March 31,	Yen in millions		U.S. dollars in millions
2014	¥	11,299	$	120
2015		9,398		100
2016		7,988		85
2017		6,347		67
2018		5,354		57
Thereafter		21,491		229

Total minimum future rentals	¥	61,877	$	658

23. Other commitments and contingencies, concentrations and factors that may affect future operations:

Commitments

Commitments outstanding as of March 31, 2013 for the purchase of property, plant and equipment and other assets totaled ¥203,901 million ($2,168 million).

Guarantees

Toyota enters into contracts with Toyota dealers to guarantee customers’ payments of their installment payables that arise from installment contracts between customers and Toyota dealers, as and when requested by Toyota dealers. Guarantee periods are set to match maturity of installment payments, and as of March 31, 2013, range from 1 month to 35 years; however, they are generally shorter than the useful lives of products sold. Toyota is required to execute its guarantee primarily when customers are unable to make required payments.

The maximum potential amount of future payments as of March 31, 2013 is ¥1,849,493 million ($19,665 million). Liabilities for guarantees totaling ¥6,590 million ($70 million) have been provided as of March 31, 2013. Under these guarantee contracts, Toyota is entitled to recover any amount paid by Toyota from the customers whose original obligations Toyota has guaranteed.

Legal Proceedings

Product Recalls

From time-to-time, Toyota issues vehicle recalls and takes other safety measures including safety campaigns relating to its vehicles. In November 2009, Toyota announced a safety campaign in North America for certain models of Toyota and Lexus vehicles related to floor mat entrapment of accelerator pedals, and later expanded it to include additional models. In January 2010, Toyota announced a recall in North America for certain models of Toyota vehicles related to sticking and slow-to-return accelerator pedals. Also in January 2010, Toyota recalled in Europe, China and other regions certain models of Toyota vehicles related to sticking accelerator pedals. In February 2010, Toyota announced a worldwide recall related to the software program that controls the antilock braking system in certain vehicle models including the Prius. Set forth below is a description of various claims, lawsuits and government investigations involving Toyota in the United States relating to these recalls and other safety measures.

F-65

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Class Action and Consolidated Litigation

Beginning in February 2010, Toyota was sued in approximately 20 putative class actions alleging defects in the antilock braking system in various hybrid vehicles that cause the vehicles to fail to stop in a timely manner when driving in certain road conditions. The plaintiffs seek an order requiring Toyota to repair the vehicles and claim that all owners and lessees of vehicles, including those for which recalls have been implemented, should be compensated for the alleged defects related to the antilock braking system. These cases have been consolidated into two actions, one in the United States District Court for the Central District of California and one in the Los Angeles County Superior Court. In January 2013, the Court in the federal case issued an order denying the plaintiff’s motion for class certification and granting summary judgment in favor of Toyota on the claims of the principal named plaintiff for the cases relating to recalled vehicles. A class certification hearing in connection with the claims related to those vehicles that were not recalled is scheduled in July 2013.

From February through March 2010, Toyota was sued in 6 putative shareholder class actions on behalf of investors in Toyota ADRs and common stock. The cases alleged violations of the Securities Exchange Act of 1934 and Japan’s Financial Instruments and Exchange Act and were consolidated into a single action in the United States District Court for the Central District of California. The judge dismissed with prejudice the claims based on Japan’s Financial Instruments and Exchange Act, and Toyota reached an agreement to resolve the claims asserted on behalf of purchasers of Toyota’s ADRs for an amount not material to Toyota. The court approved the settlement in March 2013.

F-66

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

While Toyota has resolved or is attempting to resolve many of these matters, Toyota believes that it has meritorious defenses to all of them and will vigorously defend those matters not resolved.

Government Investigations

In February 2010, Toyota received a subpoena from the U.S. Attorney for the Southern District of New York and a voluntary request and subpoena from the SEC. The subpoenas and the voluntary request primarily seek documents related to unintended acceleration and certain financial records. This is a coordinated investigation and has included interviews of Toyota and non-Toyota witnesses, as well as production of documents. In June 2010, Toyota received a second voluntary request and subpoena from the SEC and a subpoena from the U.S. Attorney for the Southern District of New York seeking production of documents related to the recalls of the steering relay rod. Toyota is cooperating with the U.S. Attorney’s Office and SEC in their investigations, which are on-going.

Other Proceedings

Environmental Matters and Others

In October 2000, the European Union brought into effect a directive that requires member states to promulgate regulations implementing the following: (i) manufacturers shall bear all or a significant part of the costs for taking back end-of-life vehicles put on the market after July 1, 2002 and dismantling and recycling

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

those vehicles. Beginning January 1, 2007, this requirement became applicable to vehicles put on the market before July 1, 2002; (ii) manufacturers may not use certain hazardous materials in vehicles to be sold after July 2003; (iii) vehicles type-approved and put on the market after December 15, 2008, shall be re-usable and/or recyclable to a minimum of 85% by weight per vehicle and shall be re-usable and/or recoverable to a minimum of 95% by weight per vehicle; and (iv) end-of-life vehicles must meet actual re-use of 80% and re-use as material or energy of 85%, respectively, of vehicle weight by 2006, rising respectively to 85% and 95% by 2015. A law to implement the directive came into effect in all member states including Bulgaria, Romania that joined the European Union in January 2007. Currently, there are uncertainties surrounding the implementation of the applicable regulations in different European Union member states, particularly regarding manufacturer responsibilities and resultant expenses that may be incurred.

In addition, under this directive member states must take measures to ensure that car manufacturers, distributors and other auto-related economic operators establish adequate used vehicle collection and treatment facilities and to ensure that hazardous materials and recyclable parts are removed from vehicles prior to shredding. This directive impacts Toyota’s vehicles sold in the European Union and Toyota is introducing vehicles that are in compliance with such measures taken by the member states pursuant to the directive.

Based on the legislation that has been enacted to date, Toyota has provided for its estimated liability related to covered vehicles in existence as of March 31, 2013. Depending on the legislation that will be enacted subject to other circumstances, Toyota may be required to revise the accruals for the expected costs. Although Toyota does not expect its compliance with the directive to result in significant cash expenditures, Toyota is continuing to assess the impact of this future legislation on its financial position, results of operations and cash flows.

Toyota purchases materials that are equivalent to approximately 10% of material costs from a supplier which is an affiliated company.

The parent company has a concentration of labor supply in employees working under collective bargaining agreements and a substantial portion of these employees are working under the agreement that will expire on December 31, 2014.

24. Segment data:

The operating segments reported below are the segments of Toyota for which separate financial information is available and for which operating income/loss amounts are evaluated regularly by executive management in deciding how to allocate resources and in assessing performance.

The major portions of Toyota’s operations on a worldwide basis are derived from the Automotive and Financial Services business segments. The Automotive segment designs, manufactures and distributes sedans, minivans, compact cars, sport-utility vehicles, trucks and related parts and accessories. The Financial Services segment consists primarily of financing, and vehicle and equipment leasing operations to assist in the merchandising of the parent company and its affiliated companies products as well as other products. The All Other segment includes the design, manufacturing and sales of housing, telecommunications and other business.

F-68

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables present certain information regarding Toyota’s industry segments and operations by geographic areas and overseas revenues by destination as of and for the years ended March 31, 2011, 2012 and 2013.

Segment operating results and assets -

As of and for the year ended March 31, 2011:


	Yen in millions
	Automotive		Financial Services		All Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	17,322,753	¥	1,173,168	¥	497,767	¥	—		¥	18,993,688
Inter-segment sales and transfers		14,567		19,037		474,485		(508,089	)		—

Total		17,337,320		1,192,205		972,252		(508,089	)		18,993,688
Operating expenses		17,251,347		833,925		937,010		(496,873	)		18,525,409

Operating income	¥	85,973	¥	358,280	¥	35,242	¥	(11,216	)	¥	468,279

Assets	¥	11,341,558	¥	13,365,394	¥	1,146,720	¥	3,964,494		¥	29,818,166
Investment in equity method investees		1,784,539		3,519		3,045		26,885			1,817,988
Depreciation expenses		819,075		330,865		25,633		—			1,175,573
Capital expenditure		691,867		991,330		21,058		(13,064	)		1,691,191

As of and for the year ended March 31, 2012:


	Yen in millions
	Automotive		Financial Services		All Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	16,964,378	¥	1,071,737	¥	547,538	¥	—		¥	18,583,653
Inter-segment sales and transfers		30,168		28,587		501,377		(560,132	)		—

Total		16,994,546		1,100,324		1,048,915		(560,132	)		18,583,653
Operating expenses		16,972,863		793,886		1,006,853		(545,576	)		18,228,026

Operating income	¥	21,683	¥	306,438	¥	42,062	¥	(14,556	)	¥	355,627

Assets	¥	12,261,814	¥	13,172,548	¥	1,161,224	¥	4,055,379		¥	30,650,965
Investment in equity method investees		1,877,720		3,887		4,765		27,757			1,914,129
Depreciation expenses		744,067		298,757		25,006		—			1,067,830
Capital expenditure		796,839		683,161		35,340		16,742			1,532,082

F-69

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and for the year ended March 31, 2013:


	Yen in millions
	Automotive		Financial Services		All Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	20,378,762	¥	1,150,042	¥	535,388	¥	—		¥	22,064,192
Inter-segment sales and transfers		40,338		20,628		531,073		(592,039	)		—

Total		20,419,100		1,170,670		1,066,461		(592,039	)		22,064,192
Operating expenses		19,474,396		854,850		1,012,845		(598,787	)		20,743,304

Operating income	¥	944,704	¥	315,820	¥	53,616	¥	6,748		¥	1,320,888

Assets	¥	13,179,741	¥	16,231,473	¥	1,310,115	¥	4,761,988		¥	35,483,317
Investment in equity method investees		2,033,040		4,925		6,968		57,651			2,102,584
Depreciation expenses		745,880		336,528		22,701		—			1,105,109
Capital expenditure		937,695		1,005,326		29,286		1,845			1,974,152


	U.S. dollars in millions
	Automotive		Financial Services		All Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	$	216,680	$	12,228	$	5,693	$	—		$	234,601
Inter-segment sales and transfers		429		219		5,646		(6,294	)		—

Total		217,109		12,447		11,339		(6,294	)		234,601
Operating expenses		207,064		9,089		10,769		(6,366	)		220,556

Operating income	$	10,045	$	3,358	$	570	$	72		$	14,045

Assets	$	140,135	$	172,583	$	13,930	$	50,633		$	377,281
Investment in equity method investees		21,617		52		74		613			22,356
Depreciation expenses		7,931		3,578		241		—			11,750
Capital expenditure		9,970		10,689		311		20			20,990

F-70

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Geographic Information -

As of and for the year ended March 31, 2011:


	Yen in millions
	Japan			North America		Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	6,966,929		¥	5,327,809	¥	1,920,416	¥	3,138,112	¥	1,640,422	¥	—		¥	18,993,688
Inter-segment sales and transfers		4,019,317			101,327		61,081		236,422		168,694		(4,586,841	)		—

Total		10,986,246			5,429,136		1,981,497		3,374,534		1,809,116		(4,586,841	)		18,993,688
Operating expenses		11,348,642			5,089,633		1,968,349		3,061,557		1,648,987		(4,591,759	)		18,525,409

Operating income (loss)	¥	(362,396	)	¥	339,503	¥	13,148	¥	312,977	¥	160,129	¥	4,918		¥	468,279

Assets	¥	11,285,864		¥	9,910,828	¥	1,931,231	¥	2,138,499	¥	2,044,379	¥	2,507,365		¥	29,818,166
Long-lived assets		3,123,042			2,276,332		305,627		344,304		259,855		—			6,309,160

As of and for the year ended March 31, 2012:


	Yen in millions
	Japan			North America		Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	7,293,804		¥	4,644,348	¥	1,917,408	¥	3,116,849	¥	1,611,244	¥	—		¥	18,583,653
Inter-segment sales and transfers		3,873,515			107,538		76,538		217,425		148,931		(4,423,947	)		—

Total		11,167,319			4,751,886		1,993,946		3,334,274		1,760,175		(4,423,947	)		18,583,653
Operating expenses		11,374,359			4,565,477		1,976,150		3,077,484		1,651,361		(4,416,805	)		18,228,026

Operating income (loss)	¥	(207,040	)	¥	186,409	¥	17,796	¥	256,790	¥	108,814	¥	(7,142	)	¥	355,627

Assets	¥	12,034,423		¥	9,693,232	¥	1,960,532	¥	2,433,312	¥	2,175,493	¥	2,353,973		¥	30,650,965
Long-lived assets		2,981,985			2,197,197		263,070		412,959		380,169		—			6,235,380

F-71

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and for the year ended March 31, 2013:


	Yen in millions
	Japan		North America		Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	¥	7,910,456	¥	6,167,821	¥	2,003,113	¥	4,058,629	¥	1,924,173	¥	—		¥	22,064,192
Inter-segment sales and transfers		4,910,562		116,604		80,000		326,847		170,092		(5,604,105	)		—

Total		12,821,018		6,284,425		2,083,113		4,385,476		2,094,265		(5,604,105	)		22,064,192
Operating expenses		12,244,683		6,062,500		2,056,651		4,009,421		1,960,521		(5,590,472	)		20,743,304

Operating income	¥	576,335	¥	221,925	¥	26,462	¥	376,055	¥	133,744	¥	(13,633	)	¥	1,320,888

Assets	¥	12,296,731	¥	11,841,471	¥	2,199,256	¥	3,305,319	¥	2,616,164	¥	3,224,376		¥	35,483,317
Long-lived assets		2,929,346		2,633,067		288,288		590,021		410,517		—			6,851,239

	U.S. dollars in millions
	Japan		North America		Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Net revenues
Sales to external customers	$	84,109	$	65,580	$	21,299	$	43,154	$	20,459	$	—		$	234,601
Inter-segment sales and transfers		52,212		1,240		850		3,475		1,809		(59,586	)		—

Total		136,321		66,820		22,149		46,629		22,268		(59,586	)		234,601
Operating expenses		130,193		64,460		21,868		42,630		20,846		(59,441	)		220,556

Operating income	$	6,128	$	2,360	$	281	$	3,999	$	1,422	$	(145	)	$	14,045

Assets	$	130,747	$	125,906	$	23,384	$	35,144	$	27,817	$	34,283		$	377,281
Long-lived assets		31,147		27,996		3,065		6,274		4,365		—			72,847

“Other” consists of Central and South America, Oceania and Africa.

Revenues are attributed to geographies based on the country location of the parent company or the subsidiary that transacted the sale with the external customer.

There are no any individually material countries with respect to revenues, and long-lived assets included in other foreign countries.

Unallocated amounts included in assets represent assets held for corporate purposes, which mainly consist of cash and cash equivalents and marketable securities. Such corporate assets were ¥4,613,672 million, ¥4,749,259 million and ¥5,599,970 million ($59,542 million), as of March 31, 2011, 2012 and 2013, respectively.

Transfers between industries or geographic segments are made at amounts which Toyota’s management believes approximate arm’s-length transactions. In measuring the reportable segments’ income or losses, operating income consists of revenue less operating expenses.

F-72

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Overseas Revenues by destination -

The following information shows revenues that are attributed to countries based on location of customers, excluding customers in Japan. In addition to the disclosure requirements under U.S.GAAP, Toyota discloses this information in order to provide financial statements users with valuable information.


	Yen in millions						U.S. dollars in millions
	For the years ended March 31,						For the year ended March 31,
	2011		2012		2013		2013
North America	¥	5,398,278	¥	4,715,804	¥	6,790,453	$	72,200
Europe		1,793,932		1,817,944		1,901,118		20,214
Asia		3,280,384		3,284,392		3,940,175		41,894
Other		3,196,114		3,103,383		3,929,775		41,784

“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

F-73

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Certain financial statements data on non-financial services and financial services businesses -

The financial data below presents separately Toyota’s non-financial services and financial services businesses.

Balance sheets -


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Non-Financial Services Businesses
Current assets
Cash and cash equivalents	¥	1,104,636		¥	1,107,409		$	11,775
Marketable securities		1,015,626			1,204,447			12,806
Trade accounts and notes receivable, less allowance for doubtful accounts		2,031,472			2,033,831			21,625
Inventories		1,622,154			1,715,634			18,242
Prepaid expenses and other current assets		1,464,124			1,597,514			16,986

Total current assets		7,238,012			7,658,835			81,434

Investments and other assets		6,218,377			7,462,767			79,349
Property, plant and equipment		4,510,716			4,741,357			50,413

Total Non-Financial Services Businesses assets		17,967,105			19,862,959			211,196

Financial Services Businesses
Current assets
Cash and cash equivalents		574,564			610,888			6,495
Marketable securities		165,444			241,216			2,565
Finance receivables, net		4,114,897			5,117,660			54,414
Prepaid expenses and other current assets		685,611			693,036			7,369

Total current assets		5,540,516			6,662,800			70,843

Noncurrent finance receivables, net		5,602,462			6,943,766			73,830
Investments and other assets		304,906			515,025			5,476
Property, plant and equipment		1,724,664			2,109,882			22,434

Total Financial Services Businesses assets		13,172,548			16,231,473			172,583

Eliminations		(488,688	)		(611,115	)		(6,498	)

Total assets	¥	30,650,965		¥	35,483,317		$	377,281

Assets in the non-financial services include unallocated corporate assets.

F-74

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions						U.S. dollars in millions
	March 31,						March 31,
	2012			2013			2013
Non-Financial Services Businesses
Current liabilities
Short-term borrowings	¥	715,019		¥	576,685		$	6,132
Current portion of long-term debt		339,441			185,582			1,973
Accounts payable		2,234,316			2,092,722			22,251
Accrued expenses		1,737,490			2,092,102			22,245
Income taxes payable		123,344			140,935			1,499
Other current liabilities		1,175,801			1,186,870			12,619

Total current liabilities		6,325,411			6,274,896			66,719

Long-term liabilities
Long-term debt		503,070			521,428			5,544
Accrued pension and severance costs		700,211			754,360			8,021
Other long-term liabilities		531,982			969,668			10,310

Total long-term liabilities		1,735,263			2,245,456			23,875

Total Non-Financial Services Businesses liabilities		8,060,674			8,520,352			90,594

Financial Services Businesses
Current liabilities
Short-term borrowings		3,040,373			3,861,699			41,060
Current portion of long-term debt		2,218,526			2,538,249			26,988
Accounts payable		27,095			37,655			400
Accrued expenses		96,247			105,901			1,126
Income taxes payable		10,434			15,331			163
Other current liabilities		536,291			632,025			6,720

Total current liabilities		5,928,966			7,190,860			76,457

Long-term liabilities
Long-term debt		5,555,112			6,876,849			73,119
Accrued pension and severance costs		8,191			11,752			125
Other long-term liabilities		520,252			724,337			7,702

Total long-term liabilities		6,083,555			7,612,938			80,946

Total Financial Services Businesses liabilities		12,012,521			14,803,798			157,403

Eliminations		(488,708	)		(613,689	)		(6,525	)

Total liabilities		19,584,487			22,710,461			241,472

Total Toyota Motor Corporation shareholders’ equity		10,550,261			12,148,035			129,166

Noncontrolling interests		516,217			624,821			6,643

Total shareholders’ equity		11,066,478			12,772,856			135,809

Total liabilities and shareholders’ equity	¥	30,650,965		¥	35,483,317		$	377,281

F-75

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Statements of income -


	Yen in millions									U.S. dollars in millions
	For the years ended March 31,									For the year ended March 31,
	2011			2012			2013			2013
Non-Financial Services Businesses
Net revenues	¥	17,826,986		¥	17,534,872		¥	20,943,634		$	222,686

Costs and expenses
Cost of revenues		15,986,741			15,796,635			18,034,256			191,752
Selling, general and administrative		1,723,071			1,676,999			1,899,997			20,202

Total costs and expenses		17,709,812			17,473,634			19,934,253			211,954

Operating income		117,174			61,238			1,009,381			10,732

Other income (expense), net		88,840			69,935			79,837			849

Income before income taxes and equity in earnings of affiliated companies		206,014			131,173			1,089,218			11,581

Provision for income taxes		178,795			141,558			436,223			4,638
Equity in earnings of affiliated companies		214,229			196,544			230,078			2,446

Net income		241,448			186,159			883,073			9,389

Less: Net income attributable to noncontrolling interests		(54,055	)		(82,181	)		(119,359	)		(1,269	)

Net income attributable to Toyota Motor Corporation - Non-Financial Services Businesses		187,393			103,978			763,714			8,120

Financial Services Businesses
Net revenues		1,192,205			1,100,324			1,170,670			12,447

Costs and expenses
Cost of revenues		636,374			615,563			633,306			6,734
Selling, general and administrative		197,551			178,323			221,544			2,355

Total costs and expenses		833,925			793,886			854,850			9,089

Operating income		358,280			306,438			315,820			3,358

Other income (expense), net		1,349			(4,679	)		(970	)		(10	)

Income before income taxes and equity in earnings of affiliated companies		359,629			301,759			314,850			3,348

Provision for income taxes		134,094			120,725			116,033			1,234
Equity in earnings of affiliated companies		787			1,157			1,441			15

Net income		226,322			182,191			200,258			2,129

Less: Net income attributable to noncontrolling interests		(3,251	)		(2,566	)		(1,961	)		(21	)

Net income attributable to Toyota Motor Corporation - Financial Services Businesses		223,071			179,625			198,297			2,108

Eliminations		(2,281	)		(44	)		152			2

Net income attributable to Toyota Motor Corporation	¥	408,183		¥	283,559		¥	962,163		$	10,230

F-76

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Statements of cash flows -


	Yen in millions									Yen in millions
	For the year ended March 31, 2011									For the year ended March 31, 2012
	Non-Financial Services Businesses			Financial Services Businesses			Consolidated			Non-Financial Services Businesses			Financial Services Businesses			Consolidated
Cash flows from operating activities
Net income	¥	241,448		¥	226,322		¥	465,485		¥	186,159		¥	182,191		¥	368,302
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		844,708			330,865			1,175,573			769,073			298,757			1,067,830
Provision for doubtful accounts and credit losses		1,806			2,334			4,140			5,843			3,780			9,623
Pension and severance costs, less payments		(24,867	)		1,453			(23,414	)		15,410			1,301			16,711
Losses on disposal of fixed assets		36,076			138			36,214			33,448			80			33,528
Unrealized losses on available-for-sale securities, net		7,915			—			7,915			53,831			—			53,831
Deferred income taxes		(17,258	)		103,035			85,710			(82,792	)		89,199			6,395
Equity in earnings of affiliated companies		(214,229	)		(787	)		(215,016	)		(196,544	)		(1,157	)		(197,701	)
Changes in operating assets and liabilities, and other		591,378			(106,416	)		487,402			182,931			(73,020	)		93,916

Net cash provided by operating activities		1,466,977			556,944			2,024,009			967,359			501,131			1,452,435

Cash flows from investing activities
Additions to finance receivables		—			(14,323,261	)		(8,438,785	)		—			(13,455,792	)		(8,333,248	)
Collection of and proceeds from sales of finance receivables		—			13,887,751			8,003,940			—			13,168,058			8,061,710
Additions to fixed assets excluding equipment leased to others		(621,302	)		(8,024	)		(629,326	)		(713,867	)		(9,670	)		(723,537	)
Additions to equipment leased to others		(78,559	)		(983,306	)		(1,061,865	)		(135,054	)		(673,491	)		(808,545	)
Proceeds from sales of fixed assets excluding equipment leased to others		50,742			600			51,342			36,203			430			36,633
Proceeds from sales of equipment leased to others		17,700			468,995			486,695			20,689			410,624			431,313
Purchases of marketable securities and security investments		(4,063,499	)		(358,308	)		(4,421,807	)		(2,565,772	)		(607,862	)		(3,173,634	)
Proceeds from sales of and maturity of marketable securities and security investments		3,423,618			292,538			3,716,156			2,227,812			629,013			2,856,825
Payment for additional investments in affiliated companies, net of cash acquired		(299	)		—			(299	)		(147	)		—			(147	)
Changes in investments and other assets, and other		394,479			18,303			177,605			213,957			(12,206	)		209,972

Net cash used in investing activities		(877,120	)		(1,004,712	)		(2,116,344	)		(916,179	)		(550,896	)		(1,442,658	)

Cash flows from financing activities
Proceeds from issuance of long-term debt		15,318			2,934,588			2,931,436			39,803			2,379,152			2,394,807
Payments of long-term debt		(309,862	)		(2,306,139	)		(2,489,632	)		(294,646	)		(2,608,135	)		(2,867,572	)
Increase (decrease) in short-term borrowings		(86,884	)		122,619			162,260			238,072			93,002			311,651
Dividends paid		(141,120	)		—			(141,120	)		(156,785	)		—			(156,785	)
Purchase of common stock, and other		(28,617	)		—			(28,617	)		(37,448	)		—			(37,448	)

Net cash provided by (used in) financing activities		(551,165	)		751,068			434,327			(211,004	)		(135,981	)		(355,347	)

Effect of exchange rate changes on cash and cash equivalents		(76,960	)		(50,069	)		(127,029	)		(36,093	)		(19,846	)		(55,939	)

Net increase (decrease) in cash and cash equivalents		(38,268	)		253,231			214,963			(195,917	)		(205,592	)		(401,509	)
Cash and cash equivalents at beginning of year		1,338,821			526,925			1,865,746			1,300,553			780,156			2,080,709

Cash and cash equivalents at end of year	¥	1,300,553		¥	780,156		¥	2,080,709		¥	1,104,636		¥	574,564		¥	1,679,200

F-77

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions									U.S. dollars in millions
	For the year ended March 31, 2013									For the year ended March 31, 2013
	Non-Financial Services Businesses			Financial Services Businesses			Consolidated			Non-Financial Services Businesses			Financial Services Businesses			Consolidated
Cash flows from operating activities
Net income	¥	883,073		¥	200,258		¥	1,083,482		$	9,389		$	2,129		$	11,520
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		768,581			336,528			1,105,109			8,172			3,578			11,750
Provision for doubtful accounts and credit losses		1,745			25,622			27,367			19			272			291
Pension and severance costs, less payments		(23,514	)		3,085			(20,429	)		(250	)		33			(217	)
Losses on disposal of fixed assets		32,005			216			32,221			341			2			343
Unrealized losses on available-for-sale securities, net		2,104			—			2,104			22			—			22
Deferred income taxes		89,834			70,743			160,008			955			753			1,701
Equity in earnings of affiliated companies		(230,078	)		(1,441	)		(231,519	)		(2,446	)		(15	)		(2,461	)
Changes in operating assets and liabilities, and other		472,514			32,066			292,973			5,024			341			3,115

Net cash provided by operating activities		1,996,264			667,077			2,451,316			21,226			7,093			26,064

Cash flows from investing activities
Additions to finance receivables		—			(16,877,678	)		(10,004,928	)		—			(179,454	)		(106,379	)
Collection of and proceeds from sales of finance receivables		—			15,784,681			9,102,856			—			167,832			96,788
Additions to fixed assets excluding equipment leased to others		(839,756	)		(14,805	)		(854,561	)		(8,929	)		(157	)		(9,086	)
Additions to equipment leased to others		(129,070	)		(990,521	)		(1,119,591	)		(1,372	)		(10,532	)		(11,904	)
Proceeds from sales of fixed assets excluding equipment leased to others		38,051			1,140			39,191			405			12			417
Proceeds from sales of equipment leased to others		68,571			464,870			533,441			729			4,943			5,672
Purchases of marketable securities and security investments		(2,980,821	)		(431,602	)		(3,412,423	)		(31,694	)		(4,589	)		(36,283	)
Proceeds from sales of and maturity of marketable securities and security investments		2,285,566			383,525			2,669,091			24,301			4,078			28,379
Payment for additional investments in affiliated companies, net of cash acquired		16,216			—			16,216			172			—			172
Changes in investments and other assets, and other		17,206			(77,848	)		3,396			183			(828	)		36

Net cash used in investing activities		(1,524,037	)		(1,758,238	)		(3,027,312	)		(16,205	)		(18,695	)		(32,188	)

Cash flows from financing activities
Proceeds from issuance of long-term debt		182,114			3,089,484			3,191,223			1,937			32,849			33,931
Payments of long-term debt		(328,380	)		(2,415,566	)		(2,682,136	)		(3,492	)		(25,684	)		(28,518	)
Increase (decrease) in short-term borrowings		(162,782	)		388,416			201,261			(1,731	)		4,130			2,139
Dividends paid		(190,008	)		—			(190,008	)		(2,020	)		—			(2,020	)
Purchase of common stock, and other		(43,098	)		—			(43,098	)		(458	)		—			(458	)

Net cash provided (used in) financing activities		(542,154	)		1,062,334			477,242			(5,764	)		11,295			5,074

Effect of exchange rate changes on cash and cash equivalents		72,700			65,151			137,851			773			693			1,466

Net increase in cash and cash equivalents		2,773			36,324			39,097			30			386			416
Cash and cash equivalents at beginning of year		1,104,636			574,564			1,679,200			11,745			6,109			17,854

Cash and cash equivalents at end of year	¥	1,107,409		¥	610,888		¥	1,718,297		$	11,775		$	6,495		$	18,270

F-78

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

25. Per share amounts:

Reconciliations of the differences between basic and diluted net income attributable to Toyota Motor Corporation per share for the years ended March 31, 2011, 2012 and 2013 are as follows:


	Yen in millions			Thousands of shares		Yen		U.S. dollars in millions			U.S. dollars
	Net income attributable to Toyota Motor Corporation			Weighted- average shares		Net income attributable to Toyota Motor Corporation per share		Net income attributable to Toyota Motor Corporation			Net income attributable to Toyota Motor Corporation per share
For the year ended March 31, 2011
Basic net income attributable to Toyota Motor Corporation per common share	¥	408,183			3,135,881	¥	130.17
Effect of dilutive securities
Assumed exercise of dilutive stock options		(0	)		34

Diluted net income attributable to Toyota Motor Corporation per common share	¥	408,183			3,135,915	¥	130.16

For the year ended March 31, 2012
Basic net income attributable to Toyota Motor Corporation per common share	¥	283,559			3,143,470	¥	90.21
Effect of dilutive securities
Assumed exercise of dilutive stock options		(3	)		0

Diluted net income attributable to Toyota Motor Corporation per common share	¥	283,556			3,143,470	¥	90.20

For the year ended March 31, 2013
Basic net income attributable to Toyota Motor Corporation per common share	¥	962,163			3,166,909	¥	303.82	$	10,230		$	3.23
Effect of dilutive securities
Assumed exercise of dilutive stock options		(32	)		246				(0	)

Diluted net income attributable to Toyota Motor Corporation per common share	¥	962,131			3,167,155	¥	303.78	$	10,230		$	3.23

Stock options that were not included in the computation of diluted net income attributable to Toyota Motor Corporation per share for the years ended March 31, 2011, 2012 and 2013 were 12,403 thousand shares, 12,530 thousand shares and 8,682 thousand shares, respectively, because the options’ exercise prices were greater than the average market price per common share during the period.

In addition to the disclosure requirements under U.S.GAAP, Toyota discloses the information below in order to provide financial statements users with valuable information.

F-79

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows Toyota Motor Corporation shareholders’ equity per share as of March 31, 2012 and 2013. Toyota Motor Corporation shareholders’ equity per share amounts are calculated by dividing Toyota Motor Corporation shareholders’ equities’ amount at the end of each period by the number of shares issued and outstanding, excluding treasury stock at the end of the corresponding period.


	Yen in millions		Thousands of shares		Yen		U.S. dollars in millions		U.S. dollars
	Toyota Motor Corporation Shareholders’ equity		Shares issued and outstanding at the end of the year (excluding treasury stock)		Toyota Motor Corporation Shareholders’ equity per share		Toyota Motor Corporation Shareholders’ equity		Toyota Motor Corporation Shareholders’ equity per share
As of March 31, 2012	¥	10,550,261		3,166,810	¥	3,331.51
As of March 31, 2013		12,148,035		3,167,429		3,835.30	$	129,166	$	40.78

26. Fair value measurements:

In accordance with U.S.GAAP, Toyota classifies fair value into three levels of input as follows which are used to measure it.


Level 1:		Quoted prices in active markets for identical assets or liabilities

Level 2:		Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the assets or liabilities

Level 3:		Unobservable inputs for assets or liabilities

The following table summarizes the fair values of the assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and 2013. Transfers between levels of the fair value are recognized at the end of their respective reporting periods:


	Yen in millions
	March 31, 2012
	Level 1		Level 2			Level 3			Total
Assets
Cash equivalents	¥	485,119	¥	223,385		¥	—		¥	708,504
Time deposits		—		50,000			—			50,000
Marketable securities and other securities investments
Public and corporate bonds		3,389,882		237,934			1,684			3,629,500
Common stocks		1,034,319		—			—			1,034,319
Other		40,619		428,737			—			469,356
Derivative financial instruments		—		289,931			7,565			297,496

Total	¥	4,949,939	¥	1,229,987		¥	9,249		¥	6,189,175

Liabilities
Derivative financial instruments	¥	—	¥	(180,347	)	¥	(2,826	)	¥	(183,173	)

Total	¥	—	¥	(180,347	)	¥	(2,826	)	¥	(183,173	)

F-80

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2013
	Level 1		Level 2			Level 3			Total
Assets
Cash equivalents	¥	245,264	¥	375,941		¥	—		¥	621,205
Time deposits		—		57,572			—			57,572
Marketable securities and other securities investments
Public and corporate bonds		3,753,451		792,806			6,889			4,553,146
Common stocks		1,401,183		—			—			1,401,183
Other		49,731		518,955			—			568,686
Derivative financial instruments		—		217,745			7,083			224,828

Total	¥	5,449,629	¥	1,963,019		¥	13,972		¥	7,426,620

Liabilities
Derivative financial instruments	¥	—	¥	(196,386	)	¥	(1,956	)	¥	(198,342	)

Total	¥	—	¥	(196,386	)	¥	(1,956	)	¥	(198,342	)


	U.S. dollars in millions
	March 31, 2013
	Level 1		Level 2			Level 3			Total
Assets
Cash equivalents	$	2,608	$	3,997		$	—		$	6,605
Time deposits		—		612			—			612
Marketable securities and other securities investments
Public and corporate bonds		39,909		8,430			73			48,412
Common stocks		14,898		—			—			14,898
Other		529		5,518			—			6,047
Derivative financial instruments		—		2,315			75			2,390

Total	$	57,944	$	20,872		$	148		$	78,964


Liabilities
Derivative financial instruments	$	—	$	(2,088	)	$	(21	)	$	(2,109	)

Total	$	—	$	(2,088	)	$	(21	)	$	(2,109	)

The following is description of the assets and liabilities measured at fair value, information about the valuation techniques used to measure fair value, key inputs and significant assumption:

Cash equivalents and time deposits -

Cash equivalents include money market funds and other investments with original maturities of three months or less. Cash equivalents classified in Level 2 include primarily negotiable certificate of deposit with original maturities of three months or less. These are measured at fair value using observable interest rates in the market. Time deposits include negotiable certificate of deposit with original maturities over three months. These are measured at fair value using observable interest rates in the market.

F-81

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Marketable securities and other securities investments -

Marketable securities and other securities investments include public and corporate bonds, common stocks and other investments. Public and corporate bonds include primarily government bonds and represent 60% of Japanese bonds, and 40% of U.S., European and other bonds as of March 31, 2012, and 49% of Japanese bonds, and 51% of U.S., European and other bonds as of March 31, 2013. Listed stocks on the Japanese stock markets represent 83% and 85% of common stocks as of March 31, 2012 and 2013, respectively. Toyota uses primarily quoted market prices for identical assets to measure fair value of these securities. “Other” includes primarily investment trusts. Generally, Toyota uses quoted market prices for similar assets or quoted non-active market prices for identical assets to measure fair value of these securities. These assets are classified in Level 2.

Derivative financial instruments -

See note 20 to the consolidated financial statements about derivative financial instruments. Toyota estimates the fair value of derivative financial instruments using industry-standard valuation models that require observable inputs including interest rates and foreign exchange rates, and the contractual terms. The usage of these models does not require significant judgment to be applied. These derivative financial instruments are classified in Level 2. In other certain cases when market data is not available, key inputs to the fair value measurement include quotes from counterparties, and other market data. Toyota assesses the reasonableness of changes of the quotes using observable market data. These derivative financial instruments are classified in Level 3. Toyota’s derivative fair value measurements consider assumptions about counterparty and our own non-performance risk, using such as credit default probabilities.

The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the periods ended March 31, 2011, 2012 and 2013:


	Yen in millions
	For the year ended March 31, 2011
	Marketable securities and other securities investments			Derivative financial instruments			Total
Balance at beginning of year	¥	13,134		¥	5,892		¥	19,026
Total gains (losses)
Included in earnings		433			31,338			31,771
Included in other comprehensive income (loss)		779			—			779
Purchases, issuances and settlements		(810	)		(8,381	)		(9,191	)
Other		(13,536	)		(22,055	)		(35,591	)

Balance at end of year	¥	—		¥	6,794		¥	6,794

F-82

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	For the year ended March 31, 2012
	Marketable securities and other securities investments			Derivative financial instruments			Total
Balance at beginning of year	¥	—		¥	6,794		¥	6,794
Total gains (losses)
Included in earnings		—			6,476			6,476
Included in other comprehensive income (loss)		—			—			—
Purchases and issuances		—			—			—
Settlements		—			(3,832	)		(3,832	)
Other		1,684			(4,699	)		(3,015	)

Balance at end of year	¥	1,684		¥	4,739		¥	6,423


	Yen in millions
	For the year ended March 31, 2013
	Marketable securities and other securities investments			Derivative financial instruments			Total
Balance at beginning of year	¥	1,684		¥	4,739		¥	6,423
Total gains (losses)
Included in earnings		24			2,118			2,142
Included in other comprehensive income (loss)		58			—			58
Purchases and issuances		3,607			—			3,607
Settlements		(1,563	)		(2,343	)		(3,906	)
Other		3,079			613			3,692

Balance at end of year	¥	6,889		¥	5,127		¥	12,016


	U.S. dollars in millions
	For the year ended March 31, 2013
	Marketable securities and other securities investments			Derivative financial instruments			Total
Balance at beginning of year	$	18		$	50		$	68
Total gains (losses)
Included in earnings		0			22			22
Included in other comprehensive income (loss)		1			—			1
Purchases and issuances		38			—			38
Settlements		(16	)		(25	)		(41	)
Other		32			7			39

Balance at end of year	$	73		$	54		$	127

“Included in earnings” in marketable securities and other securities investments and derivative financial instruments are included in “Other income (loss), net” and “Cost of financing operations” in the accompanying consolidated statements of income, respectively.

F-83

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In the reconciliation table above, derivative financial instruments are presented net of assets and liabilities. The other amount includes consolidated retained interests in securitized financial receivables of ¥(13,165) million, certain derivative financial instruments transferred into Level 2 due to be measured at observable inputs of ¥(21,413) million and the impact of currency translation adjustments for the year ended March 31, 2011, and includes the impacts of level transfers and currency translation adjustments for the year ended March 31, 2012, and includes the currency translation adjustments for the year ended March 31, 2013.

As of March 31, 2013, the Level 3 assets and liabilities measured at fair value on a recurring basis are not significant.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. During the years ended March 31, 2012 and 2013, Toyota measured certain finance receivables at fair value of ¥32,056 million and ¥32,974 million ($351 million) based on the collateral value, resulting in gains of ¥1,736 million and ¥978 million ($10 million). This fair value measurement on a nonrecurring basis is classified in Level 3. See note 21 to the consolidated financial statements for the fair value measurement. These Level 3 financial assets are not significant.

F-84

ITEM 19. EXHIBITS

Index to Exhibits


1.1		Amended and Restated Articles of Incorporation of the Registrant (English translation)

1.2		Amended and Restated Regulations of the Board of Directors of the Registrant (English translation)

1.3		Amended and Restated Regulations of the Audit & Supervisory Board of the Registrant (English translation)

2.1		Amended and Restated Share Handling Regulations of the Registrant (English translation) (incorporated by reference to Exhibit 2.1 to Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2009 filed with the SEC on June 24, 2009 (file no. 001-14948))

2.2		Form of Deposit Agreement among the Registrant, The Bank of New York (predecessor of The Bank of New York Mellon), as depositary, and the owners and beneficial owners from time to time of American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to Exhibit 1 to Toyota’s Registration Statement on Form F-6, filed with the SEC on November 7, 2006 (file no. 333-138477))

2.3		Form of ADR (included in Exhibit 2.2)

8.1		List of Principal Subsidiaries (See “Organizational Structure” in “Item 4. Information on the Company”)

11.1		Code of Ethics of the Registrant applicable to its directors and managing officers, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (English translation) (incorporated by reference to Exhibit 11.1 to Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2011 filed with the SEC on June 24, 2011 (file no. 001-14948))

12.1		Certifications of the Registrant’s Chairman of the Board and Executive Vice President, Member of the Board pursuant to Section 302 of the Sarbanes-Oxley Act

13.1		Certifications of the Registrant’s Chairman of the Board and Executive Vice President, Member of the Board pursuant to Section 906 of the Sarbanes-Oxley Act

15.1		Consent of Independent Registered Public Accounting Firm

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

131

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.


TOYOTA MOTOR CORPORATION

By:		/s/ TAKUO SASAKI
Name:		Takuo Sasaki
Title:		Managing Officer

Date: June 24, 2013