As filed with the U.S. Securities and Exchange Commission on June 10, 2026
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
OR
È
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 2026
OR
‘
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
‘
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)
(Translation of registrant’s name into English)
Japan
(Jurisdiction of incorporation or organization)
Aichi Prefecture 471-8571
+81 565 28-2121
(Address of principal executive offices)
Yoshihide Moriyama
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
Trading Symbol(s)
Name of each exchange on which registered
American Depositary Shares*
Common Stock**
TM
The New York Stock Exchange
*
Each American Depositary Share representing ten 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:
13,033,931,974 shares of common stock (including 355,369,125 shares of common stock in the form of American Depositary Shares) as of March 31, 2026
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:
Yes
È
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
È
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
È
No
‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files):
Yes
È
No
‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of
“large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
È
Accelerated filer
‘
Non-accelerated filer
‘
Emerging growth company
‘
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act:
‘
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.
‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
‘
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
‘
International Financial Reporting Standards as issued by the International Accounting Standards Board
È
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
È
TABLE OF CONTENTS
Page
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
[RESERVED]
............................................................
1
3.B
CAPITALIZATION AND INDEBTEDNESS
...................................
1
3.C
REASONS FOR THE OFFER AND USE OF PROCEEDS
........................
1
3.D
RISK FACTORS
.........................................................
1
ITEM 4.
INFORMATION ON THE COMPANY
.......................................
7
4.A
HISTORY AND DEVELOPMENT OF THE COMPANY
.........................
7
4.B
BUSINESS OVERVIEW
...................................................
7
4.C
ORGANIZATIONAL STRUCTURE
.........................................
69
4.D
PROPERTY, PLANTS AND EQUIPMENT
....................................
70
ITEM 4A.
UNRESOLVED STAFF COMMENTS
........................................
71
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
...................
72
5.A
OPERATING RESULTS
...................................................
72
5.B
LIQUIDITY AND CAPITAL RESOURCES
...................................
86
5.C
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
.................
95
5.D
TREND INFORMATION
..................................................
97
5.E
CRITICAL ACCOUNTING ESTIMATES
.....................................
97
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
....................
97
6.A
DIRECTORS AND SENIOR MANAGEMENT
.................................
97
6.B
COMPENSATION
........................................................
104
6.C
BOARD PRACTICES
.....................................................
110
6.D
EMPLOYEES
............................................................
112
6.E
SHARE OWNERSHIP
.....................................................
112
6.F
DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY
AWARDED COMPENSATION
.............................................
115
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
...........
115
7.A
MAJOR SHAREHOLDERS
................................................
115
7.B
RELATED PARTY TRANSACTIONS
........................................
117
7.C
INTERESTS OF EXPERTS AND COUNSEL
..................................
117
ITEM 8.
FINANCIAL INFORMATION
..............................................
117
8.A
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
.....
117
8.B
SIGNIFICANT CHANGES
.................................................
119
ITEM 9.
THE OFFER AND LISTING
................................................
119
9.A
LISTING DETAILS
.......................................................
119
9.B
PLAN OF DISTRIBUTION
.................................................
119
9.C
MARKETS
..............................................................
119
9.D
SELLING SHAREHOLDERS
...............................................
119
9.E
DILUTION
..............................................................
119
9.F
EXPENSES OF THE ISSUE
................................................
119
ITEM 10.
ADDITIONAL INFORMATION
.............................................
119
10.A
SHARE CAPITAL
........................................................
119
10.B
MEMORANDUM AND ARTICLES OF ASSOCIATION
.........................
120
10.C
MATERIAL CONTRACTS
.................................................
126
Page
10.D
EXCHANGE CONTROLS
.................................................
126
10.E
TAXATION
.............................................................
131
10.F
DIVIDENDS AND PAYING AGENTS
.......................................
138
10.G
STATEMENT BY EXPERTS
...............................................
138
10.H
DOCUMENTS ON DISPLAY
...............................................
138
10.I
SUBSIDIARY INFORMATION
.............................................
138
10.J
ANNUAL REPORT TO SECURITY HOLDERS
................................
138
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . .
138
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
...........
138
12.A
DEBT SECURITIES
......................................................
138
12.B
WARRANTS AND RIGHTS
................................................
138
12.C
OTHER SECURITIES
.....................................................
139
12.D
AMERICAN DEPOSITARY SHARES
........................................
139
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
...............
141
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS
......................................................
141
ITEM 15.
CONTROLS AND PROCEDURES
...........................................
141
ITEM 16.
[RESERVED]
............................................................
142
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
..................................
142
ITEM 16B.
CODE OF ETHICS
.......................................................
143
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
...........................
143
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . .
144
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
...........................................................
144
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
...................
145
ITEM 16G.
CORPORATE GOVERNANCE
.............................................
145
ITEM 16H.
MINE SAFETY DISCLOSURE
.............................................
149
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
...........................................................
149
ITEM 16J.
INSIDER TRADING POLICIES
.............................................
150
ITEM 16K.
CYBERSECURITY
.......................................................
150
ITEM 17.
FINANCIAL STATEMENTS
...............................................
153
ITEM 18.
FINANCIAL STATEMENTS
...............................................
153
ITEM 19.
EXHIBITS
..............................................................
154
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. Unless the context otherwise requires or as otherwise expressly stated, references in
this prospectus supplement to “TMC” refers to Toyota Motor Corporation, “Toyota,” “we,” “us,” “our” and
similar terms refer to Toyota Motor Corporation and its consolidated subsidiaries, as a group, and as of
March 31, 2026, “Toyota Group” refers to Toyota Motor Corporation, Toyota Industries Corporation (“Toyota
Industries”), Aichi Steel Corporation, JTEKT CORPORATION, Toyota Auto Body Co., Ltd., Toyota Tsusho
Corporation,
AISIN
CORPORATION,
DENSO
Corporation,
TOYOTA
BOSHOKU
CORPORATION,
TOYOTA FUDOSAN CO., LTD., TOYOTA CENTRAL R&D LABS., INC., Toyota Motor East Japan, Inc.,
Toyoda Gosei Co., Ltd., Hino Motors, Ltd. (“Hino”), Daihatsu Motor Co., Ltd. (“Daihatsu”), Toyota Housing
Corporation, Toyota Motor Kyushu, Inc. and Woven by Toyota, Inc. (“Woven by Toyota”), collectively.
However, effective April 1, 2026, Hino ceased to be a consolidated subsidiary of TMC, and references in this
annual report to “Toyota,” “we,” “us,” “our,” the “Toyota Group” and similar terms, when used in respect of any
date or period on or after April 1, 2026, exclude Hino. Notwithstanding the foregoing, certain Hino-brand
vehicles continue to be manufactured by our consolidated subsidiaries on or after April 1, 2026, and consolidated
vehicle sales for periods on or after such date include such Hino-brand vehicles manufactured by our
consolidated subsidiaries.
Toyota’s consolidated financial statements in this annual report have been prepared in accordance with
IFRS Accounting Standards, as issued by the International Accounting Standards Board (“IASB”). IFRS
Accounting Standards also includes International Accounting Standards (“IASs”) and the related interpretations
of the interpretations committees (SIC and IFRIC). As such, we make an explicit and unreserved statement of
compliance with IFRS Accounting Standards with respect to our consolidated financial statements as of and for
the fiscal years ended March 31, 2024, 2025, and 2026 included in this annual report.
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Written forward-looking statements may appear in documents filed with 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, market demand, and the competitive environment affecting 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 Canadian dollar and the British pound), stock prices and
interest rates;
(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 and regulations, as well as other government actions, in the markets in which
Toyota operates that affect Toyota’s operations, particularly laws, regulations and government actions
relating to vehicle safety including remedial measures such as recalls, environmental protection, vehicle
emissions and vehicle fuel economy, and tariffs and other trade policies, as well as 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, as well as information security;
(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;
(xiv) the impact of natural calamities, epidemics, political and economic instability, fuel shortages or
interruptions in social infrastructure, wars, terrorism and labor strikes, including their negative effect on
Toyota’s vehicle production and sales;
(xv) the impact of climate change and the transition towards a low-carbon economy; and
(xvi) the ability of Toyota to hire or retain sufficient human resources.
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 [RESERVED]
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. In recent years, competition in the automotive industry has
further intensified amidst difficult overall market conditions. In addition, competition is likely to further intensify
as technological advances in areas such as Connected, Autonomous / Automated, Shared, and Electric (“CASE”)
technologies progress in the worldwide automotive industry, possibly resulting in industry reorganizations.
Factors affecting competition include product quality and features, safety, reliability, fuel economy, the amount
of time required for innovation and development, pricing, customer service, financing terms and tax credits or
other government policies in various countries. 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, results of
operations, cash flows and prospects. Toyota’s ability to adequately respond to the recent rapid changes in the
automotive market, particularly shifts in consumer preferences to electrified vehicles, 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 economic, social and political 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.
Changes in demand for automobiles are continuing, and it is unclear how this situation will transition in the
future. Toyota’s financial condition, results of operations, cash flows and prospects may be adversely affected if
the changes in demand for automobiles continue or progress further beyond Toyota’s expectations. In addition,
demand has been affected, and may in the future be affected by, factors directly impacting vehicle price or the
1
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, results of operations, cash flows and prospects.
Toyota’s future success depends on its ability to offer new, innovative and 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, reliability and sustainability. The timely introduction of new vehicle
models and vehicle features, 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 and technological advances. 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, sustainability 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 offer new products or implement capital
expenditures at the level and times planned by management, including as described in targets or goals that we
have disclosed publicly. Toyota’s inability to develop and offer products that meet customers’ preferences and
demand with respect to quality, safety, reliability, styling, sustainability 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, results of operations, cash flows and prospects.
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 geopolitical and 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, results of operations, cash
flows and prospects.
Toyota’s success is significantly impacted by its ability to maintain and develop its brand image and
reputation.
In the highly competitive automotive industry, it is critical to maintain and develop a brand image and
reputation. In order to do so, it is necessary to further increase stakeholders’ confidence by ensuring that Toyota,
the Toyota Group and their suppliers thoroughly comply with laws and regulations, provide safe, high-quality
products that meet customer preferences and demand, as well as timely and appropriately disseminate
information to stakeholders. It is also becoming increasingly important for companies to contribute to
sustainability. However, the Toyota Group cannot ensure that it or its suppliers do so in all cases. For instance, at
the consolidated subsidiary level, Hino and Daihatsu announced vehicle model certification issues in March 2022
and in April 2023, respectively. In addition, Toyota Motor Corporation investigated certain of its model
certification applications as per instructions from the Ministry of Land, Infrastructure, Transport and Tourism of
Japan (“MLIT”) on January 26, 2024. Toyota Motor Corporation has confirmed that since 2014 seven models,
including some that have already been discontinued, were tested as part of such applications using methods that
differed from government standards, and it reported this to the MLIT on May 31, 2024. In July 2024, Toyota
Motor Corporation received a correction order from the MLIT regarding its model certification applications.
2
Following on-site investigations, the MLIT indicated eight new cases involving seven vehicles that did not
comply with the standards. In August 2024, Toyota Motor Corporation submitted a report on measures to prevent
recurrence of such conduct to the MLIT. See “Item 4. Information on the Company — 4.B Business Overview —
Legal Proceedings” for further discussion of these and related matters.
In addition, actual or perceived failures on the part of Toyota or its suppliers to contribute to sustainability
or to meet certain sustainability-related goals or objectives, including those relating to climate change or the
protection of human rights in Toyota’s supply chain, may also harm Toyota’s reputation. Any insufficient
measures taken by Toyota, the Toyota Group or their suppliers to maintain and develop Toyota’s brand image
and reputation may have an adverse effect on Toyota’s financial condition, results of operations, cash flows and
prospects.
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.
Irrespective of the number of 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. Circumstances that may
adversely affect such abilities include geopolitical tensions as well as related governmental actions such as
economic sanctions and export controls that may be relevant to certain 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, results of operations, cash flows
and prospects.
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 prices, an increase in the ratio of credit losses and increased funding costs are
additional 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, results of operations, cash flows and prospects.
Toyota’s operations and vehicles rely on various digital and information technologies, as well as information
security, which are subject to frequent attack.
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 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, shutdowns due to unauthorized access or attacks by hackers, computer
3
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 or otherwise uses, 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. In particular, cyberattacks or other intentional
malfeasance are increasing in terms of intensity, sophistication and frequency, and Toyota has been and expects
to continue to be the subject of such attacks. Such attacks have, in some cases, and could again 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, results
of operations, cash flows and prospects. Moreover, similar attacks on Toyota’s suppliers and business partners
have had, and may in the future have, a similar negative impact on Toyota.
Toyota is exposed to risks associated with climate change, including the physical risks of climate change and
risks from the transition to a lower-carbon economy.
Risks associated with climate change are subject to increasing societal and political, including regulatory,
focus in Japan and globally. These risks include the physical risks of climate change and risks from the transition
to a lower-carbon economy.
The physical risks of climate change include both acute, event-driven risks such as those relating to
hurricanes, floods, tornadoes, drought, and wildfires as well as longer-term weather patterns and related effects,
such as sustained higher temperatures and sea level rise. While Toyota has a Business Continuity Plan (“BCP”),
in addition to large-scale disasters due to extreme weather conditions, the increase and intensification of severe
weather events such as heat waves is expected to increase the risk of heat stroke and water shortages due to
drought. Such severe weather events and other natural conditions have in the past harmed, and may in the future
again harm, Toyota’s employees or its facilities and other assets, as well as those of Toyota’s suppliers and other
business partners, thereby adversely affecting Toyota’s production, sales or other operational capacities. Large-
scale disasters and other events may also adversely affect the financial condition of Toyota’s customers, and
thereby demand for its products and services.
Transition risks are those attributable to regulatory, technological and market changes to address the
mitigation of, or adaptation to, climate-related risks. For example, Toyota is subject to the risk of changes in
customer demand for vehicles due to such factors as changes in laws, regulations and government policies
relating to climate change, technological innovation to address climate change, and new entrants into the
automobile industry that seek to capitalize on changing market dynamics. Changes in customer demand may
pose ancillary risks and challenges, such as Toyota’s having to establish new, or enhance existing, supply
networks in order to source the raw materials, parts and components necessary for it to manufacture the products
then in demand at desired volumes and at competitive costs. Toyota may incur significant costs and expenses as a
result of the materialization of such risks, or in its efforts to mitigate or adapt to such risks. Toyota’s inability to
develop and offer products that meet customers’ preferences and demand in a timely manner could result in a
lower market share and reduced sales revenues and margins, and may adversely affect Toyota’s financial
condition, results of operations cash flows and prospects.
Furthermore, Toyota has published disclosures on climate-change related matters relating to its business and
its
partners.
Such
disclosures
include
forward-looking
statements
based
on
Toyota’s
expectations
and
assumptions, involving substantial discretion and forecasts about costs and future circumstances, which may
prove to be incorrect. In addition, Toyota’s initiatives relating to climate change may not have the intended
results, and estimates concerning the timing and cost of implementing, and ability to meet, stated goals are
subject to risks and uncertainties. As a result, Toyota may not be able to meet its goals, including those set forth
in this report, on expected timing or within expected costs.
In particular, progress toward achieving Toyota’s climate-related targets requires significant investment of
resources and management time, as well as further improvement of compliance and risk management systems,
4
internal controls and other internal procedures. Toyota’s ability to achieve its climate-related goals, which are to
be pursued over the long-term and are inherently aspirational, is subject to numerous risks and uncertainties,
many of which are outside of Toyota’s control, such as changes in environmental and energy regulation and
policy, the pace of technological change and innovation, and the actions of Toyota’s customers and competitors.
Any failure, or perceived failure, by Toyota to achieve its climate-change related goals, including those set forth
in this report, could adversely impact its reputation, financial condition, results of operations, cash flows and
prospects. For a further discussion of risks associated with climate change, see “Item 4. Information on the
Company — 4.B Business Overview — Climate Change-related Disclosures.”
Toyota’s operations are dependent on securing, retaining and developing talented, diverse employees.
Given in particular the rapid changes in its business environment and its efforts to transform into a mobility
company, Toyota’s success depends on its ability to continue to recruit, retain and develop talented and diverse
employees. However, competition for such employees is intense and if Toyota cannot recruit and retain diverse
employees with a high level of expertise and extensive experience as planned, or it is unable to provide its
employees with the opportunities, training and resources they need to develop themselves further, it may reduce
Toyota’s competitiveness, and its financial condition, results of operations, cash flows and prospects could be
adversely affected.
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 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, results of operations, cash flows and prospects. For a further discussion of
currency and interest rate fluctuations and the use of derivative financial instruments, see “Item 5. Operating and
Financial Review and Prospects — 5.A Operating Results — Overview — Currency Fluctuations,” “Item 11.
Quantitative and Qualitative Disclosures About Market Risk,” and notes 9 and 20 to Toyota’s consolidated
financial statements.
High prices of raw materials and strong pressure on Toyota’s suppliers has and could continue to negatively
impact Toyota’s profitability.
Increases in raw materials prices 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
profitability if Toyota is not able to pass all those costs on to its customers.
A 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,
5
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, results of operations, cash flows and prospects may be
adversely affected.
Regulatory, Legal, Political and Other Risks
The automotive industry is subject to various laws, regulations and governmental actions.
The worldwide automotive industry is subject to various laws and regulations. Toyota has incurred
significant costs as a result of laws, regulations and governmental actions or in response thereto, and expects to
incur such costs in the future. Furthermore, new legislation or regulations or changes in existing legislation or
regulations may also subject Toyota to additional costs in the future. If Toyota incurs significant costs related to
laws, regulations and governmental actions, Toyota’s financial condition, results of operations, cash flows and
prospects may be materially and adversely affected. Such laws, regulations and governmental actions may also
limit or restrict Toyota’s businesses or operations, which may also materially and adversely affect its financial
condition, results of operations, cash flows and prospects.
For example, Toyota is subject to various laws and regulations 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 prescribed in laws and regulations. In addition, Toyota may, in order to reassure its
customers of the safety of Toyota’s vehicles, decide to voluntarily implement sales suspensions, recalls or other
safety measures even if the vehicle complies with the safety standards of relevant laws and regulations. If Toyota
launches products that result in safety measures such as recalls (including where parts related to recalls or other
measures were procured by Toyota from a third party), Toyota may incur various costs including significant
costs for free repairs. The failure to comply with such regulations could result in legal proceedings, recalls,
negotiated remedial actions, fines, corrective orders, revocations of government approvals and the imposition of
other government sanctions, restricted product offerings, compensatory payments or adverse consequences.
Similarly, many governments also impose tariffs and other trade barriers, taxes and levies, or enact export,
price or exchange controls. For example, in 2025, a significant increase in tariffs on exports to the United States,
including tariffs specifically related to the automotive industry, were announced. Such elevated tariff rates
remain in effect as of the date of this report. We cannot predict the timing, duration, scope or extent of any future
changes to such tariffs and trade policies, or of other tariffs or trade-related actions. In addition, export controls
governing components incorporated into certain vehicles also have been enacted. The recently announced tariffs
and trade actions have increased the cost of our products and may cause stagnation in demand for them in the
future. They have also adversely affected our supply chains and distribution networks, which negatively impacts
our production and sales. The effects described above are primarily focused in the United States, but they are not
limited to the United States, given our cross-border operations. Should the current situation continue for an
extended period, it could potentially negatively impact not only us but other participants in the entire automotive
industry as well as related industries, which could in turn further adversely affect our financial condition, results
of operations, cash flows and prospects. Furthermore, our efforts to mitigate the impact of such tariffs or trade-
related actions may themselves require us to incur costs and dedicate management attention.
Toyota may become subject to various legal proceedings.
Toyota may become subject to legal proceedings in respect of various issues, including issues relating to the
topics discussed in “— The automotive industry is subject to various laws, regulations and governmental
actions,” as well as 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
6
in one or more of these pending legal proceedings could adversely affect Toyota’s reputation, brand image,
financial condition, results of operations, cash flows and prospects. For a further discussion of governmental
regulations, see “Item 4. Information on the Company — 4.B Business Overview — Governmental Regulation,
Environmental and Safety Standards” and for legal proceedings, please see “Item 4. Information on the
Company — 4.B Business Overview — Legal Proceedings.”
Toyota may be adversely affected by natural calamities, epidemics, 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;
epidemics;
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. Disruptions,
delays and other adverse changes in the operations of Toyota’s business have ensued from such risks
materializing in the past. 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 future disruptions, delays and other adverse changes in
the operations of Toyota’s business.
ITEM 4. INFORMATION ON THE COMPANY
4.A HISTORY AND DEVELOPMENT OF THE COMPANY
Toyota
Motor
Corporation
is
a
joint-stock
company
with
limited
liability
incorporated
under
the
Commercial Code of Japan and continues to exist under the Companies Act of Japan (the “Companies Act”).
Toyota commenced operations in 1933 as the automobile division of Toyota Industries (formerly Toyoda
Automatic Loom Works, Ltd.). Toyota was incorporated as a separate company in August 1937. In 1982, the
Toyota Motor Company and Toyota Motor Sales merged to form the present Toyota Motor Corporation. As of
March 31, 2026, Toyota operates through 602 consolidated subsidiaries (including structured entities) and
159 associates and joint ventures accounted for by the equity method.
See “Item 4. Information on the Company — 4.B Business Overview — Capital Expenditures and
Divestitures” for a description of Toyota’s principal capital expenditures and divestitures between April 1, 2023
and March 31, 2026 and information on 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.
The
SEC
maintains
a
website
(https://www.sec.gov/)
that
contains
reports,
proxy
and
information
statements, and other information regarding issuers that file electronically with the SEC. Toyota also maintains a
website (https://global.toyota/en/) through which its annual reports on Form 20-F and certain of its other SEC
filings may be accessed. Information contained on or accessible through Toyota’s website is not part of this
annual report on Form 20-F.
4.B BUSINESS OVERVIEW
Toyota primarily conducts business in the automotive industry. Toyota also conducts business in the
financial services and other industries. Toyota sold 9,595 thousand vehicles in fiscal 2026 on a consolidated
basis. Toyota had sales revenues of ¥50,684.9 billion and net income attributable to Toyota Motor Corporation of
¥3,848.0 billion in fiscal 2026.
7
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,
2024
2025
2026
Automotive
................................................
41,080,731
42,996,299
45,201,924
Financial Services
...........................................
3,447,195
4,437,827
4,819,003
All Other
..................................................
567,399
602,578
664,026
Toyota’s automotive operations include the design, manufacture, assembly and sale of passenger vehicles,
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 business also provides mainly retail installment credit and leasing
through the purchase of installment and lease contracts originated by Toyota dealers. Related to Toyota’s
automotive operations, Toyota is working towards having all of its vehicles become connected vehicles, creating
new value and reforming businesses by utilizing big data obtained from those connected vehicles, and
establishing new mobility services. Toyota’s all other operations business segment includes the information
technology related businesses including a web portal for automobile information called GAZOO.com.
Toyota sells its vehicles in approximately 200 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,
2024
2025
2026
Japan
.....................................................
10,193,556
10,719,120
10,985,614
North America
..............................................
17,624,268
18,930,253
20,661,490
Europe
....................................................
5,503,738
6,110,052
6,464,911
Asia
......................................................
7,604,269
7,903,360
7,966,455
Other*
....................................................
4,169,494
4,373,919
4,606,482
* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
During fiscal 2026, 21.7% of Toyota’s automobile unit sales on a consolidated basis were in Japan, 30.6%
were in North America, 12.3% were in Europe and 18.3% were in Asia. The remaining 17.1% of consolidated
unit sales were in other markets.
The Worldwide Automotive Market
Toyota estimates that annual worldwide vehicle sales totaled approximately 92 million units in 2025.
Automobile sales are affected by a number of factors including:
•
social, political and economic conditions;
•
introduction of new vehicles and technologies;
•
vehicle prices, costs incurred by customers to purchase and operate automobiles; and
•
Supply chain disruptions arising from geopolitical risks
8
These factors can cause consumer demand to vary substantially from year to year in different geographic
markets and in individual categories of automobiles. Looking at the global economy in fiscal 2026, the U.S.
economy remained resilient, supported principally by stable personal consumption. In China, fiscal policy
measures, including economic stimulus packages, provided underlying support. As a result, according to our
research, the global economy maintained a growth rate of around 3%.
Meanwhile, in the automotive market, government policies and consumer stimulus measures across various
countries bolstered demand, and the market continued to expand at a steady pace.
Looking at the economies of major countries, in the United States, despite adverse conditions such as shifts
in trade policy, the economy maintained solid performance, supported by resilient personal consumption. The
Chinese economy maintained year-over-year growth, supported by resilient exports and fiscal policy measures;
however, underlying domestic demand lacked momentum. In Europe, the economy accelerated from the previous
year. Against a backdrop of moderated inflation and a stable employment environment, personal consumption
served as the primary driver of growth. In Japan, the economy shifted from negative growth in the previous year
to positive growth in 2025.
Amid this environment, the global automotive market maintained a pace of expansion in 2025, with a
year-on-year increase of 3%.
In North America, new vehicle sales were approximately 19.90 million units, an increase from the previous
year. In Europe, new vehicle sales increased from the previous year to approximately 18.60 million units. New
vehicle sales in the Chinese market totaled approximately 26.60 million units, remaining largely flat compared to
the previous year. Emerging markets also continued on an upward trend. In India, in addition to underlying
market strength, the revised Goods and Services Tax enacted in the second half of 2025 boosted automobile
demand.
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 29% for China, 22% for North America (including Mexico and
Puerto Rico), 20% for Europe, 4% for Asia (excluding Japan, South Korea and China), and 10% for India and the
Middle East.
In the medium- to long-term, Toyota expects the automotive market to continue growing driven principally
by growth in China and other emerging countries. However, global competition is expected to be severe, as
various regulations aimed at carbon neutrality have been strengthened and the pace of technological advancement
and development of new products, particularly related to electrification, quickens further.
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, as well as 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
or
otherwise
burden
an
automaker’s
operations. Government laws and 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.
9
Over the years, there have been many global business alliances and investments entered into between
manufacturers in the global automotive industry. There are various reasons behind these transactions including
the need to address excessive global capacity in the production of automobiles, and 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.
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 Philosophy
The automotive industry is experiencing a once-in-a-century transformation. We are now striving to
transform ourselves into a mobility company. In an era which it is hard to predict the future, Toyota has reflected
on the path it has taken thus far and has formulated the “Toyota Philosophy” as a roadmap for the future.
Toyota’s mission is “Producing Happiness for All” by expanding the possibilities of people, companies and
communities through addressing the challenges of mobility as a mobility company. In order to do so, Toyota will
continue to create new and unique value with various partners by relentlessly committing towards
monozukuri
(manufacturing), and by fostering imagination for people and society.
MISSION
Producing Happiness for All
Using our technology, we work towards a future of
convenience and happiness, available to all
VISION
Creating Mobility for All
Toyota strives to raise the quality and availability of
mobility so that individuals, businesses, municipalities
and communities can do more, while achieving a
sustainable relationship with our planet
VALUE
We unite our three strengths (Software, Hardware and
Partnerships) to create new and unique value that
comes from the Toyota Way
Toyota Production System (“TPS”)
TPS is imbued with the desire of Sakichi Toyoda, the founder of the Toyota Group, and Kiichiro Toyoda,
the founder, “to make someone’s work easier.”
TPS was established based on two concepts:
Jidoka
, which can be loosely translated as “automation with a
human touch,” — an idea of stopping equipment immediately when a problem occurs, in order to prevent
defective products from being produced — and “Just in Time” (“JIT”), a concept based on the idea that “each
10
process produces only what is needed for the next process in a continuous flow.” Based on the basic philosophies
of
jidoka
and JIT, through TPS, Toyota aims to efficiently and quickly produce vehicles of sound quality, one at
a time, to fully satisfy customer requirements.
Toyota believes that improving upon TPS is essential to its future survival. Toyota has introduced TPS into
development departments and administrative departments. Toyota applies TPS to its development departments
not only to shorten development times and reduce costs, but also to develop our human resources, thus leading to
the manufacturing of ever-better cars that customers will love.
Toyota Group Vision
Chairman Akio Toyoda unveiled the Toyota Group Vision in January 2024. By outlining the direction the
Toyota Group should take and putting forth a vision and set of values to which all Toyota Group members can
refer, we aim to empower everyone at the
genba
(front lines) to engage in autonomous action that is consistent
with the common vector defined for the Group. Since announcing the vision, we have been advancing numerous
initiatives to entrench this vision and the associated values throughout the organization. At the Groupwide level,
Chairman Toyoda met with frontline leaders at Group companies to take part in frank discussions and provide
advice. He also attended meetings of Daihatsu dealer representatives to gather input from dealers and customers
so as to better understand actual conditions and issues on a
genchi genbutsu
(on-site, hands-on experience) basis.
At Toyota Motor Corporation, meanwhile, steps have been taken to share our vision and values among members
of management and frontline staff through the ongoing issuance of messages from then-President Koji Sato to
employees, labor-management discussions, and regular visits to frontline organizations by management. Through
these concerted efforts, we seek to foster an appropriate workplace environment. The Group Vision represents
the direction the Toyota Group should take and the vision and values to which all Toyota Group members can
return.
“Inventing our path forward, together.”
Sakichi Toyoda, the founder of the Toyota Group, invented the Toyoda wooden hand loom with the desire
to make life a little easier for his struggling mother. Kiichiro Toyoda invented the domestically produced
passenger car with the idea that the automobile industry must be developed by the knowledge and skills of
Japanese people. Thinking of others, learning, honing skills, making things, and bringing smiles to people’s
faces — that passion and attitude toward invention are truly the starting point of the Toyota Group.
11
In a time when there is no right answer, we will build a corporate culture in which we can say “thank you”
to each other and aim to be a Toyota Group that is needed in the future, where diverse human resources can play
an active role.
Product-centered Management
The challenges our industry faces — carbon neutrality, connected mobility, and AI — cannot be solved by a
single company acting alone. True breakthroughs emerge from synergies created when diverse people with
varying perspectives collaborate and engage in lively discussion. We believe that co-creating in this manner is
key to shaping the future.
A good example is our recent collaboration on battery technology. Through continued development efforts,
Toyota has successfully reduced the size of its all-solid-state batteries by one-third compared with conventional
batteries while maintaining performance. These batteries are compact and lightweight, offering both short
charging times and exceptional durability, and are targeted for commercialization between 2027 and 2028. This
battery technology will enhance the flexibility of battery electric vehicles (“BEV”) proportions and packaging,
enabling designs that strike a better balance between aesthetics and performance.
BEVs are just one pillar of Toyota’s multi-pathway strategy for becoming carbon neutral. We are working
with our partners on the development of carbon-neutral fuels such as biofuels and synthetic fuels, striving to
lower the CO
2
emissions of our existing vehicles. We also see great potential in hydrogen. For commercial
vehicles, we are collaborating with Daimler Truck Holding AG, and for passenger vehicles, we are working with
BMW, as well as the governments in Fukushima and Tokyo, to expand the use of hydrogen in both markets. In
Japan, with the support of the government, we have begun introducing light-duty fuel-cell trucks for logistics in
regions such as Fukushima and Tokyo. By promoting the wider adoption of hydrogen in commercial vehicles,
which consume large amounts of fuel, we aim to accelerate infrastructure development to help contribute to the
realization of a hydrogen society wherein hydrogen fuel can be stable and reliable.
Furthermore, we are expanding the possibilities of mobility across land, sea, air, and space. Our
collaboration with Joby Aviation, Inc. (“Joby”) on Joby’s electric vertical take-off and landing aircraft (eVTOL)
12
has the potential to transform people’s sense of distance and time, and we are working with them to steadily
progress to open up a new dimension of mobility. Furthermore, we are venturing into the satellite and rocket
fields with Interstellar Technologies Inc. and are also working to provide solutions to terrestrial issues through
satellite communication.
The ultimate goal of automated driving and Software Defined Vehicles (“SDV”) is to realize a world with
zero traffic accidents. Driving assist technologies and automated driving are expected to further reduce the
number of accidents, but responding to unpredictable situations such as sudden obstacles emerging from blind
spots requires information from the infrastructure side. We are building a system that integrates vehicles, people,
and infrastructure, enabling the prediction and prevention of accidents before they occur. Demonstrations are
already underway in Japan and China, and we are working steadily toward realizing a safe and secure mobility
society in collaboration with many partners.
In addition, Toyota Research Institute, Inc. (“TRI”) is taking on the challenge of developing AI robots that
work
and
grow
together
with
humans
as
partners,
rather
than
simply
replacing
them.
To
accelerate
demonstrations and the advancement of these technologies, we are leveraging Woven City, a mobility test
course. Woven City, which held its grand opening in 2025, brings together partners, universities, start-ups,
research institutions, and other diverse partners to turn innovative ideas into reality. From here, Woven City will
pave the way toward the next generation of mobility.
Today, Toyota has outstanding partners who share our vision and are committed to creating the future
together. They are likeminded allies who share a long-term perspective and the belief that collaboration
accelerates progress. Together with these partners, we will realize the future of mobility and the sustainable
growth of society.
Region-centered Management
The foundation of Toyota’s region-centered management is the concept of “best in town.” This concept does
not aim to maximize global sales volume or market share. Instead, it reflects our commitment to remain the
company that stays closest to customers’ daily lives and earns their trust in each community. Mobility is an
integral part of everyday life. By continuing to address the unique challenges and expectations of each region, we
believe we can achieve sustainable, long-term growth. Being recognized globally and being needed locally are
not always the same. Toyota has achieved the former by steadily accumulating the latter. “Best in town”
expresses this management approach. “Best in town” does not simply mean providing high-quality products. It
means understanding customers’ lifestyles, culture, road conditions, climate, and values and providing mobility
that best fits each region. Even the same vehicle may be used differently depending on the environment. Cold
climates, deserts, urban areas, and rural communities require different performance and value. For this reason,
rather than applying uniform global strategies, we emphasize systems that allow decisions and actions to be made
locally.
This philosophy extends beyond product planning and design to sales and after-sales services. Dealers
around the world serve not only as sales locations but also as our closest points of contact with customers.
Feedback gathered through daily dialogue serves as the starting point for product improvements and new
initiatives. For Toyota, volume and share ultimately represent the trust we build with customers. The
accumulation of this trust has supported our business over the long term.
Toyota operates by dividing the world into eight major regions and managing each business based on the
characteristics of those regions. Economic conditions, social issues, and levels of market maturity vary
significantly from one region to another. For this reason, we have established a structure that enables each region
to assess its own circumstances and customer needs and to make decisions and execute initiatives locally.
The cornerstone of this approach is our commitment to stay close to people’s lives and contribute to local
communities through mobility. While the best solutions may differ by region, our overall direction remains the
13
same. This approach remains consistent across both emerging and developed markets. Guided by our belief that
“no one should be left behind,” Toyota has continued to offer a full global lineup. Leaders in each of the eight
regions work closely with customers and local communities to deliver vehicles that best meet the needs of their
respective markets.
As a result, we deliver vehicles to customers globally on the basis of a well-balanced business foundation,
without depending too heavily on any particular region or market. Energy conditions differ by region, and the
pace of electrification and vehicle usage also varies widely. The powertrains required in each market therefore
differ as well. To ensure that customer choice is never limited, Toyota continues to enhance the appeal and
competitiveness of all powertrains, including BEVs. In an uncertain environment, rather than trying to predict the
future, we prepare a range of options to respond quickly to change.
Initiatives that begin in a single town and with a single customer are carried out by thousands of dealers
around the world. By working together, Toyota has become a company chosen by customers globally. In addition
to delivering high-quality products, Toyota is supported by the people who bring those products to customers in
each region and build lasting relationships. Partnerships grounded in trust, credibility, and mutual understanding
create value rooted in local communities and foster loyalty across generations.
Guided by our aim to be “best in town” and the mantra of “making ever-better cars,” we continue to evolve
our vehicles by responding to the unique characteristics of each market and the needs of customers in every
region. By maintaining a full global lineup and continuously evolving our vehicles to meet the needs of different
eras and regions, we have produced many long-selling models, such as the Corolla and the Land Cruiser, that are
loved by customers worldwide. Going forward, under its “best in town” philosophy, Toyota will remain deeply
rooted in local communities, stay close to customers’ lives, and continue delivering products that are loved for
generations as a mobility company.
Five-brands Strategy
At the Japan Mobility Show held in October 2025, we announced the launch of Century as a new brand
alongside our Toyota, Lexus, Daihatsu, and GR brands. In particular, the “Century” brand’s goal is to share the
pride of Japan with the world. Its name reflects the aspiration to shape the next 100 years, and through the
creation of new value originating in Japan, Toyota aims to contribute to the realization of a sustainable and
peaceful society.
We also introduced “TO YOU” as a brand concept in 2025 to represent the Toyota brand. Additionally, the
IMV Origin, which we unveiled at Japan Mobility Show 2025, is deliberately shipped from the factory in an
unfinished state, with final assembly carried out locally. This approach creates new jobs in vehicle assembly
within the community and contributes to the development of employment opportunities and skills. In addition, by
allowing flexible customization to suit a wide range of lifestyles and work needs, the IMV Origin aims to deliver
mobility that best fits the unique conditions of each region.
By assuming roles that are both more clearly defined and complementary to one another, the Toyota
Group’s brands will comprise a product lineup suitably diverse to meet the needs of each customer and offer
them a wider range of options.
Continuous Improvement in Break-even Volume
In 2024 and 2025, we faced certification issues and a lack of capacity head-on and reinforced our
operational foundations. As a result, we have rigorously enhanced safety standards and quality requirements and
secured additional capacity, which has stabilized production. On the other hand, we have recently seen a
significant rise in our break-even volume due to a combination of increases in investments in human resources
and future-oriented investments and the impact of U.S. tariffs.
14
Therefore, we have initiated undertaking company-wide measures. First, we will increase earnings by
reviewing fixed costs, achieving cost improvements, and initiating sales initiatives in all regions, groups, and
in-house companies. Additionally, to boost productivity even further, we will encourage employees to reexamine
their ways of working and pursue efficient, value-added work. For instance, we will step up our utilization of AI
for routine tasks and low-value-added work so that personnel can focus on tasks only humans can perform,
thereby heightening the “rate of value-added work.” In advancing the aforementioned measures, we will focus on
improving our break-even volume by ensuring that the benefits of reinforcing our operational foundations are
steadily reflected in our earnings power. Toyota needs a management structure that reliably generates earnings in
both favorable and challenging operating conditions and thereby enables Toyota to continue pursuing joint
growth initiatives with its stakeholders.
In our transformation into a mobility company, value chain businesses will play a crucial role. Providing
continuous value to customers throughout the long ownership period after the sale of a new car, these businesses
have steadily grown. This growth is thanks to the many different products we offer. Supported by strong brands
forged through product- and region-centered management, our diverse product lineup has enabled us to have
150 million units in operation worldwide. The growth of our value chain businesses is also attributable to the
strength of our products, including their ease of repair and our ability to supply parts for them, as well as to the
efforts of frontline personnel engaged in services, sales finance, used car sales, and insurance to fully utilize the
high residual value of each product. Going forward, in addition to the virtuous cycle of new cars and value chain
businesses, we will further strengthen our earnings base by promoting the creation of new forms of value through
software and diverse mobility services.
Across Toyota’s workplaces, starting with production sites, employees continue to tackle numerous
challenges while striving every day to make “ever-better cars.” To translate these efforts into tangible results,
management and the front lines (
genba
) will work together to create an environment that enables workplaces
across Toyota, starting with production sites, to fully demonstrate their capabilities.
Automotive Operations
Toyota’s
sales
revenues
from
its
automotive
operations
were
¥45,417.7
billion
in
fiscal
2026,
¥43,199.8 billion in fiscal 2025, and ¥41,266.2 billion in fiscal 2024.
Toyota produces and sells passenger vehicles, minivans and commercial vehicles such as trucks. Toyota
Motor Corporation’s subsidiary, Daihatsu, produces and sells mini-vehicles and compact cars. Hino, which
ceased to be a consolidated subsidiary of TMC effective April 1, 2026, 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 and Product Development
Toyota’s vehicles (produced by Toyota, Daihatsu and Hino) can be classified largely into electrified
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. Toyota’s luxury cars are sold in North America, Europe, Japan and other regions,
primarily under the Lexus brand name.
In fiscal 2024, Toyota launched the all-new Alphard and Vellfire, which were developed from a concept of
“the joy of comfortable mobility” to create a space where everyone can share consideration and appreciation in
all kinds of situations. To further contribute toward carbon neutrality, Toyota plans to introduce new plug-in
hybrid electric vehicles (“PHEV”) in the future. Moreover, a new model has been added to the Century series,
which has been sold for more than half a century as one of Japan’s representative chauffeur-driven vehicles. The
new model is a next-generation chauffeur-driven vehicle that inherits Japanese aesthetics, quietness and
15
hospitality, combines a human-centered approach, and dramatically evolves the rear-seat space to allow true
comfort and elegant entry and exit. In Thailand, Toyota launched the Hilux Champ IMV 0, a new model of the
IMV series. The pickup truck is regarded as a local favorite and integral to daily life in Thailand. Toyota decided
to return to its origins and create an IMV pickup truck that meets the needs of customers. In addition, Toyota
launched the all-new Lexus LBX. Redefining luxury with a stylishly compact size, it provides an engaging
driving experience that instills a lasting desire to continue exploring the road ahead.
In fiscal 2025, Toyota launched the new Land Cruiser 250 Series. The 250 Series is a core Land Cruiser
model that returns to the car’s origin, a vehicle that is simple and sturdy, and helps fulfill both customers’
lifestyle choices and practical needs. By pursuing dynamic styling and functionality so drivers can enjoy an
active lifestyle, Toyota also created Crown Estate as a vehicle that embodies both the dignity and functionality of
the Crown, what we call a mature active cabin. The Camry, with its distinctive exterior, quality, and reliability,
has remained a leading sedan in the U.S. for over 20 years according to our estimates. For the Lexus brand,
alongside master driver Akio Toyoda, Toyota developed the LBX MORIZO PR as a high-performance model
that delivers the refined signature LEXUS driving quality and sophisticated design, enhancing the dialogue
between driver and car, evokes spontaneous smiles, and provides an exhilarating out-of-the-ordinary experience.
In fiscal 2026, Toyota launched the all-new 6th generation RAV4, which is an SUV built on the idea that
“Life is an Adventure,” embodying a go-anywhere, do-anything spirit. While maintaining the RAV4’s signature
solid and powerful design and packaging, it has been developed around the keywords Diversification,
Electrification, and Intelligence. Arene, the software development platform, was leveraged for crucial UI (user
interface) software, such as the cockpit. The Lexus brand unveiled the all-new 8th-generation ES as a forerunner
in LEXUS’s next-generation electrification lineup. This model aspires to deliver a refined driving experience
across every scene — further enhancing quietness and ride comfort while staying in tune with customer needs. In
pursuit of carbon neutrality through a multi-pathway approach, both hybrid electric vehicles (“HEV”) and BEV
powertrains are offered to meet a diverse range of mobility demands.
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.
Thousands of Units
Year Ended March 31,
2024
2025
2026
Units
%
Units
%
Units
%
Japan
.............................................
1,993
21.1%
1,991
21.3%
2,082
21.7%
North America
......................................
2,816
29.8
2,703
28.9
2,934
30.6
Europe
............................................
1,192
12.6
1,172
12.5
1,183
12.3
Asia
..............................................
1,804
19.1
1,838
19.6
1,759
18.3
Other*
............................................
1,638
17.4
1,659
17.7
1,637
17.1
Total
.............................................
9,443
100.0% 9,362
100.0% 9,595
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
16
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 as of March 31, 2026.
Vehicle unit sales in North America represents the combined total for the United States and Canada. Vehicle unit
sales in Asia do not include sales in China.
Thousands of Units
Year Ended March 31,
2024
2025
2026
Japan:
Total market sales (excluding mini-vehicles)
............
2,906
2,951
2,848
Toyota sales (retail basis, excluding mini-vehicles)
.......
1,506
1,487
1,450
Toyota market share
...............................
51.8%
50.4%
50.9%
Thousands of Units
Year Ended December 31,
2023
2024
2025
North America:
Total market sales
.................................
17,306
17,827
18,273
Toyota sales (retail basis)
...........................
2,475
2,572
2,767
Toyota market share
...............................
14.3%
14.4%
15.1%
Europe:
Total market sales
.................................
17,439
17,807
18,552
Toyota sales (retail basis)
...........................
1,174
1,217
1,229
Toyota market share
...............................
6.7%
6.8%
6.6%
Asia (excluding China):
Total market sales
.................................
11,024
10,928
11,556
Toyota sales (retail basis)
...........................
1,407
1,434
1,500
Toyota market share
...............................
12.8%
13.1%
13.0%
Japan
Japan is one of the leading countries with respect to technological innovation and improvements in the
automotive industry and will continue to demonstrate such strength. Toyota strives to earn customer satisfaction
by introducing products distinctive of Japan’s manufacturing ability, through the full lineup of Toyota brand
vehicles, including not only passenger cars but also commercial and mini vehicles, as well as the advanced,
premium
Lexus
brand.
Furthermore,
by
advancing
electrification
centered
on
a
multi-pathway
strategy
encompassing BEVs, PHEVs, fuel cell electric vehicles (“FCEV”), and HEVs, dealers and manufacturers will
work together to realize a carbon-neutral society. Toyota endeavors to secure and maintain its significant share of
and position atop the Japanese market. Toyota held a domestic market share (excluding mini-vehicles) on a retail
basis of 51.8% in fiscal 2024, 50.4% in fiscal 2025, and 50.9% in fiscal 2026.
Although Toyota’s principle is to conduct production in regions where it enjoys true competitiveness, it
considers Japan to be the source of its good manufacturing practices. Having 16 production sites in Japan, 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.
North America
The North American region is one of Toyota’s most significant markets. The United States, in particular, is
the largest market in the North American region, accounting for 86% of Toyota’s retail sales in the region. In the
region, Toyota has in recent years reorganized its production structure and made improvements to its product
lineup. In addition, Toyota has a wide product lineup in every segment (excluding large trucks and buses).
17
Toyota’s North American production capacities include the production of vehicle models such as the RAV4,
Camry, Tacoma and Highlander through 14 manufacturing entities.
In 2025, Toyota Battery Manufacturing, North Carolina (“TBMNC”) began supplying batteries for Toyota’s
cars. TBMNC is Toyota’s eleventh U.S. plant and the company’s first and only battery plant outside of Japan.
Batteries assembled at TBMNC are set to power the Camry HEV, Corolla Cross HEV, RAV4 HEV, and a
yet-to-be-announced all-electric 3-row BEV. When the facility reaches full production, it will have 14 production
lines supporting battery production for HEV, BEV and PHEV.
Toyota has five research and development centers in North America. As for vehicle development, the
Toyota Technical Center spearheads the design, planning, and evaluation of vehicles and parts as to their ability
to meet customer needs.
Europe
Toyota’s principal European markets are Germany, France, the United Kingdom, Italy and Spain. In the
European markets, as a full-lineup car manufacturer, Toyota aims to increase its global vehicle sales with a focus
on electrified vehicles (HEVs, PHEVs, FCEVs and BEVs) that suit the needs of customers and the circumstances
of each region.
In terms of production, to strengthen its business setup so that it is less likely to be affected by exchange
rates, Toyota produces models such as the Corolla, Yaris and C-HR locally through six entities in Europe. In
addition, Toyota is actively promoting production and sales measures that meet local demand by strengthening its
value chain including used car dealerships, after-sales services and finance and insurance services.
Asia
Toyota’s principal Asian markets are Thailand, India, Indonesia and Taiwan.
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. 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 terms of production, Toyota manufactures models such as the Hilux, Hiace, Corolla, Camry and Vios
through 15 entities. Toyota’s plants in Thailand not only meet domestic demand, but also serve as a production
base for locations inside and outside of the ASEAN region.
China
Toyota has been conducting operations in China in large part 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 terms of production, Toyota has been conducting a significant portion of its China business, including in
relation to the production and sales of vehicles, through joint ventures. Toyota has two major joint venture
partners in China, namely, China FAW Group Corporation and Guangzhou Automobile Group Co., Ltd. The
joint venture with China FAW Group manufactures models such as the Avalon, Corolla, RAV4 and bZ3 and the
joint venture with Guangzhou Automobile Group Co., Ltd. manufactures models such as the Camry, Frontlander,
Highlander, Wildlander, and bZ3X.
18
Total vehicle unit sales in the Chinese market reached 27.73 million vehicles in 2025, representing 105.5%
of that of 2024, and 26.28 million vehicles in 2024, representing 101.1% of that of 2023. In this market, Toyota’s
new vehicle sales were 1.78 million vehicles in 2025, accounting for 100.4% of that of 2024, and 1.77 million
vehicles in 2024, accounting for 93.1% of that of 2023. In 2025, the domestically produced passenger vehicle
market in mainland China (24.02 million vehicles), Toyota had a 7.4% market share. Toyota has been expanding
the distribution network for locally produced vehicles in cooperation with China FAW Group and Guangzhou
Automobile Group under the names Tianjin FAW Toyota Motor Co., Ltd. and Guanqi Toyota Motor Co., Ltd.,
respectively, and for imported vehicles, Toyota has also been expanding primarily the Lexus brand sales
network. Toyota seeks to increase sales by expanding the number of dealers and its product lineup. In addition, as
the market in China develops and becomes more sophisticated, Toyota plans to promote so-called “Value Chain”
businesses, such as used car sales, services, financing and insurance, so as to contribute to the development of a
mobility society.
South and Central America, Oceania, Africa and the Middle East
Toyota’s
principal
markets
in
South
and
Central
America,
Oceania,
Africa
and
the
Middle
East
(collectively, the “Four Regions”) are Brazil and Argentina in South and Central America, Australia in Oceania,
South Africa in Africa and Saudi Arabia in the Middle East. The core models in the Four Regions are global
models such as the Corolla, IMV (the Hilux) and Camry.
Toyota has seven production bases in the Four Regions. In these regions, which are expected to become
increasingly important to Toyota’s business strategy, Toyota aims to continue developing new products which
meet the specific demands of each region, increasing production and promoting sales.
Production
As of March 31, 2026, Toyota and its affiliated companies produce automobiles and related components
through more than 50 overseas manufacturing organizations in 27 countries and regions aside from Japan.
Facilities are located principally in Japan, the United States, Canada, the United Kingdom, France, Turkey,
Czech Republic, Poland, Thailand, China, Taiwan, India, Indonesia, South Africa, Argentina and Brazil. See
“Item 4. Information on the Company — 4.D Property, Plants and Equipment” for a description of Toyota’s
principal production facilities.
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 line with its basic policy of manufacturing in countries or regions where there is demand and where
Toyota is truly competitive, Toyota will make efficient use of and maximize capacity utilization at its existing
plants to respond to the expanding market and will continue to focus on making efficient capital investments as
necessary.
Furthermore, Toyota will continue to place top priority on safety and quality in strengthening true
competitiveness with the aim of achieving sustainable growth.
19
The following table shows Toyota’s worldwide vehicle unit production by geographic market 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 vehicle units produced by
these affiliated companies. Vehicle units produced by Daihatsu and Hino are included in the vehicle unit
production figures set forth below.
Thousands of Units
Year Ended March 31,
2024
2025
2026
Japan
........................................................
4,042
4,000
4,149
North America
.................................................
1,976
1,958
2,050
Europe
.......................................................
846
811
815
Asia
..........................................................
1,876
1,790
1,802
Other*
.......................................................
523
491
477
Total
........................................................
9,263
9,049
9,293
* “Other” consists of Central and South America and Africa.
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 “Item 4. Information on the Company — 4.B Business Overview — 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.
Distribution
Toyota’s automotive sales distribution network is the largest in Japan. As of March 31, 2026, this network
consisted of 226 dealers employing approximately 100 thousand personnel and operating approximately
4.2 thousand sales and service outlets. TOYOTA Mobility Tokyo Inc. is the only dealer owned by Toyota and the
rest are independent.
Toyota believes that this extensive sales network of independent local interests 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 is working to
improve its sales activities such as customer reception and meticulous service at showrooms, as well as online
sales, to increase customer satisfaction.
Sales of Toyota vehicles in Japan had been conducted through four sales channels until April 2020, but from
May 2020 shifted to a framework where all of its Japanese-market vehicle models are made available through all
sales outlets in Japan. 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 191 new-vehicle sales outlets dedicated to the
Lexus brand in order to enhance its competitiveness in the domestic luxury automotive market. The following
table provides information on the dealer network as of March 31, 2026.
Dealers
Channel
Toyota Owned
Independent
Outlets
Toyota brand
.............................
1 company
225 companies
4,245 outlets
Lexus brand
..............................
23 outlets
168 outlets
191 outlets
20
Outside
Japan,
Toyota
vehicles
are
sold
through
approximately
168
distributors
in
approximately
204 countries and regions. Through these distributors, Toyota maintains networks of dealers. The chart below
shows the number of Toyota distributors as of March 31, 2026 by country and region:
Country/Region
Number of Countries
Number of Distributors
North America
............................................
4
5
Europe
..................................................
55
29
China
...................................................
1
4
Asia (excluding China)
.....................................
20
20
Oceania
.................................................
15
15
Middle East
..............................................
16
14
Africa
...................................................
54
48
Central and South America
..................................
39
40
Multi-pathway Strategy — Overview
The push for carbon neutrality is a matter of urgency if cars are to remain a necessary part of society.
Providing our customers around the world with options for mobility under our multi-pathway strategy while also
promoting the decarbonization of our
monozukuri
(manufacturing) and supply chains serves as the core of our
activities.
Considering ways in which mobility takes into account the future of energy is important. The strategy’s
basic premise is that we need to move away from fossil fuels from the perspective of the global environment and
sustainability. Furthermore, over the medium- to long- term, renewable energy sources will continue to
proliferate, with electricity and hydrogen emerging as the primary energy sources sustaining society. In the short
term, however, it is critical to acknowledge global realities and implement changes in practical ways that
maintain energy security.
This is precisely why we are committed to providing mobility options that are in tune with a diverse range
of energy situations and customer needs, while also keeping an eye on the future of electricity and hydrogen. In
short, the underlying concept of our multi-pathway strategy is to focus on promoting practical transition even as
we pursue carbon neutrality.
BEV Strategies
Next-generation BEVs
Through our next-generation BEVs, we seek to change the future of cars. This will entail evolving the
products we provide to customers. Through the integration of next-generation batteries and sonic technology, we
aim to achieve a game-changing BEV driving range of 1,000 km.
Our next step will be to capture customers’ hearts with stylish designs. AI will be used to help ensure
excellent aerodynamic performance, doubling the time that designers can devote to creating attractive cars.
Our BEVs will also offer a customizable ride feel. The Arene software platform and a full over-the-air
system, which provides vehicle software updates via wireless transmission, will greatly expand the possibilities
for enjoying cars. Moreover, Toyota will deliver exciting surprises and fun, like the manual electric vehicle, to its
customers with technologies that only an automobile manufacturer can create.
Automobile bodies will be constructed in a new modular structure consisting of three main components. The
finished automobiles are then assembled after each of the three modules is completed. This structure allows each
module to be evolved separately, expediting action, particularly important in the race to develop better batteries.
Furthermore, the use of giga casting will allow significant component integration, contributing to the reduction of
vehicle development costs and plant investment.
21
The new modular structure and self-propelling production and other automation technologies will halve the
number of processes required. Self-propelling production will be key to building next-generation BEVs. By
greatly reducing the time and cost, as well as efforts on the part of production and technical staff required to
modify plants and expand buildings whenever a new model is introduced, this technology will accelerate the
launch of new products to market. Such new approaches to manufacturing, combined with the use of digital twin
technology, are expected to halve production lead times.
We are advancing the integrated planning of our full global lineup of next-generation BEVs. In addition to
efforts to increase product appeal, we will transform our manufacturing approaches to eliminate processes as well
as reduce investment and lead times while securing earnings and increasing sales volume.
Toyota is targeting global BEV sales of 3.5 million units by 2030. This figure is shaped by customer
demand and represents the base unit amount based on which supply systems will be prepared together with
suppliers and dealers. However, we will adopt a flexible approach toward sales in recognition of the fact that it is
customers who will ultimately decide what they purchase.
BEV Battery Development
The battery is the heart of the BEV. Just as the heart pumps blood through the body, the battery transfers
electricity to the vehicle. As Toyota advances its efforts toward introducing next-generation BEVs, it is also
evolving batteries with new technologies to meet customer expectations. The earnings of Toyota’s next-
generation BEVs will be driven by our next-generation batteries, which will be developed with a focus on
achieving world-leading levels of efficiency. Our development approach entails viewing batteries and vehicles as
a set, and this approach is the starting point for the development of BEVs. Toyota’s development of both
batteries and vehicles in-house provides an advantage in this area. The resources afforded by this advantage will
be used to improve our product appeal to exceed customer expectations and secure earnings.
Liquid lithium-ion batteries, which are currently the mainstream, will gain enhanced performance through
improvement to the energy density of prismatic batteries, an area in which Toyota has longstanding expertise. In
addition, by using the bipolar battery structure developed for HEVs in BEVs, we will expand our lineup to
provide customers with a variety of options, from low-cost batteries for popularization to batteries optimized for
maximum performance.
Furthermore,
all-solid-state
batteries,
which
are
highly
anticipated
as
game-changers,
are
finally
approaching the phase of practical application for use in BEVs. Our full lineup of competitive batteries will
support the evolution of Toyota’s BEVs in the future.
Notes:
1.
The performance version of next-generation batteries are being developed with Prime Planet Energy &
Solutions Inc., while the popularization and high-performance versions of next-generation batteries and
the all-solid-state battery for BEVs are being developed with Toyota Industries, combining the
knowledge of the Toyota Group.
2.
The bZ4X referenced in this report refers to the 2022 model. The bZ4X underwent a partial update in
October 2025.
Liquid Lithium-ion Battery Development
1. Next-generation Batteries: Performance Version
The next-generation BEVs will have a cruising range of 1,000 km.* For such cars, we are developing a
performance-oriented rectangular battery to expand the degree of freedom in vehicle design. While increasing the
22
energy density of the battery, we also aim to extend cruising range by improving vehicle efficiencies, such as
aerodynamics and weight reduction, while at the same time reducing costs by 20% compared with the earlier
bZ4X and achieving a quick charge time of 20 minutes or less (state-of-charge (“SOC”) =10–80%).
2. Next-generation Batteries: Popularization Version
Toyota is also developing good, low-cost liquid lithium batteries that will contribute to the widespread use
of BEVs to provide customers with a variety of battery options. Bipolar structure batteries, which have been used
in the Aqua and Crown hybrid vehicles, are now being applied to BEVs. These batteries use inexpensive lithium
iron phosphate (LFP) and are expected to be commercialized. We are aiming for a 20% increase in cruising
range* and 40% reduction in cost compared with the earlier bZ4X, as well as quick recharging in 30 minutes or
less (SOC=10–80%). We are also considering installing these batteries in BEVs in the popularization price range.
In a regular battery, individual current collectors are coated on both sides with either an anode or cathode,
then paired to make a set. In contrast, every current collector in a bipolar configuration is coated with an anode
on one side and a cathode on the other, making for a simpler structure that requires only one-third as many
components. At the same time, material costs can be reduced by using LFP for the cathode in place of rare
metals, such as nickel and cobalt. However, to make these batteries a reality, Toyota must overcome three
difficulties: applying the material evenly, doing so at high speeds, and simultaneously sealing all the cells.
Furthermore, all this needs to be achieved in batteries large enough to power a car.
In tackling
these
challenges,
Toyota is drawing on approximately
30 years of battery production
technologies honed through its HEVs along with bipolar nickel-metal hydride battery technology and expertise,
precision coating used for FCEVs, and various digital technologies. Using all of these together, we are advancing
development toward mass production.
3. Bipolar Lithium-ion Battery: High-performance Version
The high-performance version of the battery combines the best aspects of both the performance and
popularization versions. This battery combines a bipolar structure with a high-nickel cathode to achieve further
advances. We expect an even greater performance than the performance version of the prismatic battery will be
achieved along with a 10% increase in cruising range* and a 10% reduction in cost, as well as a quick charge
time of 20 minutes or less (SOC=10–80%). We aim to commercialize this battery in 2027-2028.
(*Including vehicle efficiency improvements such as aerodynamics and weight reduction.)
Conventional
Battery type
Shape
Structure
Cathode
EV driving range (CLTC mode, including
gains through vehicle improvements)
Costs (For same driving range)
Charge time
(SOC = 10%–80%)
bZ4X battery
1. Performance version
2. Popularization version
3. High-performance
version
New
Structure
Prismatic
Monopolar
NCM
615 km
─
200% increase compared with bZ4X
(before improvements)
20% reduction compared
with bZ4X (before improvements)
30 mins. or less
30 mins. or less
20 mins. or less
20 mins. or less
20% increase compared with bZ4X
(before improvements)
40% reduction compared
with bZ4X (before improvements)
10% increase compared with
next-generation batteries
(performance version)
10% reduction compared
with next-generation batteries
(performance version)
LFP
Ni
Bipolar
Next-
generation
batteries
Evolved
batteries
Development of All-solid-state Batteries
All-solid-state batteries have a solid electrolyte, allowing faster movement of ions and greater tolerance of
high voltages and temperatures. It is hoped that this technology will result in increased power output, longer
cruising range, and shorter charging times.
The tradeoff, meanwhile, is thought to be a shorter battery life. Solid electrolytes repeatedly expand and
contract as the battery charges and discharges, which can create cracks in the electrodes that inhibit the
23
movement of ions between the cathode and anode. Toyota has discovered a new technology that overcomes this
issue. Aiming for commercialization in 2027–2028, Toyota continues to advance product development and the
development of mass production methods.
In October 2023, Toyota announced a partnership with Idemitsu Kosan Co., Ltd. (“Idemitsu”) to work
toward the mass production of all-solid-state
batteries for BEVs. Through the integration of materials
development technologies of both companies, including Idemitsu’s materials manufacturing technologies and
Toyota’s battery processing and assembly technologies honed in on electrified vehicle development, we both aim
to realize the mass production of solid electrolytes and all-solid-state batteries that will be widely used by
consumers.
In October 2025, we announced a collaboration with Sumitomo Metal Mining Co., Ltd. (“Sumitomo Metal
Mining”) aimed at mass production of cathode materials. Leveraging the company’s proprietary powder
synthesis technology, we jointly developed a new cathode material with superior durability suited for all-solid-
state batteries. Going forward, we will continue to draw on Sumitomo Metal Mining’s expertise accumulated
over two decades of supplying cathode materials, as we work toward the supply and subsequent mass production
of this newly developed material.
Establishment of a New Company
On February 5, 2025, Toyota announced that it will sign a comprehensive partnership agreement with the
Shanghai municipal government in China regarding carbon neutrality. In addition, Toyota established Lexus
(Shanghai) New Energy Co., Ltd., a new wholly owned company in Jinshan District in southwest Shanghai, to
develop and produce BEVs and batteries.
Under this partnership with the Shanghai municipal government, Toyota hopes to contribute to the Chinese
government’s goal of achieving carbon neutrality by 2060 in fields such as hydrogen energy, automated driving
technology, and battery recycling and reuse. To drive the initiative forward, Toyota will establish a new company
based on the belief that quicker supply of products that meet customers’ needs is important in China, where there
is a high demand for new energy vehicles.
The newly formed company will develop a new BEV under the Lexus brand, with production scheduled to
begin from 2027 onward. The initial production capacity will be around 100,000 units per year, and 1,000 new
jobs are planned for the start-up phase.
Toyota has been working with partners such as China FAW Group Co., Ltd. and Guangzhou Automobile
Group Co., Ltd. to bring smiles to customers in China. Going forward, Toyota will continue working together
with all its partners to be a “best-in-town” company to achieve its goal of “producing happiness for all.” In doing
so, we will forge ahead with our mission of transforming cars,
monozukuri
(manufacturing), and work to change
the future with BEVs.
Hydrogen Business Strategies
We have seen significant global developments in the area of hydrogen business in recent years, with countries
introducing policies and taking active steps with an eye toward 2030. To anticipate these rapid changes and respond
to customer needs, we established in July 2023 a new business unit called Hydrogen Factory, which is able to make
rapid decisions under one leader, from sales to development and production, all at once. The Hydrogen Factory is
advancing business activities based on three key axes.
The first is localizing R&D and production in countries within the major markets. We are working to
accelerate our efforts by establishing local bases, mainly in Europe and China. In Europe, Toyota Motor Europe
NV/SA is engaged in the development of hydrogen fuel-cell systems and carries out production and external
24
sales. In China, we have already established a development and production base in collaboration with Beijing
SinoHytec Co., Ltd. This base began production of fuel cells in August 2024. Toyota began offering the fuel-cell
unit installed in the Mirai passenger vehicle as a modular product to partners aiming to realize a hydrogen
society. In recent years, as demand for commercial applications has expanded across various countries, sales of
fuel-cell units have continued to grow year by year, reaching a global cumulative total of more than 3,000 units
as of December 2025.
The second is strengthening alliances with leading partners. Hydrogen has been positioned as an important
energy source in Toyota’s CO
2
emissions reduction efforts in its quest to achieve carbon neutrality. To create a
hydrogen-powered society, we are promoting the widespread adoption of fuel-cell products, including passenger
and commercial fuel-cell electric vehicles as well as fuel-cell stationary generators. Through such initiatives, we
are working with various industry partners in the areas of producing, transporting, and using hydrogen.
In Europe, Toyota announced a partnership with Daimler Truck Holding AG in May 2023. The scope of this
partnership includes collaboration on hydrogen-related development. Furthermore, in September 2024, we
unveiled plans to bolster coordination with BMW in the field of hydrogen, pursuing joint development and
standardization of components to drive cost reductions. These components are also being considered for use in
Toyota models going forward. In China, we entered into a partnership in November 2024 with GLP Investment
(Shanghai) Co., Ltd. (GLP China) in the field of high-value-added green trunk-line logistics. In collaboration
with leading domestic logistics companies For-U Smart Freight and Shenzhen Dekun Logistics Co., Ltd., we
began operating 50 heavy-duty fuel-cell trucks in 2025. In Japan, in February 2024, we agreed with Chiyoda
Corporation to jointly develop a large-scale water electrolysis system that produces hydrogen from water and
electricity by applying the fuel-cell technology used in the Mirai. Preparations are underway for demonstrations
to begin in 2026.
The third is enhancement of competitiveness and technologies. The next-generation (third-generation) fuel-
cell unit currently under development aims to offer durability equivalent to twice that of the current generation
and is designed to be virtually maintenance-free even under commercial vehicle operating conditions. Fuel
efficiency and driving range have been improved by 20%, enabling travel between Tokyo and Osaka without
refueling.
We
are
developing
dedicated
units
for
both
passenger
and
commercial
applications,
while
standardizing cells to achieve lower costs. Our plan is to roll out this next-generation fuel-cell unit, capable of
meeting a wide range of use cases, from passenger cars to commercial vehicles, starting in fiscal 2027.
At the same time, hydrogen remains a costly energy source. To expand its utilization, reducing its price is
essential. To this end, Toyota is working with partners on technology for hydrogen production.
In 2023, DENSO Fukushima Co., Ltd. introduced an electrolysis system at its production plant. The system
leverages fuel-cell technology from the Mirai and has a capacity of approximately 0.4 megawatts. Since April
2024, it has been supplying hydrogen to combustion furnaces within the plant and continues to be used.
The hydrogen production market is expected to grow rapidly both in Japan and overseas. To enhance
scalability of hydrogen production equipment, Toyota is combining Chiyoda Corporation’s processing plant
design expertise and large-scale plant construction technologies to develop large-scale electrolysis systems in the
5 megawatt to 20 megawatt range. In 2026, Toyota plans to build a facility called Hydrogen Park at its Honsha
Plant and begin large-scale demonstration testing. Going forward, we will continue accelerating efforts toward
commercialization.
Commercial Sector Initiatives
In Japan, Toyota established Commercial Japan Partnership Technologies Corporation (“CJPT”) in 2021
together with Isuzu Motors Limited, Hino, Suzuki Motor Corporation, and Daihatsu with the aim of contributing
to the resolution of issues in the transportation industry and helping realize a carbon-neutral society.
25
We
are
working
with
shippers
and
logistics
companies
in
Fukushima
and
Tokyo
on
the
social
implementation of electrification that utilizes heavy- and light-duty fuel-cell electric trucks and light-duty BEV
trucks. As of the end of December 2025, approximately 200 fuel-cell electric trucks have hit the roads,
supporting the daily lives of local people not only as general delivery vehicles but also as waste collection
vehicles and school lunch delivery vehicles. In addition, around 180 fuel-cell electric buses are operating across
Japan and are beginning to take root as part of local transportation infrastructure. From fiscal 2027, we will begin
production of a new model, further promoting the utilization of hydrogen.
At the same time, the widespread adoption of fuel-cell commercial vehicles faces challenges, including
reductions in vehicle costs, the expansion of hydrogen refueling infrastructure, and the lowering of hydrogen
costs. To address these challenges, efforts are being undertaken through close collaboration between the public
and private sectors.
In May 2025, the Ministry of Economy, Trade and Industry of Japan selected Fukushima, Tokyo,
Kanagawa, Aichi, and Hyogo as priority regions for promoting the deployment of fuel-cell commercial vehicles.
In response, Toyota and CJPT have started work on the following initiatives, aiming to ultimately roll them out
nationwide.
•
Creation of massive hydrogen demand and new hydrogen utilization models through the deployment of
heavy-duty fuel-cell electric trucks
•
Establishment of sales and operating environments in newly designated priority regions
•
Expansion of the lineup of fuel-cell commercial vehicles
•
Support for businesses working to reduce hydrogen costs
Development of Hydrogen Internal Combustion Engines
In 2025, Toyota’s efforts to race a Corolla equipped with one of its hydrogen engines currently in
development entered their fifth year. Hydrogen engines work like modified versions of conventional gasoline
engines powered by burning hydrogen directly as fuel. The fuel is 100% pure hydrogen, unmixed with gasoline.
As no fossil fuels are burned, hydrogen-engine vehicles emit almost no CO
2
when in operation — only that from
the combustion of minute amounts of engine oil. The hydrogen engine is thus one option that offers great
potential to contribute to carbon neutrality while making use of technologies for internal combustion engines
built up over the decades and protecting engine-related jobs in the automotive industry.
In 2024, we took another step forward in the evolution of our hydrogen engines by increasing the durability
of pumps, which had needed to be replaced numerous times in prior races; extending driving ranges by
modifying tank shapes; automating the processes of switching CO
2
collection units; and implementing other
substantial improvements. This cemented the achievement of our target driving range of 30 consecutive laps.
In 2025, we conducted test drives of vehicles with small, highly efficient superconducting motors within
their fuel tanks, improving tank capacity over 1.3 times. Going forward, this will lead to further improvements in
cruising range and driving performance and a reduction in the volume of boil-off gas.
We are striving to practically implement superconductivity technology with the aim of further developing
liquid hydrogen technology.
Toyota could not have taken on this initiative with liquid hydrogen alone. A portion of the liquid hydrogen
used in the hydrogen engine-equipped Corolla in the 2023 Fuji 24 Hours Race was lignite-derived hydrogen
produced and transported from Australia in the Suiso Frontier liquid hydrogen carrier built by Kawasaki Heavy
Industries, Ltd. as part of the HySTRA project. In addition, the mobile liquid hydrogen station used at the circuit
was jointly developed by Iwatani Corporation and Toyota. Moreover, the switch to liquid hydrogen fuel required
26
the modification of many parts. In 2024, Toyota partnered with Japan Metals & Chemicals Co., Ltd. to develop
an electricity supply system that used hydrogen storage alloy in order to address the boil-off gas* issues faced
with prior liquid hydrogen fueling systems. A concept model of an engine that reused boil-off gas produced
during driving as fuel or for generating electricity was displayed at the final race of the Super Taikyu Fuji Final 4
Hour Race, attracting individuals with similar ambitions to join us in the development process. Through
cooperation with our numerous partners, the liquid hydrogen-fueled Corolla successfully completed the race,
and, as a result of such efforts, our number of partners has grown from eight companies in May 2021 to 60
companies by the end of the 2025 season.
* Vaporized hydrogen produced due to the evaporation of liquid hydrogen fuel contained within tanks as a result
of natural influx of outside heat
The scope of hydrogen engine development is expanding beyond motorsports. For example, a verification
test of a hydrogen-powered Hiace was conducted on public roads in Australia from the end of 2023. In addition,
Japan’s first verification test of a mobile liquid hydrogen fueling system was carried out at the Iwatani Hydrogen
Station in Kariya City, Aichi Prefecture, in 2024.
Toyota will continue in its efforts to expand the possibilities of hydrogen engines. Aiming to contribute to
the realization of a carbon-neutral society, we will continue to evolve alongside our partners in line with the
principle of “making ever-better cars from a starting point in motorsports” and our multi-pathway strategy.
Efforts in Realizing a Safe Mobility Society
Toyota’s ultimate goal is to achieve zero casualties from traffic accidents, and ultimately, a society with
zero traffic accidents. Additionally, to achieve a safe mobility society, we believe it will be important to adopt an
integrated three-pronged approach involving people, vehicles, and the traffic environment.
It will also be vital for us to pursue real-world safety by learning from actual accidents and incorporating
that knowledge into vehicle development. Toyota has defined its “Integrated Safety Management Concept” as the
basic philosophy behind its technologies for eliminating traffic accident casualties and is moving forward with
the development of technologies based on this concept.
Toyota provides optimized driver support for safety at every stage of driving, from parking to normal
operation, the moment before a collision, during a collision, and post-collision emergency response. We also aim
to enhance safety by reinforcing links between vehicle safety systems, rather than thinking about each system as
a separate component. These are the approaches behind our Integrated Safety Management Concept.
We introduced the Toyota Safety Sense system, which packages multiple preventive safety functions that
help reduce serious traffic accidents with the potential to cause death or injury, to the market in 2015. These
functions include avoiding and mitigating damage from collisions with cars in front of a vehicle or with
pedestrians, preventing accidents caused by a vehicle leaving its current lane, and ensuring optimal forward
visibility during nighttime driving. Toyota Safety Sense has now been installed in more than 61 million vehicles
globally (as of March 2026). Toyota Safety Sense is now available on nearly all passenger car models (as
standard or option) in the Japanese, U.S., and European markets. It has also been introduced in a total of
144 countries and regions, including such key markets as China, other select Asian countries, the Middle East,
and Australia.
Software Defined Vehicles (SDVs)
SDVs are playing a leading role in the transformation of mobility. Toyota’s main aspiration in working with
SDVs is a society with zero traffic accidents. Through SDVs, we aim to realize safer, more reliable, and more fun
mobility. However, realizing such a society is difficult with just the technological innovation of cars. It requires
27
an integrated three-pronged approach involving cars, people, and infrastructure. For example, this includes
coordination with road infrastructure that utilizes data from built-in sensors to address blind spots — an issue that
evolution of vehicles cannot overcome alone — and AI agents that autonomously support drivers (people). An
environment with uninterrupted communication and the development of infrastructure such as data centers are
key to linking cars with society. Accordingly, we worked together with NTT, Inc. (formerly Nippon Telegraph
and Telephone Corporation) in 2024 to begin creating appropriate infrastructure.
Toyota places strong emphasis and priority on safety and security. At the same time, we have an opportunity
to leverage the strength of having 150 million private vehicles in operation to help identify the diverse values of
SDVs, including the use of things such as AI agents that grow alongside customers and cars that may one day be
capable of reproducing more professional or proficient driving styles. We aim to continue to provide customers
with safe, reliable, high-quality software through innovative digital platforms that are the foundation of software
development and our Arene software creation platform. We will accelerate the development of an SDV
infrastructure unique to Toyota through cooperation with our partners across industries.
Arene
The structural components supporting SDVs include applications, software, and electronic platforms. To
enhance the scalability as it relates to cars, we have encouraged co-creation with partner companies and have
renewed our electronic platforms, including improving chip performance.
Furthermore, supporting the software development is Arene, introduced with the new RAV4. Arene is a
software development platform through which we will mass-produce safe, reliable, and high-quality software,
which will help accelerate the development of SDVs by applying the knowledge and technologies from the
monozukuri
that Toyota has cultivated to date. There are three components of the Arene platform.
1.
Arene SDK
Arene SDK is a modular development kit for developers, enabling the rapid development of high-quality
software and easy deployment of developed software across multiple vehicles.
2.
Arene Tools
Arene Tools are tools for verifying and evaluating software in a virtual environment, reducing physical
inspections of actual cars and enabling the creation of functions at an even earlier stage. The Arene SDK and
Arene Tools shorten the development period for software, contributing to the quick provision of better software
to customers.
3.
Arene Data
Arene Data is the component referring to the collection and analysis of data that will contribute to providing
a personalized driving experience tailored to each customer by continuously improving the car’s functions as the
owner drives it. By adopting Arene in the RAV4, a popular Toyota model loved by countless customers across
regions, we can collect various data from customers around the world and continue evolving cars. Looking
ahead, we expect this approach to expand and will consider cross-domain development. As the first step in mass
production of Toyota RAV4 SDVs, we will make ever-better cars in line with regional needs through Arene,
contributing to the future realization of a society with zero traffic accidents.
Toyota Woven City
Toyota aspires to transform into a mobility company. On our road toward accomplishing this goal, Toyota
Woven City will function as a “mobility test course” for creating new products and services. Toyota and its group
28
company Woven by Toyota are advancing the Woven City project. Woven City saw its official launch on
September 25, 2025, with companies and individuals commencing demonstrations of various products and
services, and some residents have begun moving in. Access to this facility will not be limited to the Toyota
Group. Rather, we hope to make Woven City a place where external stakeholders who share our desire to act “for
others” can also use the environment, in which people actually live, to create new values to help shape a better
future and enhance well-being for all. The companies and individuals who utilize Woven City to develop and
demonstrate new products and services are called “Inventors.”
By combining Toyota’s manufacturing expertise, Woven by Toyota’s advanced software capabilities, and
the
unique
strengths
of
each
Inventor,
Woven
City
seeks
to
foster
kakezan
,
a
Japanese
concept
of
“multiplication,” where new innovation and societal value emerge from the convergence of different ideas and
capabilities. The people who live in and visit Woven City, called “Weavers,” also participate in inventions
through
kakezan
.
Weavers test the products and services developed by Inventors, sharing their comments on usability and
opinions as feedback that Inventors will incorporate into their inventions. The Weavers and Inventors who gather
at Woven City aim to work together to produce well-being for all under Toyota’s goal of working for others.
Inventors are Toyota Group companies as well as like-minded outside companies and other organizations who
have joined this quest for expanding mobility. Toyota and Woven by Toyota will also take advantage of Woven
City to conduct tests as Inventors. Additionally, Toyota hosted an accelerator program attended by start-up
companies, entrepreneurs, universities, and research institutions. The selected winners are expected to join the
Inventors. The addition of start-up companies to the Inventors, which have primarily consisted of large
corporations, is expected to further accelerate innovation through
kakezan
.
Co-creation Themes by Investors
Inventor
Theme
Daikin Industries, Ltd.
Testing “pollen-less spaces” and “personalized functional environments”
DyDo DRINCO, INC.
Creating new value through innovative vending machine concepts
NISSIN FOOD PRODUCTS CO.,
LTD.
Creating and evaluating food environments to inspire new “food cultures”
UCC Japan Co., Ltd.
Conducting a proof-of-concept study to demonstrate the effect of coffee
on creativity and productivity
Zoshinkai Holdings Inc.
Leveraging data to realize innovative educational methods and new
learning environments
Interstellar Technologies Inc.
Developing a robust rocket production system*
Kyoritsu Seiyaku Corporation
Finding new ways to enhance human-pet coexistence
Naoto Inti Raymi
Developing future-oriented soundscapes
AI Robot Association (AIRoA)
Exploring the practical deployment of robots through real-world challenge
identification and feedback cycles
DAIICHIKOSHO CO., LTD.
Creating more flexible karaoke experiences through real-world
demonstration experiments
Joby Aviation, Inc.
Exploration of an air mobility ecosystem
29
Toyota Financial Services
Corporation
Developing new sales and financing models based on verified, real-world
mobility usage data
*
Interstellar Technologies Inc. will conduct its work outside Woven City, with development support provided by Toyota
and Woven by Toyota in the form of engineering know-how and technical staff.
The products and services developed by Inventors will be tested by Weavers (residents and visitors). These
individuals are indispensable to the testing processes or co-creation activities and will serve a similar function to the
test drivers who take part in the automobile development process. Their contributions to tests will come in the form
of the feedback they provide with regard to the products and services being tested.
Following the official launch of Woven City, in September 2025, residents — primarily Toyota and Woven by
Toyota staff and their families — have resided in Woven City as Weavers. The community will then gradually expand to
include external Inventors and their families. Under Phase 1, the total population of Woven City is expected to reach
approximately 300 in the future. Initially, visitors will be limited to related parties, with plans to welcome the general
public to participate as Weavers in co-creation activities starting in fiscal 2026 and beyond. Woven City is a test course for
mobility that demonstrates mobility infrastructure via a three-pronged approach of people, mobility, and infrastructure.
The goal of this approach is to help realize the safe and secure mobility society that Toyota envisions. Up until now,
Toyota has pursued this vision by focusing on the development of automobiles and working to make ever-better cars on
dedicated automobile test courses. However, realizing a truly safe and secure mobility society requires that we expand our
focus beyond automobiles and other forms of mobility to also consider the people who use these mobility options and the
infrastructure that supports mobility. Woven City functions as a test course for implementing such demonstration testing.
Under Phase 1, which has been officially launched, we have included the following features.
Features
Three-type
road system
Underground
road network
Traffic signals
Multifunctional
poles
Citywide
Ground-level roads are classified into three types–one
exclusively for pedestrians, one shared by pedestrians
and personal mobility, and one dedicated to vehicles.
A fourth underground road enables testing unaffected
by weather or temperature conditions.
A system that coordinates traffic signals with mobility,
advancing safety through a three-pronged approach
(mobility, people, and infrastructure)
Serving as both streetlights and traffic signal posts,
these poles can also host sensors and cameras used in
testing and co-creation activities.
Underground
Citywide
Citywide
Implementation
Function
In April 2026, the Woven City Inventor Garage (the “Inventor Garage”) began operations as a facility
designed to further accelerate
kakezan
of Inventors. The Inventor Garage is located in the former stamping
facility of Toyota Motor East Japan, Inc.’s Higashi-Fuji plant, which supported passenger vehicle production for
more than 50 years, and was renovated to serve as a co-creation hub.
As a real-world test course, Woven City supports agile development and validation through three
environments: the Inventor Garage, which serves as a hub for development of products and services, the “Woven
City Inventor Field,” in which performance and safety tests are conducted in an environment without residents,
and the “Phase 1 Residential Area,” which enables testing in a living environment currently home to
approximately 100 Weavers. Woven City is intended to continue expanding as an “ever-evolving city,” and by
providing a test course where safety and security are maintained at every stage, it aims to further support
kakezan
.
Woven City has officially launched, but this is just the starting point. We will work through trial and error
together with Inventors and Weavers, while improving Woven City’s performance as a test course, to create
products and services that will become the future fabric of life.
30
Mobility is not just the physical movement from point A to point B. It is also about being able to “move”
people’s hearts and creating excitement. Moving toward inventions that will become the future fabric of life and
expanding people’s potential: this is our vision for expanding mobility and for Woven City itself. Together with
allies who share our vision, we will leverage Woven City to further our transformation into a mobility company
that will help weave the future.
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,
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 has expanded 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 42 countries and regions, which support its automotive operations globally.
Toyota’s
sales revenues
from its financial services operations were
¥4,857.1
billion in fiscal 2026,
¥4,481.1 billion in fiscal 2025, and ¥3,484.1 billion in fiscal 2024. In fiscal 2026, Toyota’s business saw solid
growth mainly due to an accumulated balance of earning assets resulting from new car sales support for Toyota and
Lexus vehicles. Under such circumstances, as a result of Toyota’s continued collaboration with dealers in various
countries and regions and efforts to expand products and services that meet customer needs, Toyota’s share of
financing provided for new car sales of Toyota and Lexus vehicles in regions where Toyota Financial Services
Corporation operates reached approximately 30%, and the balance of earning assets continued to steadily increase.
In addition, to fund the growing asset base, Toyota is making efforts to provide both its customers and dealers with
stable financial services by diversifying its funding methods by deposit-based funding in addition to using already
existing means as commercial paper, corporate bonds, bank borrowings, and asset securitization. As a result of
ongoing monitoring of bad debt and diligent, detailed collection efforts, the percentage of credit losses remained at
stable levels of 0.43% in fiscal 2026 and 0.46% in fiscal 2025. Toyota continues to work towards improving its
management measures in connection with residual value risks in leasing.
Toyota Motor Credit Corporation is Toyota’s principal financial services subsidiary in the United States and
provides financial services, including retail financing, retail leasing, wholesale financing, and insurance services.
Toyota also provides financial services in 42 other countries and regions through various financial services
subsidiaries, including:
•
Toyota Finance Corporation in Japan;
•
Toyota Credit Canada Inc. in Canada;
•
Toyota Finance Australia Ltd. in Australia;
•
Toyota Kreditbank GmbH in Germany;
•
Toyota Financial Services (UK) PLC in the United Kingdom;
•
Toyota Leasing (Thailand) Co., Ltd. in Thailand; and
•
Toyota Motor Finance (China) Co., Ltd. in China.
KINTO, which started in Japan in 2019 in response to the shift from “owning” cars to “using” cars, has been
steadily enhancing its service lineup and gaining brand awareness. This service is also being made available in
Europe and other regions. Furthermore, Toyota developed and provides customers with the payment application
“TOYOTA Wallet” as a platform that contributes to improving the convenience of customers’ daily payments
and creating a foundation for a mobility society.
31
A large portion of Toyota’s financial services is related to the sale of Toyota vehicles. Finance receivables
for all of Toyota’s dealer and customer financing operations were ¥38,966.6 billion as of March 31, 2026,
representing an increase of 15.9% compared to the previous year. As of March 31, 2026, 52.2% of Toyota’s
finance receivables were attributable to North America, 15.4% from Europe, 11.4% from Asia, 10.0% from
Japan and 11.0% from other areas.
Approximately 40% of Toyota’s unit sales in the United States during fiscal 2026 included a finance or
lease arrangement with Toyota.
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 “Item 5. Operating and
Financial Review and Prospects — 5.A 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 installment
payment collections 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 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.
32
Toyota’s finance subsidiaries also make term loans to dealers for 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 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, 2026, Toyota Finance Corporation
has 15.7 million card holders (including Lexus credit card holders).
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. Sales revenues for these activities totaled ¥1,651.4 billion in fiscal
2026, ¥1,447.1 billion in fiscal 2025, and ¥1,368.1 billion in fiscal 2024.
Governmental Regulation, Environmental and Safety Standards
Toyota’s products must comply with government regulations governing, among many other things, their
emissions, fuel economy, noise and safety. In addition, Toyota is subject to laws regulating pollutants generated
by its manufacturing operations. 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.
The following is a summary of the more significant existing environmental and safety standards that apply
to our products.
International Harmonization of Vehicle Regulations
The World Forum for Harmonization of Vehicle Regulations (“WP.29”) of the United Nations Economic
Commission for Europe has been working to promote international harmonization of the technical prescriptions
for the construction and approval of wheeled vehicles. Towards that end, it has developed certain international
rules and regulations such as the UN Regulations (“UNR”) under the 1958 Agreement and the Global Technical
Regulations (“GTR”) under the 1998 Agreement. The UNR has been adopted in jurisdictions such as Japan, EU
and Russia, and each participating party’s type approvals are mutually recognized under the 1958 Agreement.
The parties to the 1998 Agreement include the U.S., China and India in addition to Japan, the EU and Russia, and
25 Global Technical Regulations have been established to date. Progress in international harmonization of
technical prescriptions is expected to reduce country to country variations in product specifications and to lead to
greater efficiency in Toyota’s product development.
33
Vehicle Emissions
Japanese Standards
The Air Pollution Control Act of Japan and the Road Transport Vehicle Act and the Act Concerning Special
Measures for Total Emission Reduction of Nitrogen Oxides and Particulate Matter from Automobiles in
Specified Areas regulate vehicle emissions in Japan. In recent years, more stringent regulations have been
introduced to match the European Union Standards, as can be seen from, among other things, the strengthened
regulations on particulate matters emitted from gasoline-fueled vehicles, the adoption of the Worldwide
Harmonized Light Vehicles Test Cycle (“WLTC”) driving cycles and the introduction of the Real Driving
Emission (“RDE”). UN-R154 has also been adopted. The Noise Regulation Act and the Road Transport Vehicle
Act provide for noise reduction standards on automobiles in Japan.
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 vehicles, light-duty trucks and heavy-duty
vehicles (with such classifications based on gross vehicle weight ratings). Manufacturers are not permitted to sell
vehicles in the United States that do not meet the standards. In 2014, EPA finalized new “Tier 3” tailpipe emission
and evaporative emission standards for passenger vehicles, light-duty trucks, medium-duty passenger vehicles and
some heavy-duty vehicles. Under that rule, tailpipe emission standards for non-methane organic gases, nitrogen
oxides, and particulate matter, as well as standards for evaporative emissions and guaranteed useful life (which
relates to a vehicle’s ability to meet emission limits over time), became increasingly stringent in phases from model
years 2017 to 2025. It also required reductions in gasoline’s sulfur content beginning in model year 2017, which
was expected to improve the performance of emission control systems. With the Tier 3 rule, EPA brought federal
requirements in line with California’s more stringent emission standards (discussed below).
In March 2024, the EPA announced a final rule for Tier 4 emission standards for passenger vehicles, light-
duty trucks, medium-duty passenger vehicles and some heavy-duty vehicles from model year 2027 through 2032.
The rule tightened criteria pollutant limits, requiring reductions in non-methane organic gases and nitrogen
oxides emissions and a particulate matter cap, fully phased in by model year 2031. Under the current Trump
administration, however, the EPA has initiated steps to roll back these standards, framing them as an overreach
that effectively mandates electric vehicle adoption. This deregulation effort is expected to face legal challenges
from environmental groups and states, potentially delaying or altering the implementation of the original rules.
California Standards
The federal Clean Air Act generally prohibits states from enacting their own emission standards for new
motor vehicles and engines. However, California is allowed to establish its own more stringent vehicle emission
control standards if it receives a waiver of preemption from EPA. Other states then may decide to adopt the
California standards that are allowed under the waiver.
Over the years, EPA has granted many such preemption waivers to California. Among those was a January
2013 waiver in support of California’s Advanced Clean Cars (“ACC”) program.
The California Air Resources Board (“CARB”) had adopted the ACC program in coordination with the EPA
and the federal National Highway Traffic Safety Administration (“NHTSA”). It included the Low-Emission
Vehicle III (“LEV III”) regulations, which set progressively stringent standards to reduce emissions of volatile
organic compounds, carbon monoxide, nitrogen oxides, particulate matter and greenhouse gases (“GHG”). The
regulations also addressed standards for evaporative emissions and extended vehicle useful life requirements.
Another
part
of
the
ACC
program
was
a
“zero-emission
vehicles”
(“ZEV”)
mandate
requiring
manufacturers to sell a specified percentage of ZEVs—including BEVs, FCEVs and certain advanced technology
34
vehicles such as PHEVs that meet “partial zero-emission vehicles requirements”. Toyota’s MIRAI, an FCEV, is
one example of a vehicle that qualifies as a zero-emission vehicle. Toyota intends to continue to develop
additional advanced technologies and alternative fuel technologies that will allow other vehicles to qualify as
zero-emission vehicles or partial zero-emission vehicles.
In 2022, CARB finalized the Advanced Clean Cars II (“ACC II”) regulations, which include updated LEV
IV exhaust emissions standards and an expanded ZEV sales mandate applicable to model years 2026 through
2035. LEV IV standards further tighten criteria pollutant limits for light- and medium-duty vehicles, while the
ZEV mandate requires 100% of new passenger vehicles sold in California to be ZEVs by 2035, consistent with
California Governor Newsom’s Order of 2020 (N 79 20).
Legal challenges to the ACC II program have been filed, including suits over CARB’s authority and the
waiver granted by the EPA under the Clean Air Act, particularly as federal policy on vehicle electrification has
shifted under the second Trump administration. For example, the US Congress passed joint resolutions in May
2025 under the Congressional Review Act that disapproved EPA waivers for several California vehicle emission
programs, including the ACC II rules; President Trump signed these resolutions into law on June 12, 2025.
Developments such as these with their associated legal battles create significant uncertainty around future
emissions standards under the Clean Air Act.
Aside from its emission standards, California has adopted regulations that require On-Board Diagnostics
(“OBD”) systems to be incorporated into the computers of vehicles sold in California. OBD systems monitor
components that can affect the emission performance of a vehicle and, if a problem with a component is detected,
illuminates a warning light on the vehicle’s instrument panel. The systems also store the malfunction information
in the computer to facilitate repairs. California’s OBD regulations are the most stringent in the world.
Other States’ Standards
Under Section 177 of the Clean Air Act, states can adopt California’s vehicle emissions standards and opt-in
to that more stringent program. Approximately seventeen other states, for example, have adopted regulations
substantially similar to California’s LEV standards. At least fifteen of those (Colorado, Connecticut, Maine,
Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island,
Vermont, Virginia and Washington) have adopted California’s ZEV program. Delaware and Pennsylvania have
implemented the LEV standards but not the ZEV standards. Approximately eleven states (in addition to
California) and the District of Columbia have adopted California’s ACC II regulations, mandating that 100% of
new light-duty vehicle sales be ZEVs by 2035. Some of these state measures have faced reversal due to such
concerns as the effect and cost of the mandates on consumers.
Canadian Standards
Canada finalized vehicle emission standards equivalent to federal standards in the United States in October
2014, responding to the strengthening of U.S. standards for model years 2017 to 2025; however, while the U.S.
EPA published even stronger standards in March 2024 to drive significant ZEV penetration through 2032, it
officially rescinded its Greenhouse Gas Endangerment Finding and repealed all federal GHG standards on
February 12, 2026, leaving Tier 4 regulations on hold.
Although Canada typically aligns with the most stringent North American performance standards via
“incorporation by reference,” U.S. regulatory reversals and legal threats have created uncertainty for Canada’s
post-2026 emissions framework.
Further, in February 2026 the federal government announced a significant policy redirection by announcing
it will repeal its ZEV Mandate (Electric Vehicle Availability Standard) and replace it with more stringent,
Canada-unique fleet-average GHG emission standards for model years 2027–2032, with an eventual goal of 75%
EV sales by 2035 and 90% by 2040 to be achieved via GHG emissions standards.
35
Despite this federal uncertainty, provinces of British Columbia and Quebec maintain their own ZEV
mandates. In March 2026, British Columbia announced that it will modify its ZEV mandate to require
manufacturers to reach 75% ZEV sales in model year 2035 (down from 100%). Quebec announced in 2025 that it
would lift its 2035 ban on new gasoline-powered vehicles, set a new 2035 target of 90% ZEV sales — combining
both BEVs and PHEVs, and provide some credit for hybrid vehicles within its ZEV mandate, with draft
regulation reflecting these changes expected by the end of 2026.
To support these transitions, Canada provides a federal incentive through the Electric Vehicle Affordability
Program (EVAP), which can often be combined with active provincial programs, though availability varies as
several other regional programs have recently closed or paused. Furthermore, Canada remains committed to its
2017 fuel regulations, which limit sulfur concentration to 10mg/kg.
European Union Standards
In 2007, the European Parliament and the Council of the EU adopted the Vehicles Emissions Regulation
(Regulation (EC) No 715/2007), which introduced more stringent emission standards for passenger vehicles and
light commercial vehicles. The effective date for phasing in these stricter standards for passenger vehicles was
September 2014 for Euro 6. For light commercial vehicles, the effective date was September 2015.
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.
The
EU
implements
RDE
regulations,
which
require
manufacturers to conduct on-road emissions tests using portable emissions testers to demonstrate compliance.
Since September 2017, manufacturers have been required to reduce the divergence between the regulatory limit
tested in laboratory conditions and the values of RDE tests, and this divergence factor was made more stringent
for all new vehicles effective January 2021. The EU also implements the Worldwide harmonized Light vehicles
Test Procedure (“WLTP”), which was introduced on September 1, 2017. The OBD regulations have also been
tightened in terms of both subject parts and regulatory values. On January 1, 2019, an improved WLTP that
purports to eliminate test flexibilities and introduces on-board fuel and energy consumption monitoring devices
took effect. In March 2023, further regulations came into effect to harmonize requirements with UNR, tighten the
divergence factor on RDE, and tighten the method for calculating CO
2
emissions for PHEVs.
On May 28, 2024, Euro 7 (Regulation (EU) 2024/1257), which further strengthens Euro 6, came into effect.
The dates of application of the Euro 7 regulation depend on vehicle type. They will apply to new types of
passenger vehicles and light commercial vehicles from November 29, 2026, to new passenger vehicles and light
commercial vehicles from November 29, 2027, to new types of buses and lorries from May 29, 2028, and to new
buses and lorries from May 29, 2029. The Euro 7 regulation maintains the Euro 6 exhaust emission limits for
passenger vehicles and light commercial vehicles (except the particle number limit), tightens exhaust emission
limits for buses and lorries (e.g., introducing new in-scope pollutants such as N2O), establishes rules for other
types of emissions such as brake particle emissions and tire abrasion, and introduces minimum performance
requirements for battery durability in electric and plug-in hybrid vehicles (BEVs/PHEVs). Euro 7 also introduces
on-board monitoring (OBM) systems, which monitor real-time exhaust emissions using on-board sensors and
transmits the monitored data over the air from vehicles to manufacturers’ servers.
Chinese Standards
The next-generation emissions regulations for passenger vehicles, or Level 6 Emissions Regulations
(China 6), were issued as GB18352.6-2016 at the end of 2016, pursuant to which tighter requirements will be
implemented in two steps, depending on the regulated subjects and the implementation timing. Specifically,
China 6a will apply to all models to be sold or registered in July 2020 and beyond, and China 6b will apply to all
models to be sold or registered in July 2023 and beyond. China 6b will also introduce the RDE Regulations
adopted under Euro 6. The OBD regulations have also been tightened in terms of both subject parts and
regulatory values. With respect to fuels in the market, the quality standards and the implementation from
36
January 2019 for China 6 gasoline fuel and China 6 diesel fuel have been provided in GB17930-2016 and
GB19147-2016 so as to keep up with the implementation timing of China 6 emissions regulations. Discussions
are currently underway for Level 7 Emissions Regulations (“China 7”), which will be more stringent than the
China 6 Emissions Regulations. Potential regulations for particulate matter emitted from brake pads and tire wear
and the expansion of regulations to make BEVs/FCEVs subject to the OBD regulations are being considered.
For heavy-duty diesel-powered commercial vehicles, pursuant to GB17691-2005, the China V Emissions
Regulations are being implemented from July 2017. With the establishment of GB17691-2018, which provides
next-level China VI Emissions Regulations (“China VI”), it has been decided that China VIa will be
implemented from July 2021 and China VIb from July 2023 (these regulations will apply to gas-fueled vehicles
and public vehicles for urban areas earlier than those dates). For heavy-duty gasoline-powered commercial
vehicles, pursuant to GB14762-2008, Level IV Emissions Regulations (“China IV”) apply to new models after
July 2012. In parallel with China VII for passenger vehicles, tightening of the next-generation emissions
regulations (China VII) is currently considered for heavy-duty gasoline-powered commercial vehicles.
Standards of Other Countries or Regions
At present, certain countries such as India, Thailand, Taiwan, Australia, New Zealand, Chile and Peru have
also decided to introduce regulations equivalent to Euro 6.
Vehicle Fuel Economy
Japanese Standards
The Act on Rationalizing Energy Use and Shifting to Non-fossil 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, and are required to be met by either fiscal 2011 (April 2010-March 2011),
fiscal 2016 (April 2015-March 2016), fiscal 2021 (April 2020-March 2021), fiscal 2023 (April 2022-March
2023), fiscal 2026 (April 2025-March 2026) or fiscal 2031 (April 2030-March 2031). From 2020, if the WLTC
mode is applied as a vehicle emissions test cycle, fuel economy test must be also conducted based on the WLTC
mode.
U.S. Standards
Since 1975 when Congress passed the Energy Policy and Conservation Act, each automobile manufacturer
must comply with corporate average fuel economy (“CAFE”) standards across its fleet of new cars and trucks. 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 may be used for the three
years preceding the model year in which they were earned and the five years after.
An original goal of the CAFE Program was fuel efficiency. But the program also provided the means for
EPA to address GHG emissions from vehicles. The two are linked since carbon dioxide emissions are directly
proportional to fuel consumed. In 2012, for example, NHTSA and EPA issued a joint rule for passenger cars,
light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. NHTSA focused on
fuel efficiency. It required passenger vehicles and light-duty trucks to meet an industry average fuel economy
level of 49.7 miles per gallon in model year 2025. EPA, on the other hand, required an estimated combined
average emission level of 163 grams of carbon dioxide per mile in model year 2025, which would be equivalent
to 54.5 miles per gallon if met solely through improvements in fuel economy (without using any available credits
for reducing air conditioning leakage).
37
Under the first Trump administration, in 2018, EPA and NHTSA proposed more relaxed GHG emission
standards and CAFE standards. EPA also withdrew the preemption waiver allowing California to issue its own
more stringent GHG emission standards under the ACC program. The Biden administration, however, moved to
tighten the fuel economy program. EPA and NHTSA withdrew the prior Trump administration’s proposed GHG
emission standards and CAFE standards.
In 2021 the Biden EPA issued a final rule revising passenger car and light-duty truck GHG emissions
standards for model years 2023 through 2026. That rule projected reductions in GHG emissions, year-over-year,
by 9.8% for model year 2023, 5.1% for 2024, 6.6% for 2025, and 10.3% for 2026. Based on these reductions, the
industry-wide average emission targets for passenger cars and light-duty trucks were projected by the EPA to be
161 grams of carbon dioxide per mile in model year 2026.
In 2022, NHTSA followed with a final rule revising passenger car and light-duty truck fuel economy
standards for model years 2024 through 2026. That rule set a fleet-wide standard of approximately 49 mpg for
passenger cars and light duty trucks in model year 2026. This was to be achieved by increasing fuel efficiency,
year-over-year, by 8% for model year 2024, 8% for 2025, and 10% for 2026.
Also in 2022, EPA reinstated California’s authority to enforce its own GHG emissions standards for
vehicles.
In March 2024, EPA issued a final rule setting GHG emissions standards for light-duty and medium-duty
vehicles from model years 2027 to 2032, projecting an industry-wide average target of 85 grams of carbon
dioxide per mile by model year 2032. This represented an almost 50% reduction and was expected to accelerate
the market shift towards electrification.
However, with the second Trump administration, NHTSA decided to review and reconsider fuel economy
standards applicable to vehicles from model year 2022. In support of that effort, NHTSA issued an interpretive
rule addressing the extent of its legal authority for the CAFE program. It was followed by a December 2025
proposed rule to amend the fuel economy standards for light duty vehicles for model years 2022 to 2026 and
2027 to 2031. In 2026, moreover, the Trump EPA rescinded the 2009 endangerment finding that provided the
basis for its regulation of GHG emissions from new motor vehicles and new motor vehicle engines.
Environmental stakeholders filed to start litigation on this decision, leading to uncertainty regarding such
regulation.
Both the CAFE and GHG emissions standards are expected to remain dynamic in response to shifting
federal
policy
priorities,
technological
developments,
and
market
trends.
A
return
of
a
Democratic
administration, for example, could result in a tightening of such standards beyond model year 2032. Whatever
the standards, legal and political challenges are likely. As such, the regulatory landscape is likely to evolve, with
periodic rulemakings, midterm reviews and potential litigation shaping the trajectory of U.S. vehicle GHG
emissions and fuel economy standards in the coming years.
European Union Standards
In April 2019, the European Parliament and the Council of the EU adopted the EU Emissions Performance
Regulation (Regulation (EU) 2019/631), which introduced new carbon dioxide standards for vehicles and light
commercial vehicles. Under these standards, average emissions of the EU fleet of new vehicles and light
commercial vehicles were set to be reduced by 15% lower than 2021 levels by 2025 and, by 2030, emissions
were set to a further 37.5% and 31% reduction of 2021 levels for vehicles and light commercial vehicles,
respectively. As such, the 2020 to 2024 EU-fleet wide average carbon dioxide emissions target for light
commercial vehicles was 147 grams per kilometer, and for passenger vehicles, 95 grams per kilometer. Since
2021, these emissions targets have been tested using the WLTP.
38
As part of its “Fit for 55” package, on April 19, 2023, the European Parliament and the Council of the EU
adopted an amendment to the EU Emissions Performance Regulation (Regulation (EU) 2023/851), which
introduced more stringent carbon dioxide emission standards for vehicles and light commercial vehicles. The
new standards strengthen the 2030 targets from 37.5% to a 55% reduction for new passenger cars and from 31%
to a 50% reduction for new light commercial vehicles, both relative to the 2021 baseline discussed above. In
addition, the new standards introduce a new 2035 carbon dioxide target set at a 100% reduction for new vehicles
and light commercial vehicles, again relative to the 2021 baseline. Since 2019, manufacturers failing to meet
their targets have incurred penalties, which are currently set at
€
95 per vehicle from the first gram of target
exceedance onwards.
On July 9, 2025, the European Parliament and the Council of the EU adopted an amendment to the EU
Emissions Performance Regulation (Regulation (EU) 2025/1214), which introduced a one-time flexibility
measure allowing manufacturers to meet 2025–2027 carbon dioxide targets over a three-year average rather than
annually. This exemption was implemented as part of the Industrial Action Plan for the automotive sector, which
aims to support investment in the clean transition while preserving overall climate ambition. Furthermore, since
2025,
a
zero-
and
low-emission
vehicles
(“ZLEV”)
crediting
system
has
been
introduced
to
relax
a
manufacturer’s specific carbon dioxide emissions targets where the manufacturer produces numbers of ZLEV
above specified benchmarks.
In December 2025, the European Commission published an “Automotive Package” comprising proposed
amendments to Regulation (EU) 2023/851 (the amended CO
2
fleet-wide performance standards for cars and
vans), a proposed Directive on clean corporate vehicle fleets, a proposed Automotive Omnibus Regulation on the
simplification of type-approval and market surveillance requirements, and a Battery Booster investment program.
The proposed amendments to Regulation (EU) 2023/851 would replace the 100% tailpipe emissions reduction
target for new cars and vans by 2035 with a 90% target, with the remaining 10% to be compensated through the
use of low-carbon steel produced in the EU, e-fuels or biofuels. The proposals also introduce additional
compliance flexibilities, including “super credits” for small affordable electric vehicles manufactured in the EU,
a “banking and borrowing” mechanism for the 2030–2032 period, and a reduction of the 2030 CO
2
target for
vans from 50% to 40%. The proposed Directive on clean corporate vehicle fleets would require Member States to
set mandatory targets for the uptake of zero- and low-emission vehicles by large companies and to make zero- or
low-emission status and EU origin prerequisites for vehicles benefiting from public financial support. The
proposed Automotive Omnibus Regulation is expected to streamline type-approval testing procedures, reduce the
volume of delegated and implementing acts to be adopted under the General Safety Regulation (Regulation (EU)
2019/2144) and Euro 7 (Regulation (EU) 2024/1257), and introduce a new vehicle category for small affordable
electric cars of up to 4.2 meters in length. The Battery Booster investment program allocates
€
1.8 billion,
including
€
1.5 billion in interest-free loans for European battery cell producers, to support the development of a
fully EU-based battery value chain. These proposals remain subject to adoption by the European Parliament and
the Council of the EU, and their final form may differ from the European Commission’s proposals.
Also adopted as part of the “Fit for 55” package, the recast Renewable Energy Directive (Directive (EU)
2023/2413) enables Member States to require that renewable energy accounts for at least 29% of final energy
consumption in transport by 2030, including a combined sub-target of 5.5% for advanced biofuels and renewable
fuels of non-biological origin (“RFNBOs”) such as green hydrogen and e-fuels, of which at least 1% must come
from RFNBOs.
The Alternative Fuels Infrastructure Regulation (Regulation (EU) 2023/1804), also part of the “Fit for 55”
package, mandates the deployment of publicly accessible electric vehicle charging infrastructure along TEN-T
(Trans-European Transport Network) core and comprehensive network corridors and hydrogen refueling stations
along TEN-T core corridors.
39
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. For light-duty
passenger vehicles, GB27999-2011 was issued. In these Level 3 Fuel Consumption Regulations for passenger
vehicles, the regulation framework was substantially revised, such as the introduction of new regulations
requiring automobile manufacturers to meet standards of corporate average fuel consumption across models in
addition to existing regulations requiring each model to meet consumption standards. Furthermore, in order to
achieve the national target for average fuel efficiency for 2020, the following more stringent fuel consumption
regulations have been enforced. First, GB19578-2014, which has been enacted to strengthen regulations for each
model, is being applied to new models after January 2016. Second, GB27999-2014, which has been enacted as
Level 4 Fuel Consumption Regulations for passenger vehicles to strengthen corporate average regulations, has
been in effect since 2016. In 2021, the fuel economy test mode was changed from NEDC to WLTC, and the
Level 5 Fuel Consumption Regulations for passenger vehicles to achieve the average fuel efficiency target by
2025, GB19578-2021 and GB27999-2019, have been in effect since 2021. As a further enhancement of fuel
consumption regulations, GB19578-2024 and GB27999-2025, which are the Level 6 Fuel Consumption
Regulations for passenger vehicles, have been enacted and took effect in 2026. In addition, GB36980.1-2025,
which regulates smaller electric vehicles (BEVs) by model, was enacted and has been applied to all new vehicles
from January 2026. For light commercial vehicles, GB20997-2015 was enacted, based on which Level 3 Fuel
Consumption Regulations have been applied to all new vehicles from January 2018. As a further enhancement of
fuel consumption regulations, GB20997-2024, which are the Level 4 Fuel Consumption Regulations for light
commercial
vehicles,
were
enacted
and
applied
to
new
vehicles
from
January
2026.
Moreover,
the
implementation of the Life Cycle Assessment, which comprehensively regulates the amount of carbon dioxide
emitted during the vehicle manufacturing, use, and disposal processes, among others, is being considered earlier
than in the rest of the world.
With respect to large commercial vehicles, pursuant to GB30510-2018, Level 3 Fuel Consumption
Regulations apply to new vehicles from July 2019 and are currently being enforced. In addition, in an effort to
further strengthen fuel consumption regulations for the next generation, GB30510-2024, which is the Level 4
Fuel Consumption Regulations, have been enacted and applied to new vehicles from July 2025.
Standards of Other Countries or Regions
India, Saudi Arabia, Brazil, Chile, Mexico, Australia, New Zealand, South Korea and Taiwan have imposed
regulations that require automobile manufacturers and dealers to reduce fuel consumption and carbon dioxide
emissions.
Vehicle Safety
Japanese Standards
Japan has been participating in the 1958 Agreement of the UN and has a number of technical standards that
are harmonized with the UNRs described below.
OBD testing to verify compliance with safety standards during vehicle inspections became mandatory for
domestic vehicles starting October 2024 for imported vehicles starting October 2025.
From 2025 onwards, new UNRs have been adopted, including the pedal misapplication acceleration control
system (UN-R175) and the emergency lane keeping system (UN-R178), among others.
Based
on
the
outcomes
of
deliberations
by
the
public–private
council,
Japan
has
implemented
a
harmonization of domestic effective dates. For standards for which application dates have already been
determined, effective dates will be consolidated on an annual basis in September. For standards to be newly
introduced going forward, effective dates will be unified to either September or March each year.
40
In addition, pursuant to the agreement between Japan and the United States concerning tariffs, a new
certification scheme for U.S.-manufactured passenger vehicles has been established. By utilizing this scheme,
passenger vehicles manufactured in the United States and compliant with U.S. regulatory standards may be
accepted for sale in Japan without the need for additional testing within Japan.
U.S. Standards
In November 2021, the Bipartisan Infrastructure Bill was signed into law by President Biden. It requires the
NHTSA to create regulations that cover a wide range of vehicle safety matters, including advanced driver
assistance technologies, driver monitoring systems, headlamps, connected vehicles technologies, event data
recording, and impaired driving prevention technologies. In response to these mandates, the NHTSA has so far
completed several key rulemakings. A final rule permitting Adaptive Driving Beam headlamps was issued in
2022, a final rule mandating Automatic Emergency Braking Systems (“AEBS”) was issued in 2024, and a notice
of proposed rulemaking for enhanced seatback strength was issued in 2025.
In the area of automated vehicles (“AV”), while the federal government has not issued binding AV
regulations beyond the policy-level AV 4.0 guidance released in 2020, recent federal actions indicate a possible
shift. In April 2025, the Trump administration proposed easing AV deployment restrictions while maintaining
incident reporting for higher-level automated systems. Meanwhile, California and other states continue to
advance AV oversight in the absence of comprehensive federal standards, with California recently proposing to
lift its ban on autonomous heavy-duty truck testing.
European Union Standards
In December 2019, the EU issued the revised General Safety Regulation (Regulation (EU) 2019/2144) to
tighten the requirements concerning safety and the protection of vehicle occupants and vulnerable road users.
This revised General Safety Regulation (which came into effect in July 2022) made certain vehicle safety
equipment mandatory in a phased approach, including: automated emergency braking, emergency lane keeping
systems, driver drowsiness and attention warning, intelligent speed assistance, reversing detection systems, tire
pressure monitoring systems, and data recorders in case of an accident (“event data recorders”). In October 2024,
Regulation (EU) 2024/2220 was published specifying the specific test procedures and technical requirements for
event data recorders for heavy vehicles.
In relation to this, various UNRs were developed (as detailed further below). The General Safety Regulation
has been updated regularly to reflect new UNRs. For the equipment for which UNRs have not been developed,
such as automated driving systems for automated vehicles, the EU has established its own technical standards.
In order to adapt to new telecommunication technologies in the EU, Regulation (EU) 2024/1180 was
adopted in April 2024, amending Regulation (EU) 2015/758 which governs a 112-based eCall in-vehicle system.
Detailed requirements and test procedures for the approval of eCall systems are currently being revised to align
with the new regulations, and are expected to be issued shortly.
United Nations Standards
The United Nations Economic Commission for Europe Working Party on Automated/Autonomous and
Connected Vehicles (“GRVA”) has been continuing to advance global regulatory frameworks on automated
driving systems (“ADS”).
Amendments to UNR No. 157 on Automated Lane Keeping Systems (“ALKS”) have increased the
permissible operating speed for ALKS from 60 km/h to 130 km/h and introduced provisions for automated lane
change functions.
41
GRVA has been actively developing a new UNR/GTR on ADSs, with contributions from Canada, China,
the EU, Japan, the UK and the US. Those new regulations aim to establish harmonized international technical
requirements for ADS, encompassing functional safety, cybersecurity, software updates, and DSSAD (Data
Storage System for Automated Driving) requirements. In parallel, amendments of all relevant UN GTRs and
UNs for considering ADS fitness are being coordinated toward voting at WP.29 in June 2026.
WP.29 has endorsed “Considerations on Artificial Intelligence in the context of road vehicles” in June 2024.
GRVA is exploring regulatory measures addressing artificial intelligence (“AI”). Now WP.29 will be exploring
some instruments addressing AI used in vehicles.
In addition to automated driving, WP.29 is also engaged in the development of other new regulations. In
March 2026, it adopted regulations requiring the issuance of warnings to drivers in cases of driver distraction or
reduced alertness. Furthermore, other subsidiary working parties under WP.29 are progressing the development
of regulations concerning, among other matters, the safety of children left in vehicles, awareness of vulnerable
road users proximity, and ensuring ease of door opening in emergency situations such as vehicle fires or vehicle
submersion.
Chinese Standards
Vehicle safety regulations in China were in general established having regard to the UNRs. However, China
is adding its own requirements in consideration of the Chinese market and traffic environment, and establishing
its own standards to improve the technological capabilities of its industries and to ensure international
competitiveness. This is especially true in the area of “electrification,” or new energy vehicles (“NEVs”), which
China is strongly promoting, and China’s own national technical standards on functions such as batteries, motors,
and the charging and remote surveillance of NEVs have been made mandatory. Fuel-cell vehicles are subject to
the supervising regulations on the safety of high-pressure gas in addition to the vehicle type approval
requirement.
Moreover,
in
accordance
with
the
Made
in
China
2025
policy,
the
country
considers
“intelligentization” to be the next core technological area, and more than 100 standards for intelligent connected
vehicles are being developed (including automation, telecommunication and security). As is the case in the field
of electrification, it is anticipated that more of China’s own standards will become mandatory in a short period in
the future. In particular, in recent years, from the perspective of ensuring data security against the backdrop of
the U.S.-China trade friction and other factors, China has been vigorously and rapidly promoting legislation to
strictly control the extraterrestrial transfer of data acquired within China, and the automotive sector is no
exception to this. Although the authorities have already mandated to obtain clearance for personal information
and important data to be transferred outside of China through security review, there is a risk that Toyota will
need a major review of the necessity for further development of new technologies or of the technology
development system, including technology transfer to China, depending on the terms of future laws and
regulations. Furthermore, with the rapid expansion of the commercialization of advanced driver assistance
technologies by local IT companies and OEMs, the development of related standards is also progressing at a fast
pace. Accidents occurring during the use of these functions have become a social issue, and there is a shift
toward only permitting technologies that provide support even in complex driving scenarios, by establishing
performance requirements that significantly exceed those of UNRs. In addition, with a growing movement to
prohibit features that have become widespread in NEVs, such as retractable door handles and one-pedal driving
modes, regulatory developments specific to China are accelerating.
Environmental Matters
Japanese Standards
Automotive operations in Japan are subject to substantial environmental regulation under laws such as the
Air Pollution Control Act, the Water Pollution Prevention Act, the Noise Regulation Act and the Vibration
Control Act. Under these laws, if a business entity establishes or alters any facility that is regulated by these laws,
42
the business entity is required to give prior notice to regulators, and if a business entity uses, discharges, 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 has established and complies with environmental
standards that exceed applicable statutory and regulatory requirements, based on agreements reached with
relevant local administrative authorities. Under the Waste Management and Public Cleansing Act, producers of
industrial waste must dispose of industrial waste in the manner prescribed in the same act.
The Soil Contamination Countermeasures Act of Japan requires that landowners 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 as considered to be
contaminated, orders the landowner to submit a plan for decontamination (such plan must describe the measures
to be taken in the area, the reasons therefor, and the deadline for implementing such measures, etc.), and has the
landowner take such measures in accordance with such plan. In addition, under the Act on Recycling, etc. 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 2025,
Toyota achieved a recycling/recovery rate of 97% for automobile shredder residue (the legal requirement being
70% or higher) and 97% for air bags (the legal requirement being 85% or higher) and reached the targets set forth
in this law.
U.S. Standards
The federal environmental statutes applicable in the United States include, among others, the Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act (which governs wastes), and the Toxic
Substances Control Act. Toyota also is subject to a variety of state laws that parallel, and in some cases are more
stringent than, federal requirements.
Pursuant to the Clean Air Act, the EPA has promulgated National Ambient Air Quality Standards
(“NAAQS”) for six “criteria” pollutants (carbon monoxide, lead, nitrogen dioxide, ozone, sulfur dioxide and
particulate matter). Every five years EPA must review and possibly revise these NAAQS. In March 2024, the
EPA announced a final rule, effective May 2024, lowering the primary (health-based) annual standard for
particulate matter with diameters less than 2.5 micrometers (“PM
2.5
”) (the fine inhalable particles) from 12.0 to
9.0 micrograms per cubic meter (“μg/m3”). This revised standard, as well as any future NAAQS revisions for
other criteria pollutants, could lead to additional pollution control requirements for stationary sources of air
emissions, including Toyota’s U.S. manufacturing facilities.
The rule has faced legal challenges from several states, including Louisiana and Texas, as well as industry
groups. Arguing that EPA’s action was procedurally improper and failed to adequately consider economic
impacts, they filed petitions for judicial review in the D.C. Circuit Court of Appeals. In March 2025, EPA
Administrator Lee Zeldin announced a formal reconsideration of the PM
2.5
NAAQS, citing concerns about the
previous administration’s standards and their potential impact on permitting processes. The legal challenges
remain pending.
European Union Standards
In the EU, the Ambient Air Quality and Clearer Air for Europe Directive (Directive 2008/50/EC) sets the
environmental standards for air quality. A revised Ambient Air Quality and Clearer Air for Europe Directive
(Directive (EU) 2024/2881) entered into force on December 10, 2024, aligning 2030 EU air quality standards
more closely with the World Health Organization recommendations. In particular, the new Directive cuts the
allowed annual limit value for the main air pollutant, fine particulate matter (PM
2.5
), by more than half. It also
43
updates the air quality standards by lowering the permissible levels for twelve air pollutants. In relation to these
Directives, environmental regulations, such as the National Emissions Ceilings Directive, or NEC Directive
(2016/2284/EU), the Industrial Emissions Directive, or IED Directive (2010/75/EU) (as amended by Directive
(EU) 2024/1785), and the Motor Vehicle Regulation (Regulation (EU) 2018/858), which is intended to control
on-road emission sources, have been established, and emissions are managed under these directives based on
their source.
A review of the EU Directive on End-of-Life Vehicles (Directive 2000/53/EC) was launched in 2021,
resulting in a proposal for a new regulation in July 2023. The new proposed regulation would improve the quality
of end-of-life treatment, incentivize reuse of recycled materials to enable more resource-efficient use of
materials, recover more and better-quality raw materials (e.g., CRMs, plastics, steel and aluminum), and
strengthen responsibility and cooperation between producers.
Toyota strives to ensure that its operations comply 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 in an effort to remain in material compliance with all of
these requirements. However, in light of the net zero transition, 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 HEVs, PHEVs, FCEVs, BEVs and high fuel efficiency, low emission engines.
Beyond the product and facility-level environmental regulations described above, the European operations
of automotive manufacturers are also potentially subject to a growing body of EU corporate sustainability and
supply chain legislation. For instance, the Corporate Sustainability Reporting Directive (Directive (EU)
2022/2464) requires large undertakings operating in the EU to report detailed sustainability information in
accordance with European Sustainability Reporting Standards. In addition, the Corporate Sustainability Due
Diligence Directive (Directive (EU) 2024/1760) requires in-scope companies to conduct environmental and
human rights due diligence. These Directives may apply to the EU subsidiaries of automotive manufacturers that
meet the applicable size thresholds, and may also apply at group level under the Directives’ relevant third-
country parent provisions, depending on the consolidated EU net turnover of such manufacturers.
Finally, the EU Deforestation Regulation (Regulation (EU) 2023/1115), which prohibits the placing on the
EU market of specified commodities, including natural rubber, unless they are verified as deforestation-free and
legally produced, has applied to large operators from December 30, 2025. This may be relevant to Toyota’s tire
and rubber supply chain.
In addressing environmental issues, based on an assessment of the environmental impact of its products
through their entire life cycles, from production through sales, disposal and recycling, Toyota, as a manufacturer,
strives to take all possible measures from development stage and continues to work towards technological
innovations to make efficient use of resources and to reduce the burden on the environment.
Toyota’s Approach to and Initiatives Towards Sustainability
The following is a discussion of Toyota’s approach to and initiatives towards sustainability. It contains
forward-looking statements that are based upon the current judgment, assumptions and beliefs of Toyota’s
management. See “Cautionary Statement With Respect To Forward-Looking Statements.” Actual business,
financial and operational results may vary significantly from those described below as a result of unanticipated
changes in various factors, including those described in “Risk Factors.”
44
Approach Towards Sustainability
We believe that Toyota should conduct business for the public good and serve people’s happiness and social
development. This strong conviction is inherited from the belief, “always be faithful to your duties, thereby
contributing to the company and to the overall good,” which is part of the Toyoda Principles, the roots of the
Toyota Group.
In 2020, we revisited our roots and developed the Toyota Philosophy, which established “Producing
Happiness for All” as our corporate mission. This mission expresses our commitment to sustainable development
for society and business to bring more happiness to our customers and other stakeholders around the world. This
is our commitment to sustainable business.
Through business based on the Toyoda Principles and Toyota Philosophy, Toyota established a product/
business-driven operational base, with a company-wide emphasis on three values that make us Toyota: “making
ever-better cars,” “best-in-town carmaker,” and “for someone other than oneself.”
We are now building on this legacy. Our next step is to evolve our growth strategy and business vision with
a greater commitment to sustainability and to formulate concrete action plans to fulfill the mission of “Producing
Happiness for All.”
To fulfill this mission, Toyota aims to transform into a mobility company that provides freedom of mobility
for all without leaving anyone behind. To put our mission into action, we assessed the materiality of our impacts
as well as risks and opportunities, which incorporated a comprehensive range of stakeholder perspectives —
customers,
community/business
partners,
and
employees.
The
materiality
assessment
resulted
in
the
identification of six key themes with the greatest priority: “expanding the value of mobility,” “safety &
reliability,” “co-existence of humanity and the earth,” “supporting the community and employment,” “Active
Contribution by All” and “strong production and business operation.”
At the heart of our key themes is our aspiration for making cars, which is expressed through our motto,
“Let’s change the future of cars.”
We will continue to evolve our business from auto manufacturing to mobility, so that cars will be useful to
society and bring smiles to customers for years to come. In pursuit of this goal, we must maximize cars’ positive
impacts, focusing on enhancing user-friendliness, comfort, and emotional value and making them fun to drive.
Simultaneously, we are dedicated to minimizing negative impacts such as traffic accidents, congestion, and
environmental burdens.
For Toyota, transformation into a mobility company means creating a new industrial structure that benefits
the development of a mobility society through the evolution of the automobile. We will lead the transformative
journey to shape the future with a sense of mission, working together with business partners who share the
purpose.
We are now in an era in which it is hard to predict the future. That is why we believe that persistent and
purposeful action makes a difference. In the spirit of
hyaku-setsu futo
(indefatigability), one of the cherished
phrases of our founder Sakichi Toyoda, we will live up to our convictions and challenge ourselves to change the
future of cars. Toyota’s Origins and Materiality (Key Issues)
45
Governance
In order to grasp changes in the external environment and societal demands, and to prioritize issues of
greater importance and urgency, we continuously strive to promote and improve environmental, social, and
governance sustainability activities while working closely with the relevant groups under the promotion system
illustrated below and under the supervision and decision-making of the Board of Directors.
To deliberate on key, multidisciplinary sustainability issues related to management, we have established the
Sustainability Meeting chaired by the CEO, which mainly deals with themes associated with Environment and
Social, and the Governance Risk Compliance Meeting chaired by the Chief Risk Officer (“CRO”), which deals
with themes associated with Governance. In addition, we have established a framework in which meetings
attended by the heads of the relevant divisions and the Carbon Neutral (CN) Strategy Subcommittee deliberate on
individual issues and themes that are closer to actual practice.
<Sustainability Governance Structure>
Management
Oversight and
decision-making
Operation
Board of Directors
Sustainability
Meeting
Meeting
Reports
Reports
Reports
Reports
[Operational Execution]
(Subcommittees, etc.)
Compliance Meeting
1
Relevant Executive
Subcommittee
CN Strategy
3
Governance Risk
2
46
Sustainability Meeting
Governance Risk
Compliance
Meeting
CN Strategy Subcommittee
Chairperson
President
CRO/CCO*
President, Carbon-Neutral
Engineering Development Center
Members
Vice Chairman of the
Board of Directors (1);
Executive vice presidents
(2); outside member of
the Board of Directors
(1); outside Audit and
Supervisory Committee
members (2); CRO/CCO
(1), others (3)
Executive vice presidents
(2); outside member of
the Board of Directors
(1); outside Audit and
Supervisory Committee
members (3); Audit and
Supervisory Committee
member (1); others (4)
Executive vice presidents (2);
operating officers (4), others (10)
Number of times held
in fiscal year 2026
4
4
3
Timing of reports to
the Board of
Directors
When an important matter
arises
When an important matter
arises
When an important matter arises
Duties
Contribution to increases
in corporate value by
deliberating, making
decisions, and promoting
activities for important
sustainability-related
issues
Making proposals and
deliberation on important
matters relating to
governance, risk, and
compliance, in particular
matters requiring strategic
direction at the
management level
Cultivation of shared understanding
regarding important global trends
pertaining to carbon neutrality and
environmental issues
Reporting and deliberation on targets,
key performance indicators, and other
important management provisions
related to above duties
*
CRO: Chief Risk Officer
CCO: Chief Compliance Officer
Risk Management
Toyota will further strengthen risk management in response to uncertainties amid our constantly needing to
rise to new challenges in the era of major changes in the circumstances surrounding, and in the values of, the
automobile
industry,
such
as
carbon
neutrality,
expanding
value
of
mobility
(electrification,
intelligent
technologies, diversification), and other factors.
In order for each region, function, and in-house company to cooperate and support each other and prevent,
mitigate, reduce, and appropriately control risks arising in business activities from a global perspective, Toyota
has appointed a CRO and Deputy CRO in charge of risk management, as well as the head of risk management in
each region. Toyota has also established the Governance Risk Compliance Meeting under the CRO’s supervision
to identify, take action against, and monitor material risks from a company-wide perspective.
In addition, as a risk management system framework, we regularly identify, evaluate, consolidate,
implement measures against, and monitor risks based on the Toyota Global Risk Management Standard
(“TGRS”), a company-wide risk management framework established by referencing frameworks such as the ISO
(International Organization for Standardization) and COSO (Committee for Sponsoring Organizations of the
Treadway Commission).
The identified risks that are deemed significant to Toyota are deliberated by the Governance Risk
Compliance Meeting, chaired by the CRO, and are referred to the Board of Directors and other relevant
governing bodies, as appropriate, to promote the execution of business operations.
47
Organizational Structure
Board of Directors
Governance Risk Compliance Meeting
CRO/DCRO
Chief officers
Risk Manager by division
Presidents
Risk Manager by division
Regional CEO
Regional Functions
Collaboration
Collaboration
Collaboration
<Respective in-house Company>
<Respective group head
at the parent company>
Approach to and Initiatives Towards Human Resources
Based on the philosophy that “
monozukuri
(manufacturing) depends on human resource development,” Toyota
believes that its greatest asset is its people, and Toyota has been focusing on human resource development since its
foundation. The common foundation of our human resource development consists of three pillars: Toyota’s
“philosophy” (Toyota Philosophy), “skills” (Toyota Production System, or TPS), and “behavior” (Toyota Way 2020).
We cultivate talent whom, under our “philosophy” of “working for the sake of others,” acquire the “skills” of
TPS—which seeks to thoroughly eliminate waste and shorten lead times—and put our “philosophy” into practice
through their own actions, that is, their “behavior.” We believe that the ability of such individuals to think and act
autonomously in their fields strengthens our capacity to respond to changes in the operating environment.
1. Governance
Toyota places importance on dialogue with employees in order to accurately identify issues related to
human capital. In particular, the president, executive vice presidents, and other members who also serve on the
Sustainability Meeting participate in the Labor-Management Council and the Joint Labor-Management Round
Table Conference, which serve as opportunities to understand the voices of employees and to identify the
direction for addressing human capital-related issues.
Among the issues identified, those that are deemed particularly material or that require cross-functional
responses are referred to the Sustainability Meeting described in “Item 4. Information on the Company — 4.B
Business Overview — Toyota’s Approach to and Initiatives Towards Sustainability — Governance” where such
matters are deliberated and determined to promote “priority sustainability initiatives” relating to human capital.
Reference: Number of times held in fiscal 2026
Sustainability Meeting: 4
Labor-Management Council: 4
Joint Labor-Management Round Table Conference: 2
48
2. Strategy
In advancing our transformation into a mobility company, we have identified six materiality topics (key
issues) based on the perspectives of our stakeholders, including customers, local communities, business partners,
and employees. Among these, under “Active Contribution by All” and “Supporting the Community &
Employment,” we have identified six priority action items related to human capital.
Materiality
Aim
Active Contribution by
All
Human
Resource
Development
Acquire and develop human resources who “continuously
think and act for the benefit of others” based on the
Toyota Philosophy
Dialogue with
employees
Translate dialogue between the company and employees
of mutual trust/responsibility into action
DE&I
Create corporate culture where all people working for
Toyota
feel
respected,
and
can
demonstrate
their
uniqueness, strength, and abilities, while embracing their
diverse talents and values
Labor
Practices
Contribute to the peace of mind of employees and the
sustainable growth of local communities through stable
employment and maintaining/improving labor conditions
Health and
Safety
Eliminate all kinds of unsafety by fostering company-wide
safety culture, while protecting the good health and well-
being of employees and their families
Supporting the Community
& Employment
Respect for
Human Rights
Respect the human rights of all people involved in our
business activities
We believe that advancing initiatives in these priority action items is essential to developing the talent that
will drive our future.
3. Risk Management
We identify risks related to human capital through ongoing monitoring of workplace conditions via multiple
communication
channels—including
dialogue
with
employees,
engagement
surveys,
and
consultation
services—as well as through information gathering and benchmarking that take into account revisions to
applicable laws and regulations and changes in the external environment.
Among the risks identified through these efforts, those deemed material from a company-wide perspective
are escalated to management for decision-making and the consideration of responsive measures, in accordance
with the process described in “Toyota’s Approach to and Initiatives Towards Sustainability—
Risk Management
.”
4. Metrics and Targets
In connection with the priority initiative of “Promoting Active Participation of Diverse Talent,” the table
below sets forth representative metrics for TMC on an unconsolidated basis, together with the corresponding
targets and results for fiscal 2026.
49
Metrics
Target
Result (Fiscal 2026)
Number of women in
managerial positions
(unconsolidated)
By 2030, increase to five times the
target set in 2014
455
(4.5 times the target set in 2014)
(Note 1)
Ratio of eligible male
employees taking
childcare leave
(unconsolidated)
Achieve an average ratio of employees
taking childcare leave of 85% or above
during the period from April 1, 2025
through March 31, 2030
79.0%
(Note 2)
Note 1
As of March 31, 2026
Note 2
The ratio of eligible employees taking childcare leave is calculated based on the ratio of employees
taking childcare leave under Article 71-6, Item 1 of the Ordinance for Enforcement of the Act on
Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children
or Other Family Members (Ministry of Labour Ordinance No. 25 of 1991), in accordance with the
provisions of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of
Workers Caring for Children or Other Family Members (Act No. 76 of 1991).
Climate Change-related Disclosures
Toyota aims to establish a sustainable society in harmony with nature through contributions to the goal of
carbon neutrality. Toyota addresses climate change-related impacts, risks, and opportunities guided by the
principles of the “Toyota Earth Charter” and “Toyota Environmental Challenge 2050,” intending to fully
concentrate on achieving carbon neutrality by 2050 across the entire vehicle life cycle. Toyota intends to reduce
GHG emissions through multiple approaches, including the multi-pathway strategy, driven by the principles of
“leaving no one behind” and “delivering freedom of movement to all.”
1. Governance
The Oversight of Climate change-related Issues by the Board of Directors
Toyota positions the Board of Directors as its ultimate supervisory, decision-making authority for climate change-
related issues, including risks and opportunities. In order to effectively plan and execute strategies in response to social
trends, we bring important climate change-related issues before the Board of Directors as they arise.
Responses to climate change-related issues (including risk and opportunity assessments and management
implemented more than once a year) are addressed primarily by the CN Strategy Subcommittee, with oversight by the
Board of Directors. The Board of Directors makes decisions based on the deliberations of each committee, including
trade-offs between sustainability and climate change-related issues. The CN Strategy Subcommittee approves the
formulation, review and monitoring of progress of climate change-related targets under the oversight of the Board of
Directors, following deliberation by the Environmental Product Design Assessment Committee and the Consolidated
Environment Committee. For details of the overall process, see “Item 4. Information on the Company — 4.B Business
Overview — Toyota’s Approach to and Initiatives Towards Sustainability — Governance”.
Examples of decisions made by the Board of Directors in 2025 include the approval to execute a
comprehensive partnership agreement with the municipal government of Shanghai and the establishment of
Lexus (Shanghai) New Energy Co., Ltd., which develops and manufactures BEVs and batteries, aimed at
contributing to the realization of carbon neutrality in China. The new company will develop Lexus-branded
BEVs, with mass production to launch in 2027 or later.
50
2. Strategy
(a) Toyota’s Strategies (Fundamental approach of Toyota’s multi-pathway strategy)
Carbon neutrality is an urgent issue for cars to remain an essential part of society. Toyota is making efforts
to provide our customers around the world with options for mobility under our multi-pathway strategy, while
promoting the decarbonization of manufacturing and supply chains. It is important to consider the ways in which
mobility takes into account the future of energy. The strategy’s basic premise is that we need to reduce
dependence on fossil fuels from the perspective of the global environment and sustainability. Furthermore, over
the medium- to long-term, renewable energy sources will continue to proliferate, with electricity and hydrogen
emerging as the primary energy sources sustaining society. In the short term, however, it is critical to
acknowledge global realities and implement changes in practical ways that maintain energy security. This is
precisely why we are committed to providing mobility options that are aligned with a diverse range of energy
situations and customer needs, while also keeping an eye on the future of electricity and hydrogen.
The underlying concept of our multi-pathway strategy is to achieve carbon neutrality through practical
transition.
(b) Identification and Assessment of Climate Change-Related Impacts, Risks, and Opportunities
Overview of Impacts, Risks, and Opportunities
Toyota identifies
factors
that
may impact
the future
based on the identified
Impacts,
Risks, and
Opportunities (“IROs”). Toyota responds appropriately under Toyota’s strategies and transition plans. The
overview of climate change-related IROs are as follows.
•
Impacts: Effects that a company has on the environment and society as a result of its activities or
business transactions.
•
Risks
•
Transition risk: Negative impact on the company arising from the transition to a low-carbon society,
such as the introduction or strengthening of climate change-related policies and the advancement of
low-carbon technologies.
•
Physical risk: Negative impact on the company arising from physical climate events caused by
climate change.
•
Opportunities: Positive impact for the company arising from responses to market changes and
technological innovation, driven by the transition to a low-carbon society and the progression of climate
change.
We established a process to identify and assess climate change-related risks and opportunities using scenario
analysis. We also incorporated financial impact assessments into the process to enhance the accuracy of IRO
materiality.
Time horizon for IRO assessment
1 year
Short-term
Medium-term
Long-term
1-5 years
Over 5 years
51
Process of Identifying and Assessing Climate Change-Related Impacts
We analyze activities across Toyota and our value chain to identify potential environmental and social
impacts. We conduct assessments on identified impacts based on severity (scale and scope of impact) and
likelihood of occurrence. Scope 3 emissions account for a significant portion of Toyota’s total emissions, with
category 11 representing a substantial share thereof. As they contribute significantly to climate change, reduction
efforts across the entire value chain are essential. However, Scopes 1 and 2 emissions, while accounting for a
small percentage, fall within the company’s direct control. This makes them important for Toyota, which has set
a target under the Life Cycle Zero CO
2
Emissions Challenge. For details of the Life Cycle Zero CO2 Emissions
Challenge, see “Item 4. Information on the Company — 4B. Business Overview — Toyota’s Approach to and
Initiatives Towards Sustainability — Climate Change-related Disclosures — 2. Strategy — (c) Resilience
Analysis.”
Processes for Identifying and Assessing Climate Change-related Risks and Opportunities
Toyota identifies and assesses climate change-related risks and opportunities and evaluates the resilience of
its strategies by having an internal team of climate change experts and external specialists conduct scenario
analysis based on various future society projections.
Identifying and assessing
risks and opportunities
Identification of risk drivers
Analysis of drivers of risks
and opportunities
Clarification of the correlation
between risks and opportunities
and financial performance
indicators that may be affected
Organization of Toyota's initiatives
to minimize risks and maximize
opportunities
Clarification of links between
social issues and our initiative
to achieve scenarios
Assessment of the validity and
resilience of the strategy
Assessment of the relevance
with priority management themes
Assessment of financial impacts
in line with scenarios
Incorporation of risks identified
through TGRS
Assessment of the occurrence
and impacts of risks and
opportunities in each scenario
Scenario definitions
Chart created by Toyota based on guidance from the TCFD and Ministry of the Environment, Japan
Selection of reference scenarios
Clarification of assumptions and
perspectives for each scenario
Financial impact assessments
Resilience analysis
Identification and Assessment of Risks and Opportunities
Toyota identifies primary factors (risk drivers) for climate change-related risks and opportunities based on
anticipated future social conditions from the perspectives of transition risks (policy/legislation, markets,
technology, reputation) and physical risks (acute, chronic). Toyota identifies risks and opportunities by analyzing
driving factors and incorporates disclosure topics defined in ISSB* industry-based guidance, as well as climate
change-related risks identified through TGRS, Toyota’s cross-functional risk management system, and climate
change-related risks and opportunities specified by referencing external information into risks and opportunities
identified through driver analysis. Toyota examines how the likelihood and impact of risks and opportunities
differ in each scenario based on the identified risk drivers. The overall materiality of each risk and opportunity is
52
determined based on a quantitative assessment of likelihood and impact as well as a qualitative assessment that
takes into account factors such as corporate social responsibility and Toyota’s key issues.
*
International Sustainability Standards Board
Scenario Analysis Overview
Scenario analysis is conducted in accordance with the processes outlined in guidance provided by the
Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”) and the Ministry of
the Environment, Japan. Toyota conducts 1.5°C scenario analysis to assess transition risks and opportunities as
well as a 4°C scenario analysis to assess physical risks based on climate hazards.
•
Scope
Transition risks and opportunities: Automotive business and value chains in Toyota Motor Corporation
and its consolidated subsidiaries
Physical risks: Toyota Motor Corporation, consolidated subsidiaries, and unconsolidated vehicle
manufacturing subsidiaries
•
Impact assessment period
Transition risks and opportunities: Up to 2035
Physical risks: Up to the late 21st century
1.5°C Scenario Analysis
Selection of 1.5°C Scenarios
Toyota uses multiple published scenarios as reference for analysis, such as the scenarios from IEA
*1
and
IPCC
*2
AR6
*3
WG3 report. Toyota envisions society’s future energy landscape as converging on electricity and
hydrogen with the widespread introduction of renewable energy, and recognizes that the transition speed varies
by region depending on energy conditions.
Against the backdrop of recent global developments, discussions have begun on balancing environmental
issues with economic security. There are also observable phenomena such as a slowdown in renewable energy
investments due to international inflation and a stagnation in the growth trend of BEV sales in Europe and the
U.S. At international forums such as the Conference of the Parties (“COP”) to the United Nations Framework
Convention on Climate Change, discussions are progressing on transitional measures extending into the future.
There is a growing recognition of the importance of introducing diverse decarbonization methods tailored to
conditions in each country and region.
In recognition of these backgrounds, our multi-pathway strategy offers mobility options tailored to energy
situations in each country/region and the diverse needs of customers through a practical transition in the short
term with a view toward a future in which electricity and hydrogen serve as primary energy sources underpinning
society in the long term.
The 1.5°C scenario analysis for passenger vehicles considers both the IEA NZE scenario,
*4
which highlights
the introduction of BEVs and PHEVs as key decarbonization measures, and other 1.5°C scenarios that
incorporate regional characteristics and an increased range of mitigation measures (such as CO
2
removal
(CDR
*5
), carbon capture and storage (CCS), and carbon-neutral fuels) to assess corporate strategic resilience.
The assumptions and global circumstances of each scenario are organized as follows:
According to the IEA NZE Scenario (IEA World Energy Outlook 2025), reducing GHG emissions from the
power generation sector may decrease emissions from other sectors. GHG emissions may be reduced by the
53
widespread adoption of BEVs in the road transport field of the transportation sector, where electrification is
relatively easier. In reality, the speed of progress and timeframe of these initiatives may be delayed depending on
energy conditions and policy developments in each country and region. In such cases, CDR technologies will
become essential.
In other 1.5°C scenarios, concerns over energy and economic security and a decline in industrial
competitiveness will cause delays in the progress of mitigation measures driven by energy conditions and policy
developments in each country and region to spread globally. Furthermore, the introduction of decarbonization
technologies to the market requires substantial investment in the initial stages, and differences in investment
levels may lead to disparities in progress.
While decarbonization technologies beyond electrification may be utilized with low-emission power, the
expansion of biofuel usage in road transport could be limited by the food-versus-fuel dilemma and variations in
supply volume caused by land-use restrictions to protect the environment. A slower pace of reduction for GHG
emissions will inevitably lead to an overshoot in temperature rise, making it necessary to assume the later large-
scale and extensive deployment of CDR technologies compared to the NZE scenario.
*1
International Energy Agency
*2
Intergovernmental Panel on Climate Change
*3
Sixth Assessment Report
*4
Net Zero Emissions by 2050 Scenario
*5
Carbon Dioxide Removal
Study on the IEA NZE Scenario
The IEA reports that the following is required to accomplish the NZE scenario. The shift of passenger
vehicles to BEVs will progress as electricity is decarbonized with the active introduction of renewable energy,
leading to a sharp reduction in GHG emissions after 2030 and the achievement of net zero emissions, including
emissions from owned vehicles by 2050. To achieve this goal, it is assumed that governments around the world
will introduce ambitious climate policies such as carbon pricing, tighter fuel efficiency standards, and bans on the
sale of vehicles with internal combustion engines, along with expanded incentives to support the growth of
BEVs. BEVs will become more widely accepted in the market as consumer awareness of the environment grows
and stronger policies are put in place, along with technological advancements in vehicle electrification,
development of innovative batteries, and energy management systems powered by renewable power. The societal
shift towards electrification and renewable energy will suppress energy consumption with improvements in
efficiency. For fossil fuels in hard-to-electrify sectors and delays in transitioning to electrification and renewable
energy, carbon removal from the atmosphere via CDR technology is necessary. In the IEA World Energy
Outlook prior to 2023, the use of CDR technology was not assumed in the NZE scenario. However, the 2024
edition reports that it will be necessary, and the 2025 edition indicates even greater use is required. The transition
risks and societal challenges associated with the achievement of this scenario are as set forth below.
Transition risks associated with this scenario:
•
Fines or other penalties imposed for non-compliance with fuel efficiency, GHG, or ZEV regulations.
•
Ramp-down of production and decrease in units sold caused by sudden product changes to comply with
regulations.
•
Increase in R&D costs in response to developments in powertrain technology.
•
Supply shortages and rising procurement costs due to increased demand for feedstocks related to BEVs.
•
Increase in manufacturing costs due to the surge in renewable electricity prices.
54
The following challenges must be addressed to accomplish this scenario:
•
Formulation of government policies and active investment to promote the introduction of renewable
energy.
•
Creation of social systems to secure the supply of battery feedstocks and development of recycling
technologies.
•
Innovating and reducing the costs of decarbonization technologies that use electricity and hydrogen.
•
Development of charging infrastructure accompanying the widespread adoption of electric vehicles.
•
An increase of cost burdens associated with the introduction of decarbonization and CDR technologies
Studies on Other 1.5°C Scenarios
In addition to the IEA NZE scenario, multiple 1.5ºC scenarios published by the IPCC and various research
institutions are compared and examined in detail to analyze differences in energy conditions and policy
developments across countries and regions. The pathway toward achieving the 1.5°C target set out in the Paris
Agreement is as follows.
•
Energy sector:
Introduction of various technologies, such as CCS, in addition to the use of renewable energy and the
adoption of low-carbon and carbon-neutral fuels, such as biofuels and synthetic fuels.
•
Transportation sector:
In addition to vehicle electrification, efforts also include the use of fuel-efficient vehicles and the
adoption of low-carbon and carbon-neutral fuels such as biofuels and synthetic fuels.
•
Differences between countries and regions:
Renewable energy sources, such as biomass, are utilized to their fullest extent depending on conditions
in each country and region. During the transition period, the aim is to balance economic development
and carbon-neutral by also using fossil fuel combined with CCUS* technologies. With the advancement
of diverse energy infrastructure such as low-carbon fuels and carbon-neutral fuels, various energy
sources and powertrains are selected based on their respective convenience.
* Carbon Capture, Utilization and Storage
Transition Risks Associated with the Aforementioned Scenarios:
•
Transition risks associated with the enhancement of BEVs are similar to those stated in the IEA
NZE scenario; however, their impact on Toyota’s strategy and finances will be relatively small,
considering the current track record of BEV adoption in each country and region and reviews of their
policies.
•
Delays in the adoption of low-carbon fuels and carbon-neutral fuels such as biofuels and synthetic fuels.
•
Increase in R&D costs associated with the diversification of automotive fuels.
•
Increase in energy procurement costs due to the decarbonization of energy sources such as gas and
liquid fuels, in addition to electricity.
Social Challenges Toward Achieving Scenarios are More Diverse Compared to the IEA NZE Scenario:
•
Developing technologies for low-carbon and carbon-neutral fuels, such as hydrogen, biofuels, and
synthetic fuels, adapted to each country and region, and support in the early stage of introduction
55
•
Solving issues such as the food versus fuel dilemma related to biofuels and curbing the rise in fuel
prices
•
Ensuring the supply of low-carbon fuels and carbon-neutral fuels through collaboration with other
sectors
•
Development of infrastructure and aid policies to ensure a stable supply of energy
Risks and Opportunity Trade-Offs in the 1.5°C Scenario
While electrification presents opportunities in relation to sales, it also brings risks such as increased R&D
expenses and higher raw material procurement costs.
4°C Scenario Analysis
Selection of 4°C Scenarios
We selected IPCC AR6 WG1 SSP5-8.5 as the reference scenario for the 4°C scenario analysis. The IPCC
SSP5-8.5 is the highest emission scenario that represents a fossil fuel-dependent economic development path
without the implementation of climate policies, resulting in the occurrence of extremely frequent and severe
physical climate events. We assessed the resilience of our business activities by conducting analyses under this
scenario.
Studies on the 4°C Scenario
We consider that major physical risks under this scenario include the following:
•
Suspended production and sales resulting from supply chain disruptions caused by more frequent and
severe natural disasters.
•
Impacts on production caused by water shortage and higher water costs.
We conducted the below screenings of high-risk sites:
•
Screened high-risk sites for flooding hazards, such as river flooding, inland flooding, and storm surges,
using geographical coordinates for 137 business locations in Japan and 73 locations overseas.
•
Identified sites in and outside of Japan where future hazard grades have been changed as a result of
climate change and are evaluated as hazard grade B or higher, requiring attention to risks.
As a result of our risk analysis, we confirmed that some business sites are at risk for river flooding, inland
flooding, and storm surges, but the impact is slight.
Definition of Hazard Grade
A
B
C
D
E
Flooding is expected to submerge most of the first floor
Grade
Definition of grades
Flooding hazard is considered extremely slight, or no hazard information available
Flooding hazard is considered slight
Flooding of the building and its surroundings is anticipated
Preventing indoor flooding is difficult with typical countermeasures
56
Results of Physical Risk Screening
Hazard
River flooding
137 sites (Japan)
0 sites
0 sites
3 sites
8 sites
73 sites (overseas)
73 sites (overseas)
73 sites (overseas)
Inland flooding
Storm surge
Assessment conditions:
Assessment of changes in hazard grades from the present to the latter half of the 21st century under the
4°C scenario (SSP5-8.5) based on the following conditions
Sites (Japan):
Logic: MS&AD InterRisk Research & Consulting, Inc. (e.g., Flood Risk Finder)
Assessment item: Inundation hazards due to river flooding
Hazard assessment target site
Number of sites where the hazard
grade changed to B or higher from
the present through the latter half
of the 21st century
Sites (overseas):
Logic: Tokio Marine dR Co., Ltd. (e.g., Fathom Global Flood Map)
Assessment item: Inundation hazards due to river flooding, inland flooding, and storm surges
Efforts to Minimize Risk
To minimize physical risks, Toyota is undertaking various initiatives, including selection of locations for
new plants, taking water risk into account, taking measures based on the results of water risk assessments,
continuous revisions of BCP
*1
based on experience from past disasters as well as the initiatives related to BCM
*2
,
including the supply chain.
*1
Business Continuity Plan. A plan for companies to minimize damage and ensure business continuity and
recovery when emergencies such as disasters occur
*2
Business
Continuity
Management.
A
framework
for
operational
management
that
ensures
each
countermeasure plan defined in the BCP functions can be executed
Financial Impact Assessments
Toyota analyzes causal links between identified risks and opportunities and their financial impacts. Toyota
assesses relationships with management themes, such as mobility concepts related to identified risks and
opportunities and priority sustainability initiatives, to confirm the materiality of these risks and opportunities. In
addition, Toyota assesses the financial impacts of identified high-priority risks and opportunities in light of the
assumptions of each scenario.
57
58
(c)
Resilience Analysis
Strategies and Business Models for Addressing Material IROs
We recognized that the material IROs specified through the aforementioned process assessment have a
significant impact on Toyota. Under the multi-pathway strategy, we incorporate measures to address these IROs
into the transition plan and others, and secure resources to address these responses.
Transition Plan
We announced the “Toyota Environmental Challenge 2050” in October 2015, prior to the Paris Agreement.
We established the “Life Cycle Zero CO
2
Emissions Challenge,” “New Vehicle Zero CO
2
Emissions Challenge,”
and “Plant Zero CO
2
Emissions Challenge” to clarify our long-term climate change objectives. The “8th Toyota
Environmental Action Plan” sets specific reduction targets for each emission scope in the medium term. We have
set our reduction targets for Scope 1, Scope 2, and Scope 3 category 11 with reference to and in line with criteria
established by SBTi
*1
; however, such targets are not set forth in this annual report based upon the authority of or
in reliance upon SBTi as experts with respect to such targets.
We support the Paris Agreement and under these GHG reduction targets, we intend to fully concentrate on
achieving the 2050 Carbon Neutrality by advancing a multi-pathway strategy. We formulated a transition plan
that organizes reduction initiatives and other measures aimed at achieving targets. This plan is recognized as
crucial for Toyota to address climate change-related risks and opportunities, and is integrated into management
plans such as sales plans and the midterm business plan.
The transition plan is developed around key emission scopes and includes initiatives Toyota considers
important for contributing to carbon neutrality. We set primary reduction initiatives as reduction levers for each
emissions scope. Under these levers, we implement specific emission reduction measures and manage the
progress of our efforts. The transition plan considers the assumptions of the 1.5°C scenario referenced in the
scenario analysis.
*1
Science Based Targets initiative. An initiative established by the CDP, the United Nations Global Compact,
World Resources Institute (WRI) and the World Wide Fund for Nature (WWF)
59
Resilience Analysis
The strategic resilience of the multi-pathway strategy is verified through scenario analysis.
1.5°C Scenario Analysis Results
The scenario analysis has revealed a variety of pathways to achieve the 1.5°C target aligned with the Paris
Agreement, each accompanied by specific conditions and social challenges. With our global reach, we have
reaffirmed the validity of focusing on our multi-pathway strategy, which includes various measures and
technologies capable of addressing uncertainties to respond to global market and stakeholder demands, rather
than specializing in or adhering to a single policy or technology.
4°C Scenario Analysis Results
Through the scenario analysis, some domestic and overseas sites are facing risks for river flooding, inland
flooding, and storm surges, but the impact is estimated to be slight. Disaster drills and other means for
improvements through PDCA cycles have proven to enhance the effectiveness of BCP and accelerate the speed
of recovery after a disaster. We have positioned these activities as BCM and are promoting it as a collaborative
framework between employees and their families, the Toyota Group and suppliers, and Toyota Motor
Corporation.
Results from Resilience Analysis
Guided by the philosophy of being the “best-in-town,” we will continue to provide a lineup of vehicles that
are well-received by customers and adaptable to different economic and energy situations in order to contribute
to the development of each country and region. We will strive to reduce GHG emissions by utilizing existing
infrastructure and assets. Toyota’s multi-pathway strategy has proven to be highly resilient in all of the scenarios
presented.
As indicated in the IPCC assessment reports and other publications, there are multiple paths available to
achieve the 1.5°C target as set out in the Paris Agreement. These paths can vary depending on local energy
conditions and government policy, requiring the involvement of various industries and making collaboration with
partners, including encouraging the use of carbon-neutral fuels, crucial. We stand with the Paris Agreement and
take action to achieve its goals. We prioritize alignment with the Paris Agreement and work with our partners to
promote the development of vehicles and social infrastructure based on our mobility concept, intending to fully
concentrate on achieving carbon neutrality by 2050.
As the landscape changes, we will continue to conduct scenario analyses to reassess risks and opportunities,
and reflect the responses to them into our strategies to further strengthen our resilience.
3. Risk Management
Links Between Company-Wide Risk Management and Climate Change-Related Risk Management Processes
Recognizing that the risks and opportunities present in climate change are key management concerns, we
conduct scenario analyses based on the TCFD recommendations to identify risks and opportunities and assess the
resilience of our business activities. Utilizing tools such as the TGRS, a company-wide risk management system
designed by Toyota based on ISO standards and the COSO framework, we identify a broad range of risks related
to our global business activities. When necessary, we establish cross-company task forces to promote risk
management while monitoring the progress of countermeasures.
Risks are assessed based on the magnitude of impact and vulnerabilities. By setting a specific time horizon,
we can clarify actual and strategic impacts on our businesses.
The magnitude of impact is rated on a five-grade scale for each of the following factors: finance, reputation,
violation of laws and regulations, and business continuity. Vulnerability is assessed based on the current status of
60
countermeasures and probability of occurrence. Risk owners are assigned for the key risks assessed by region,
function (such as production and sales) and product based on the above perspectives. Chief Officers of divisions
and in-house company presidents oversee initiatives, while at the working level, relevant measures are
implemented and monitored under the instructions of divisional General Managers.
In addition to the aforementioned TGRS, climate change-related risks and opportunities are reviewed by
relevant executives and divisions in charge, and the status of the response is monitored and reviewed. Toyota
actively works to identify a wide range of risks and opportunities stemming from environmental issues, regularly
reviews the validity of strategies such as the “Toyota Environmental Challenge 2050” and promotes activities to
boost competitiveness.
Current and future GHG emissions from vehicles, production and sales operations, and supply chains are
calculated and assessed in line with relevant science-based emission reduction pathways. Important risks and
opportunities that require prompt responses are deliberated at the Governance Risk Compliance Meeting and
reported to the Board of Directors to determine the course of action.
4. Metrics and Targets
Medium- and Long-Term Target Structure
Toyota has systematically formulated its vision and targets for the environmental issues in order to realize
its mission of coexistence of humanity and the earth as well as the mass production of happiness. We share and
collaboratively promote “Toyota Environmental Challenge 2050” as our long-term vision, and the “8th Toyota
Environmental Action Plan” as our medium-term target, with Carbon Neutrality (CN), Circular Economy (CE),
and Nature Positive (NP) prioritized as our major pillars. For details on the transition plan, including medium-
and long-term targets, please refer to “Item 4. Information on the Company — 4B. Business Overview —
Toyota’s Approach to and Initiatives Towards Sustainability — Climate Change-related Disclosures — 2.
Strategy — (c) Resilience Analysis”
Review of the “7th Toyota Environmental Action Plan (2025 Target)”
Toyota promoted the “7th Toyota Environmental Action Plan (2025 Target)”, a five-year action plan to
achieve the “Toyota Environmental Challenge 2050.”
61
62
The “8th Toyota Environmental Action Plan (2030 Target)”
Toward the realization of “Toyota Environmental Challenge 2050,” we have formulated the “8th Toyota
Environmental Action Plan (2030 target),” a new five-year action plan, and begun its implementation in April
2026. Based on the three pillars that Toyota has long prioritized—Carbon Neutrality (CN), Circular Economy
(CE), and Nature Positive (NP)—we have developed specific targets for 17 categories. In 10 overseas countries
and regions (North America, Europe, China, Asia, India, South America, South Africa, Australia, New Zealand,
and South Korea), regional 2030 targets have been formulated in line with this.
Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934
None.
Research and Development
The overriding goals of Toyota’s technology and product development activities are to minimize the
negative aspects of vehicles, such as traffic accidents and impact on the environment, and maximize the positive
aspects, such as driving pleasure, comfort and convenience. By achieving these sometimes-conflicting goals to a
high degree, Toyota seeks to open the door to the automobile society of the future. To ensure efficient progress in
research and development activities, Toyota coordinates and integrates all research and development phases,
from basic research and advanced research to forward-looking technology and product development. With
respect to long-term basic research in areas such as energy, the environment, information technology,
telecommunications and materials, projects are regularly reviewed and evaluated in consultation with outside
experts to achieve research and development cost control. With respect to forward-looking, leading-edge
technology and product development, Toyota establishes cost-performance benchmarks on a project-by-project
basis to ensure efficient development investment.
63
The chart below provides an overview of Toyota’s R&D at each phase.
Basic research
Phase to discover development theme
Research on basic vehicle-related technology
Forward-looking and
leading-edge technology
development
Phase requiring technological breakthroughs such as components and
systems
Development of leading-edge components and systems that are more advanced
than those of competitors
Product development
Phase mainly for development of new models
Development of all-new models and existing-model upgrades
With a focus on environmentally friendly, carbon-neutral and safe-vehicle technology, Toyota is promoting
research and development into the early commercialization of next generation environmentally friendly, energy-
efficient and safe-vehicle technology. Toyota is also moving forward with the development of innovative
technologies such as electrification, connected vehicles and automated driving so as to realize a mobility society
of the future that enables everyone to enjoy freedom of movement beyond the conventional concept of vehicles.
To this end, Toyota is focusing on the following areas:
•
further improvements in hybrid technologies, including in functions and cost, and contributions to the
environment through advancements;
•
improvement in internal combustion engine fuel economy technology as well as improvement in
technology in connection with more stringent emission standards;
•
development of BEVs, FCEVs and other alternative fuel vehicles;
•
development of advanced safety technology designed to promote driving and vehicle safety;
•
development of automated driving technologies;
•
connected car technologies; and
•
development of technology to bring about more comfortable movement.
For a detailed discussion of our research and development infrastructure, see “Item 5. Operating and
Financial Review and Prospects — 5.C Research and Development, Patents and Licenses.”
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 optimal procurement.
Toyota believes that this policy encourages technological innovation, cost reduction and other measures to
strengthen its vehicle competitiveness. Although there are supply restrictions with respect to the procurement of
certain parts and components, Toyota plans to continue purchases based on the same principle.
Because Toyota had more than 50 overseas operations in 27 countries and regions as of March 31, 2026,
procurement of parts and components is being carried out not only locally in the country of the production site
but also from third countries. As a result, the distribution network has become increasingly complex. In order to
realize timely and efficient distribution while minimizing costs, 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 aims to share information and collaborate among the procurement divisions in each of the regions
throughout the world in order to procure parts and materials from the most competitive suppliers among Toyota
64
factories located in various areas worldwide. At the same time, Toyota carries out streamlining efforts together
with suppliers in each country in order to achieve sustainable growth. Toyota has been working on cost reduction
measures, referred to as RR-CI (
ryohin-renka
, or cost innovation) and VA (value analysis) activities, which aims
to eliminate waste in all processes from design to production while ensuring the reliability and safety of each
part. Through these activities, Toyota focuses on “developing a real cost-competitive structure” by working
together with suppliers.
In response to a significant upward trend in materials costs, including related logistics and other costs, since
fiscal 2022, Toyota is accelerating initiatives such as the replacement of raw materials with those that are less
subject to price pressure and reduction of raw material usage.
Intellectual Property
Through its ongoing challenge to be one step ahead in conducting new research and development, Toyota
has enhanced its product appeal and technological prowess, which have been serving as the source of the
company’s competitiveness. At the core of Toyota’s products created through this research and development
always lies intellectual property, including invention, know-how and brands. This intellectual property functions
as Toyota’s important management resources. By protecting and utilizing our intellectual property in an
appropriate manner, we will continue to contribute to society.
Toward the realization of a future mobility society, Toyota is carrying out intellectual property activities in
line with management priorities.
For example, we are focusing resources on such areas as carbon neutrality, including the development of
electrified vehicles and batteries, and on software and connected initiatives, including connected and automated
driving technologies. We are also reinforcing efforts to obtain and utilize intellectual property licenses in such
areas to strengthen our future competitiveness.
As for the intellectual property activities framework, having established intellectual property functions at the
R&D centers in Japan, the United States, Europe and China, Toyota supports technology development globally
by securing organic, systematic coordination between R&D activities and intellectual property activities.
Working in concert with approximately 110 law firms around the world, we also collect intellectual property
information and take measures suitable for any intellectual property disputes that may arise in specific countries
or regions. To enhance activities that incorporate management, R&D and intellectual property in one, Toyota has
an Intellectual Property Management Committee. The members of the Committee discuss and make decisions
concerning obtaining and utilizing important intellectual property conducive to management and for responding
to management risks related to intellectual property.
In 2025, Toyota filed approximately 19,000 patent applications domestically and internationally. In Japan,
based on the ranking published by IP Force, Toyota was ranked 1st among companies and 1st among automobile
manufacturers that year in terms of the number of patent registrations as of December 31, 2025. In the United
States, based on the ranking published by IFI CLAIMS, Toyota was ranked 8th among companies and 1st among
automobile manufacturers that year in terms of the number of patent registrations as of December 31, 2025.
65
Capital Expenditures and Divestitures
Set forth below is a chart of Toyota’s principal capital expenditures between April 1, 2023 and March 31,
2026, 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
........................
1,915.2
Japan
Internal funds,
financing
from issuance
of bonds, etc.
Investment primarily in technology and products by
Prime Planet Energy & Solutions, Inc
. ..............
168.5
Japan
Borrowing
Investment primarily in technology and products by
Toyota Auto Body Co., Ltd
.
......................
102.8
Japan
Internal funds
Investment primarily in technology and products by
Toyota Motor Kyushu, Inc
. .......................
86.5
Japan
Internal funds
Outside of Japan
Investment primarily to promote localization by
Toyota Battery Manufacturing, Inc
.
................
730.6
United States
Internal funds
Investment primarily to promote localization by
Toyota Motor Thailand Co., Ltd
....................
290.1
Thailand
Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing, Kentucky, Inc
..........
221.4
United States
Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing, Indiana, Inc
.
..........
184.0
United States
Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing Canada, Inc
............
170.9
Canada
Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing De Guanajuato, S.A. de
C.V
. .........................................
152.6
Mexico
Internal funds
Investment primarily to promote localization by
Toyota do Brazil LTDA
. .........................
130.6
Brazil
Internal funds
Investment primarily to promote localization by Toyota
Motor Technical Center (China) Co., Ltd
.
...........
113.0
China
Internal funds
Investment primarily to promote localization by Toyota
Motor Manufacturing, Texas, Inc
...................
102.9
United States
Internal funds
Investment primarily to promote localization by Toyota
Motor Europe NV/SA
............................
96.4
Belgium
Internal funds
Investment primarily in leased automobiles by Toyota
Motor Credit Corporation
........................
7,032.5
United States
Internal funds,
financing
from issuance
of bonds, etc.
66
Set forth below is information with respect to Toyota’s material plans to construct, expand or improve its
facilities between April 2026 and March 2027, 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
........................
850.0
Japan
Internal funds
Outside of Japan
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing, Kentucky, Inc
..........
260.9
United States
Internal funds
Investment primarily in manufacturing facilities by
Toyota Kirloskar Motor Private Ltd
. ................
128.9
India
Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing, Indiana, Inc
............
119.1
United States
Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Europe NV/SA
......................
107.5
Belgium
Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing Canada Inc
.............
70.8
Canada
Internal funds
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 does not consider its seasonality material in the sense of significantly higher sales during any certain
period of the year as compared to other periods of the year.
Legal Proceedings
Toyota and other automakers are subject to certain class actions relating to Takata airbag issues. The actions
against Toyota are being litigated in Brazil and Argentina.
Toyota is named as a defendant in an economic loss class action lawsuit in Australia in which damages are
claimed on the basis that diesel particulate filters in certain vehicle models are defective. On April 7,
2022, March 27, 2023, and November 6, 2024, Toyota received unfavorable judgments in the court of first
instance, the Federal Court of Australia, and the High Court of Australia, respectively. The judgments included a
finding that there was a perceived reduction in vehicle value of certain vehicle models. However, the High Court
remanded the case to the court of first instance for further proceedings to determine the specific calculation of the
reduction in vehicle value. Other claims of economic loss in this class action lawsuit continue to be litigated at
the court of first instance. In calculating the provision we should record in the consolidated financial statements
as a result of the aforementioned judgments, Toyota has considered various factors including the legal and
factual circumstances of the case, the contents of the judgment of the court of first instance and the Federal Court
of Australia, and the views of legal counsel. The currently estimated probable economic outflow related to the
class action is immaterial to Toyota’s consolidated financial position, results of operations and cash flows. At this
stage, however, the final outcome and therefore ultimate financial liability for Toyota on account of this matter
cannot be predicted with certainty.
67
In April 2020, Toyota reported possible anti-bribery violations related to a Thai subsidiary to the SEC and
the U.S. Department of Justice (“DOJ”) and cooperated with these investigations. In June 2025, the DOJ and
SEC informed Toyota that they had closed their investigations into the matter.
On March 4, 2022, Hino, a Japanese company that produces and sells commercial trucks and buses, and of
which Toyota owns 66.16% of the voting interests as of March 31, 2026, disclosed that it had voluntarily
commenced an investigation into potential issues regarding emissions performance and certification in the North
American and Japanese markets, and that it has reported such issues to and is cooperating with the relevant
authorities. Hino announced that, through such investigation, it identified past misconduct in relation to its
applications for certification concerning the emissions and the fuel economy performance of certain of its
engines for the Japanese market. In Japan, Hino was subject to an on-site inspection from the MLIT, and received
a corrective action order from it. From October 7, 2022 to May 22, 2024, Hino submitted recurrence prevention
reports to the MLIT. The MLIT has also revoked certain of the “type approvals” (that is, approvals that exempt
new vehicles or vehicles with certain equipment from individual testing by government inspectors prior to sale)
and the fuel consumption ratings relating to certain engine models. Hino has also further agreed to compensate
certain of its customers in Japan for certain additional motor vehicle taxes that have become payable on account
of the misconduct, as well as in connection with vehicles with engines with respect to which there were fuel
efficiency problems. The investigation by Hino’s special investigation committee for engines for the Japanese
market has been completed; however, some verification, investigations and communications with related parties
are still ongoing.
In Canada, Hino and certain of its subsidiaries were sued in a putative class action in the Supreme Court of
British Columbia, Canada, on October 19, 2023, and a similar lawsuit was filed in the Superior Court of Quebec,
Canada. Hino entered into a settlement agreement with the plaintiffs on November 13, 2024, and received final
approval of the Supreme Court of British Columbia on May 6, 2025 (local time), as well as final approval of the
Superior Court of Quebec on June 2, 2025 (local time).
With respect to the United States, a lawsuit naming Hino and certain of its subsidiaries as defendants in a
putative class action lawsuit was filed at the U.S. District Court for the Southern District of Florida claiming
damages related to Hino’s vehicles sold in the U.S. from 2004 to 2021, was filed at the U.S. District Court for the
Southern District of Florida on August 5, 2022 (local time). Hino entered into a settlement agreement with the
plaintiff on October 25, 2023 and received final approval of the court on April 1, 2024 (local time). In addition,
the DOJ and other U.S. agencies commenced an investigation with respect to potential violations of relevant laws
and regulations regarding the certification of certain of Hino’s engines for the U.S. market. On January 16, 2025,
Hino reached an agreement with the DOJ to resolve its criminal investigation into engine emissions certification
testing and performance issues in the U.S. market, which became effective on March 19, 2025. Hino and its U.S.
subsidiaries also reached a consolidated civil resolution with U.S. federal and California government authorities
to resolve their civil investigations into the issues, which became effective on May 21, 2025.
In these resolutions, Hino agreed to the payment of criminal and civil penalties. In addition, Hino has started
the implementation of measures for the engines in the market and a project for reducing environmental burdens.
Furthermore, Hino has extended warranties for vehicles in the wake of the settlement in the class action lawsuit
filed in the U.S., the civil settlement with the U.S. authorities, and the settlement in the class action lawsuit filed
in Canada.
In addition, on April 17, 2023, a lawsuit against Hino and its subsidiaries as defendants in a representative
action lawsuit has also been filed in Australia as a class action lawsuit. In the lawsuit, the plaintiffs claimed that
they had suffered loss and damage resulting from alleged misleading or deceptive conduct in relation to
non-compliance of the affected vehicles with emissions standards and fuel efficiency standards. Hino entered
into a settlement agreement with the plaintiff on February 14, 2025, and received final approval of the court on
July 18, 2025.
68
In New Zealand, Hino and local distributors which have no capital ties with Hino were sued in a class action
in the High Court of New Zealand on March 3, 2025 (local time). Hino entered into a settlement agreement with
the plaintiffs on February 9, 2026.
For the year ended March 31, 2025, Toyota recorded ¥281,140 million in costs and expenses related to the
Hino certification issues described above. This amount covers costs associated with the aforementioned
resolutions with the U.S. authorities, the settlement of the class action litigation in Canada, and the legal
settlement in Australia, to the extent that Toyota can reasonably estimate them based on available information.
Hino ceased to be a consolidated subsidiary of Toyota as a result of its business integration with Mitsubishi
Fuso Truck and Bus Corporation (“MFTBC”) effective April 1, 2026.
Similar lawsuits have been filed, and may be filed in the future. Investigations by governmental authorities,
as well as civil litigation, related to these matters could result in the imposition of further civil or criminal
penalties, fines or other sanctions, damages awards, or other consequences. Except as stated above, Toyota
cannot predict the scope, duration, or outcome of these matters described above at this time.
Toyota also has various other pending legal actions and claims, including without limitation personal injury
and wrongful death lawsuits and claims in the United States, as well as intellectual property litigation, and is
subject to government investigations from time to time.
Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a
range of reasonably possible loss, if any, for the pending legal 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. Therefore,
for all of the aforementioned matters, which Toyota is in discussions to resolve, any losses that are beyond the
amounts accrued could have an adverse effect on Toyota’s financial position, results of operations or cash flows.
4.C ORGANIZATIONAL STRUCTURE
As of March 31, 2026, Toyota Motor Corporation had 216 domestic subsidiaries and 386 foreign
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
%
%
Hino Motors, Ltd.*
1
.......................................
Japan
71.92
66.16
Prime Planet Energy & Solutions, Inc
..........................
Japan
51.00
51.00
Toyota Financial Services Corporation
........................
Japan
100.00
100.00
Daihatsu Motor Co., Ltd
.
...................................
Japan
100.00
100.00
Toyota Finance Corporation
.................................
Japan
100.00
100.00
Toyota Auto Body Co., Ltd
. .................................
Japan
100.00
100.00
Toyota Motor Kyushu, Inc
...................................
Japan
100.00
100.00
Toyota Motor East Japan, Inc
.
...............................
Japan
100.00
100.00
Woven by Toyota, 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
69
Name of Subsidiary
Country of
Incorporation
Percentage
Ownership
Interest
Percentage
Voting
Interest
%
%
Woven Capital, L.P
. .......................................
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 Battery Manufacturing, Inc
. ...........................
United States
90.00
90.00
Toyota Motor Manufacturing Canada Inc
. ......................
Canada
100.00
100.00
Toyota Motor Europe NV/SA
................................
Belgium
100.00
100.00
Toyota Motor Finance (Netherlands) B.V
.......................
Netherlands
100.00
100.00
Toyota Motor Manufacturing (UK) Ltd
.........................
United Kingdom
100.00
100.00
Toyota Motor Manufacturing Turkey Inc
. ......................
Turkey
90.00
90.00
Guangqi Toyota Engine Co., Ltd
..............................
China
70.00
70.00
Toyota Motor (China) Investment Co., Ltd
......................
China
100.00
100.00
Toyota Motor Finance (China) Co., Ltd
.
.......................
China
100.00
100.00
Lexus Electrified Shanghai Co., Ltd
. ..........................
China
100.00
100.00
Toyota Motor Asia (Singapore) Pte. Ltd
. .......................
Singapore
100.00
100.00
Toyota Leasing (Thailand) Co., Ltd
............................
Thailand
90.00
90.00
Toyota Motor Thailand Co., Ltd
. .............................
Thailand
86.43
86.43
Toyota Motor Asia (Thailand) 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 do Brasil Ltda
.
.....................................
Brazil
100.00
100.00
*1
Hino ceased to be a consolidated subsidiary of Toyota as a result of its business integration with MFTBC
effective April 1, 2026.
4.D PROPERTY, PLANTS AND EQUIPMENT
As of March 31, 2026, Toyota and its affiliated companies produced automobiles and related components
through more than 50 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, Czech
Republic, Poland, Thailand, China, Taiwan, India, Indonesia, South Africa, 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, 2026, with respect to Toyota’s principal
properties and facilities that 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
(thousands
of square
meters)
Number of
Employees
Principal
Products or
Functions
Japan (Toyota Motor Corporation)
Toyota Technical Center
Shimoyama
...................
Toyota City, Aichi Pref.
5,947
1,941
Research and
Development
Tahara Plant
.....................
Tahara City, Aichi Pref.
4,029
6,564
Automobiles
Toyota Head Office and Technical
Center
........................
Toyota City, Aichi Pref.
2,725
23,479
Research and
Development
Higashi-Fuji Technical Center
.......
Susono City, Shizuoka Pref
2,719
2,516
Research and
Development
Motomachi Plant
.................
Toyota City, Aichi Pref.
1,575
8,035
Automobiles
Takaoka Plant
...................
Toyota City, Aichi Pref.
1,305
4,337
Automobiles
70
Facility or Subsidiary Name
Location
Land Area
(thousands
of square
meters)
Number of
Employees
Principal
Products or
Functions
Honsha Plant
....................
Toyota City, Aichi Pref.
623
1,893
Automobile parts
Myochi Plant
....................
Miyoshi City, Aichi Pref.
555
1,443
Automobile parts
Shimoyama Plant
.................
Miyoshi City, Aichi Pref.
474
814
Automobile parts
Toyota Woven City
...............
Susono City, Shizuoka
263
8
Research and
Development
Japan (Subsidiaries)
Daihatsu Motor Co., Ltd
............
Ikeda City, Osaka, etc.
7,721
11,143
Automobiles
Hino Motors, Ltd.
*1
...............
Hino City, Tokyo, etc.
5,795
11,622
Automobiles
Toyota Auto Body Co., Ltd
. ........
Kariya City, Aichi Pref., etc.
2,118
11,915
Automobiles
TOYOTA Mobility Tokyo Inc
. ......
Minato-ku, Tokyo, etc.
403
6,391
Sales facilities
Prime Planet Energy & Solutions,
Inc
...........................
Chuo-ku, Tokyo, etc.
300
4,299
Automobiles
Outside Japan (Subsidiaries)
Toyota Battery Manufacturing, Inc.
. . North Carolina, U.S.A.
7,400
2,675
Automobiles
Toyota Motor Manufacturing, De
Guanajuato, S.A. de C.V
.
........
Guanajuato, Mexico
6,091
2,823
Automobiles
Toyota Motor Manufacturing,
Kentucky, Inc
. .................
Kentucky, U.S.A.
5,161
9,636
Automobiles
Toyota Motor Manufacturing Canada,
Inc
...........................
Ontario, Canada
4,752
8,298
Automobiles
Toyota Motor Thailand Co., Ltd
.
....
Samutprakarn, Thailand
4,414
7,463
Automobiles
*1
Hino ceased to be a consolidated subsidiary of Toyota as a result of the business integration with MFTBC
effective April 1, 2026.
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 take 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, 2026, property, plant and equipment having a net book value of approximately
¥1,926.7 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 “Item 4. Information on the Company — 4.B 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.
71
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
5.A OPERATING RESULTS
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 accordance with
IFRS Accounting Standards, as issued by the IASB.
The following discussion covers the fiscal years ended March 31, 2025 and 2026. For the discussion
covering the fiscal year ended March 31, 2024, refer to “ITEM 5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS” of Toyota’s Form 20-F for the fiscal year ended March 31, 2025 filed with the SEC on
June 18, 2025.
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 87% of
Toyota’s total revenues before the elimination of intersegment revenues for fiscal 2026. Toyota’s primary
markets based on vehicle unit sales for fiscal 2026 were: Japan (21.7%), North America (30.6%), Europe
(12.3%) and Asia (18.3%).
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.
During fiscal 2026, the global economy showed differing trends by region. In the United States,
consumption remained resilient even after tariff increases. In China, however, consumer sentiment stayed weak
amid a slowdown in the real estate market and employment concerns, and consumption growth remained
sluggish due to continued price stagnation and intense price competition.
The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market based on
location of customers for the past two fiscal years.
Thousands of units
Year ended March 31,
2025
2026
Japan
................................................................
1,991
2,082
North America
.........................................................
2,703
2,934
Europe
...............................................................
1,172
1,183
Asia
.................................................................
1,838
1,759
Other*
...............................................................
1,659
1,637
Overseas total
.........................................................
7,372
7,513
Total
............................................................
9,362
9,595
* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.
During fiscal 2026, Toyota’s consolidated vehicle unit sales in Japan increased. Overseas consolidated
vehicle unit sales increased overall during fiscal 2026 due mainly to increases in North America and Europe,
despite decreases in Asia and the Middle East.
72
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 such factors as the reliance on various suppliers for the provision
of supplies, or the general scarcity of certain supplies,
•
climate change risk, including both physical risks as well as transition risks,
•
the adverse effect on market, sales and productions of natural calamities as well as the outbreak and
spread of epidemics 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 the
vehicles.
Many governments also impose local content requirements, 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 relating to its vehicles. The recalls and other safety measures described above have
led to a number of claims and legal proceedings against Toyota. For a more detailed description of these claims
and legal proceedings, see “Item 4. Information on the Company — 4.B Business Overview — Legal
Proceedings” and notes 24 and 32 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.
73
Financial Services Operations Segment
Competition in the worldwide automobile financial services industry is intensifying. 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 receivables related to financial services increased during fiscal 2026 mainly due to an
increase in loan balance. Also, vehicles and equipment on operating leases increased during fiscal 2026 mainly
due to the impact of changes in exchange rates.
For details on receivables related to financial services and vehicles and equipment on operating leases, see
notes 8 and 13 to the consolidated financial statements.
Toyota’s receivables related to financial services 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 notes 3 and 20 to the consolidated financial statements for additional
information.
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 note 3 to the consolidated financial statements for
additional information.
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 manage interest rate risk from an economic perspective and are not designated as a hedge of specific
assets or liabilities on Toyota’s consolidated statements of financial position and accordingly, unrealized gains or
losses related to derivatives that are not designated as a hedge are recognized currently in operations. See the
discussion in “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and note 21 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
increased during fiscal 2025 and 2026 mainly as a result of an increase in the balance of financial liabilities.
Toyota launched its credit card business in Japan in April 2001. As of March 31, 2025, Toyota had
16.0 million cardholders, a decrease of 0.12 million cardholders compared with March 31, 2024. As of March 31,
2026, Toyota had 16.9 million cardholders, an increase of 0.85 million cardholders compared with March 31,
2025. Credit card receivables as of March 31, 2025 increased by ¥15.7 billion from March 31, 2024 to
¥574.5 billion, and that as of March 31, 2026 decreased by ¥23.0 billion from March 31, 2025 to ¥551.4 billion.
74
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 as well as the Australian dollar, 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 fiscal 2025
and 2026, Toyota produced 73.5% and 73.9%, respectively, of its non-domestic sales outside Japan. In North
America, 76.0% and 74.6% of vehicles sold in fiscal 2025 and 2026, respectively, were produced locally. In
Europe, 69.6% and 69.0% of vehicles sold in fiscal 2025 and 2026, respectively, were produced locally. In Asia,
94.6% and 96.4% of vehicles sold in fiscal 2025 and 2026, 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 3 (“Material accounting policies — Financial
instruments — (3) Derivative financial instruments”) and 21 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
consolidated revenues, operating income and net income attributable to Toyota Motor Corporation. In fiscal
2026, the Japanese yen was on average stronger against the U.S. dollar but weaker against the euro in comparison
to fiscal 2025. At the end of fiscal 2026, the Japanese yen was weaker against the U.S. dollar and the euro in
comparison to the end of fiscal 2025. See note 20 to the consolidated financial statements for additional
information.
75
Operating Performance
Sales Revenues
Toyota’s sales revenues include sales revenues from sales of products, consisting of sales revenues from
automotive operations and all other operations, excluding sales revenues from financial services operations,
which increased by 5.2% during fiscal 2026 compared with the prior fiscal year to ¥45,865.9 billion, and sales
revenues from financial services operations, which increased by 8.6% during fiscal 2026 compared with the prior
fiscal year to ¥4,819.0 billion.
See “ — Sales Revenues and Operating Income by Business Segment” and “ — Sales Revenues and
Operating Income by Geography” for additional information for the factors affecting changes in sales revenues.
Cost of Products Sold
Cost of products sold increased by ¥3,631.2 billion, or 10.2%, to ¥39,141.4 billion during fiscal 2026
compared with the prior fiscal year.
This increase includes a ¥395.0 billion increase in operating expenses attributable to our efforts to
strengthen the foundation of our suppliers and the impact of soaring materials prices. Through continued cost
reduction efforts together with our suppliers, this increase was partially offset by a ¥215.0 billion reduction
primarily attributable to value engineering activities and other cost reduction efforts concerning design-related
costs and a ¥60.0 billion reduction attributable to cost reduction efforts at plants and logistics departments.
The cost reduction efforts described above 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. The impact of soaring materials prices 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.
Cost of Financial Services
Cost of financial services increased by ¥131.2 billion, or 4.5%, to ¥3,079.7 billion during fiscal 2026
compared with the prior fiscal year. This increase was due mainly to the increase in funding costs resulting from
an increase in the balance of financial liabilities.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by ¥84.9 billion, or 1.8%, to ¥4,697.5 billion during
fiscal 2026 compared with the prior fiscal year. This decrease was due mainly to the effect of expenses related to
Hino’s certification issues recorded in fiscal 2025.
76
Operating Income
Yen in millions
Year ended March 31,
2026 v. 2025 Change
Changes in operating income and loss:
Effect of marketing efforts
................................................
710,000
Effect of cost reduction efforts
.............................................
(120,000)
Effect of changes in exchange rates
.........................................
(195,000)
Increase or decrease in expenses and expense reduction efforts
...................
(2,030,000)
Other
.................................................................
605,700
Total
.............................................................
(1,029,300)
Toyota’s operating income decreased by ¥1,029.3 billion, or 21.5%, to ¥3,766.2 billion during fiscal 2026
compared with the prior fiscal year. This decrease was due to the ¥2,030.0 billion aggregate unfavorable impact
of changes in expenses and expense reduction efforts, partially offset by the ¥710.0 billion favorable impact of
marketing efforts.
The aggregate unfavorable impact of changes in expenses and expense reduction efforts includes the
¥1,380.0 billion impact of U.S. tariffs.
The favorable impact of marketing efforts includes the ¥210.0 billion impact of changes in vehicle unit sales
and sales mix, as well as the ¥335.0 billion impact of other marketing efforts such as price revisions.
Other Income and Expenses
Share of profit (loss) of investments accounted for using the equity method during fiscal 2026 decreased by
¥38.4 billion, or 6.5%, to ¥552.7 billion compared with the prior fiscal year. This decrease was due mainly to a decrease
during fiscal 2026 in net income attributable to the shareholders of companies accounted for by the equity method. The
following table shows the share of profit (loss) of investments accounted for using the equity method by country.
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Japan
...............................................
407,085
354,234
(52,851)
(13.0)%
China
...............................................
106,992
108,299
1,307
1.2
Other
...............................................
77,143
90,209
13,066
16.9
Total
...........................................
591,219
552,742
(38,478)
(6.5)%
Other finance income increased by ¥37.5 billion, or 6.7%, to ¥594.2 billion during fiscal 2026 compared
with the prior fiscal year. This increase was due mainly to an increase in gains on sales of securities.
Other finance costs decreased by ¥103.9 billion, or 54.5%, to ¥86.7 billion during fiscal 2026 compared
with the prior fiscal year. This decrease was due mainly to a decrease in losses on securities revaluation.
77
Foreign exchange gain (loss), net decreased by ¥304.5 billion to ¥400.7 billion during fiscal 2026 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
exchange rates. The ¥304.5 billion decrease in foreign exchange gain (loss), net was due mainly to the
reclassification of foreign currency translation adjustments related to foreign operations, which had been
recognized in “Other components of equity” in the consolidated statement of financial position, to “Foreign
exchange gain (loss), net” in the consolidated statement of income during fiscal 2025 due mainly to the loss of
control of certain consolidated subsidiaries.
Other income (loss), net decreased by ¥30.7 billion, to ¥74.2 billion in losses during fiscal 2026 compared
with the prior fiscal year.
Income Taxes
The provision for income taxes decreased by ¥457.6 billion, or 28.2%, to ¥1,167.2 billion during fiscal 2026
compared with the prior fiscal year. This decrease was due mainly to the decrease in income before income taxes.
The average effective tax rate for fiscal 2026 was 22.7%.
See note 16 to the consolidated financial statements for further discussion.
Net Income Attributable to Non-controlling Interests
Net income attributable to non-controlling interests increased by ¥112.9 billion, or 458.0%, to ¥137.6 billion
during fiscal 2026 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal
2026 in net income of consolidated subsidiaries.
Net Income Attributable to Toyota Motor Corporation
Net
income
attributable
to
Toyota
Motor
Corporation
decreased
by
¥916.9
billion,
or
19.2%,
to
¥3,848.0 billion during fiscal 2026 compared with the prior fiscal year.
Other Comprehensive Income, Net of Tax
Other comprehensive income, net of tax increased by ¥2,275.9 billion to ¥1,529.9 billion for fiscal 2026
compared with the prior fiscal year. This increase resulted mainly from exchange differences on translating
foreign operations gains of ¥946.3 billion in fiscal 2026 compared with losses of ¥827.8 billion in the prior fiscal
year, due mainly to the weakening of the yen against the U.S. dollar and the euro, and remeasurements of defined
benefit plans gains of ¥101.3 billion in fiscal 2026 compared with losses of ¥109.5 billion in the prior fiscal year,
due mainly to changes in fair value of plan assets.
Operating Performance by Business Segment
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 and
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. Toyota does
not manage any subset of its automotive operations, such as domestic or overseas operations or parts, as separate
management units.
78
Sales Revenues and Operating Income by Business Segment
The tables below show Toyota’s sales revenues and operating income from external customers by business
and by product category.
For the year ended March 31, 2025
Yen in millions
Automotive
Financial
services
All other
Inter-segment
Elimination/
Unallocated
Amount
Consolidated
Sales revenues
Revenues from external customers
Vehicles
......................
36,892,232
—
—
—
Parts and components for
production
..................
1,606,173
—
—
—
Parts and components for after
service
.....................
3,423,389
—
—
—
Other
.........................
1,074,505
—
—
—
Total revenues from external customers . .
42,996,299
4,437,827
602,578
—
48,036,704
Inter-segment revenues and transfers
....
203,566
43,353
844,536
(1,091,455)
—
Total
.....................
43,199,865
4,481,180
1,447,114
(1,091,455)
48,036,704
Operating expenses
.....................
39,259,587
3,797,661
1,265,920
(1,082,050)
43,241,118
Operating income
.......................
3,940,278
683,519
181,194
(9,405)
4,795,586
For the year ended March 31, 2026
Yen in millions
Automotive
Financial
services
All other
Inter-segment
Elimination/
Unallocated
Amount
Consolidated
Sales revenues
Revenues from external customers
Vehicles
......................
38,847,899
—
—
—
Parts and components for
production
..................
1,509,449
—
—
—
Parts and components for after
service
.....................
3,608,666
—
—
—
Other
.........................
1,235,909
—
—
—
Total revenues from external customers . . .
45,201,924
4,819,003
664,026
—
50,684,952
Inter-segment revenues and transfers
.....
215,779
38,112
987,387
(1,241,278)
—
Total
.....................
45,417,703
4,857,115
1,651,412
(1,241,278)
50,684,952
Operating expenses
.....................
42,640,654
4,005,394
1,519,333
(1,246,644)
46,918,736
Operating income
.......................
2,777,049
851,722
132,079
5,366
3,766,216
79
Automotive Operations Segment
The automotive operations segment is Toyota’s largest operating segment by sales revenues. Sales revenues
for the automotive segment increased during fiscal 2026 by ¥2,217.8 billion, or 5.1%, to ¥45,417.7 billion
compared with the prior fiscal year. The increase mainly reflects the ¥1,900.0 billion favorable impact of changes
in vehicle unit sales and sales mix.
Operating
income
from
the
automotive
operations
decreased
by
¥1,163.2
billion,
or
29.5%,
to
¥2,777.0 billion during fiscal 2026 compared with the prior fiscal year. This decrease in operating income was
due mainly to the ¥2,030.0 billion aggregate unfavorable impact of changes in expenses and expense reduction
efforts, partially offset by the ¥710.0 billion favorable impact of marketing efforts.
Financial Services Operations Segment
Sales revenues for the financial services operations increased during fiscal 2026 by ¥375.9 billion, or 8.4%,
to ¥4,857.1 billion compared with the prior fiscal year. This increase was due mainly to the increase in loan
balance.
Operating income from financial services operations increased by ¥168.2 billion, or 24.6%, to ¥851.7 billion
during fiscal 2026 compared with the prior fiscal year. This increase was due mainly to the recording of
valuation gains on interest rate swaps in sales finance subsidiaries in the United States.
The following table shows the number of financing contracts by geographic region at the end of fiscal 2026
and 2025, respectively.
Number of financing contracts in thousands
As of March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Japan
...........................................
2,740
2,652
(88)
(3.2)%
North America
...................................
5,647
5,659
12
0.2
Europe
..........................................
1,944
2,076
132
6.8
Asia
............................................
2,245
2,307
62
2.8
Other*
..........................................
1,054
1,108
54
5.1
Total
.......................................
13,630
13,802
172
1.3%
* “Other” consists of Central and South America, Oceania and Africa.
All Other Operations Segment
Toyota’s other business operations consist of its information technology business and others.
Sales
revenues
for
Toyota’s
other
operations
segments
increased
by ¥204.2 billion,
or 14.1%, to
¥1,651.4 billion during fiscal 2026 compared with the prior fiscal year.
Operating income from Toyota’s other operations segments decreased by ¥49.1 billion, or 27.1%, to
¥132.0 billion during fiscal 2026 compared with the prior fiscal year.
80
Consolidated Statement of Income on Non-Financial Services Businesses and Financial Services Business
Yen in millions
Year ended
March 31, 2025
Year ended
March 31, 2026
(Non-Financial Services Businesses)
Sales revenues
.....................................................
43,787,709
46,079,610
Cost of revenues
...................................................
35,684,332
39,325,176
Selling, general and administrative
.....................................
3,984,469
3,830,878
Operating income
..................................................
4,118,908
2,923,556
Other income (loss), net
.............................................
1,622,539
1,387,992
Income before income taxes
..........................................
5,741,447
4,311,548
Income tax expense
.................................................
1,446,627
935,124
Net income
.......................................................
4,294,820
3,376,424
Net income attributable to
Toyota Motor Corporation
.......................................
4,281,231
3,245,638
Non-controlling interests
.........................................
13,589
130,786
(Financial Services Business)
Sales revenues
.....................................................
4,481,180
4,857,115
Cost of revenues
...................................................
2,960,227
3,101,062
Selling, general and administrative
.....................................
837,435
904,331
Operating income
..................................................
683,519
851,722
Other income (loss), net
.............................................
(10,309)
5,672
Income before income taxes
..........................................
673,210
857,393
Income tax expense
.................................................
178,000
232,086
Net income
.......................................................
495,210
625,307
Net income attributable to
Toyota Motor Corporation
.......................................
484,129
618,430
Non-controlling interests
.........................................
11,081
6,878
(Elimination)
Elimination of net income
............................................
(274)
(15,970)
(Consolidated)
Net income
.......................................................
4,789,755
3,985,761
Net income attributable to
Toyota Motor Corporation
.......................................
4,765,086
3,848,098
Non-controlling interests
.........................................
24,670
137,664
81
Operating Performance by Geography
The tables below show Toyota’s sales revenues and operating income from external customers by
geography.
For the year ended March 31, 2025
Yen in millions
Japan
North
America
Europe
Asia
Other*
Inter-segment
Elimination/
Unallocated
Amount
Consolidated
Sales revenues
Revenues from external
customers
.........
10,719,120 18,930,253 6,110,052 7,903,360 4,373,919
—
48,036,704
Inter-segment revenues
and transfers
.......
11,139,974
370,074
203,437 1,084,702
147,338 (12,945,525)
—
Total
...........
21,859,094 19,300,327 6,313,489 8,988,062 4,521,257 (12,945,525) 48,036,704
Operating expenses
.......
18,707,971 19,191,519 5,897,936 8,091,552 4,268,632 (12,916,492) 43,241,118
Operating income
.........
3,151,123
108,808
415,553
896,510
252,626
(29,033)
4,795,586
For the year ended March 31, 2026
Yen in millions
Japan
North
America
Europe
Asia
Other*
Inter-segment
Elimination/
Unallocated
Amount
Consolidated
Sales revenues
Revenues from external
customers
.........
10,985,614 20,661,490 6,464,911 7,966,455 4,606,482
—
50,684,952
Inter-segment revenues
and transfers
.......
11,088,528
418,175
236,280 1,304,921
152,511 (13,200,415)
—
Total
...........
22,074,141 21,079,665 6,701,191 9,271,377 4,758,993 (13,200,415) 50,684,952
Operating expenses
.......
19,753,103 21,272,219 6,343,449 8,401,551 4,430,028 (13,281,613) 46,918,736
Operating income (loss)
....
2,321,038
(192,554)
357,743
869,826
328,966
81,198
3,766,216
* “Other” consists of Central and South America, Oceania, Africa and the Middle East.
82
Sales Revenues and Operating Income by Geography
Japan
Thousands of units
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Toyota’s consolidated vehicle unit sales*
.............
3,932
4,083
151
3.8%
* including number of exported vehicle unit sales
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Sales revenues:
Sales of products
............................
21,468,488
21,651,881
183,393
0.9%
Financial services
............................
390,606
422,260
31,654
8.1
Total
..................................
21,859,094
22,074,141
215,047
1.0%
Operating costs and expenses
.......................
18,707,971
19,753,103
1,045,132
5.6%
Operating income
................................
3,151,123
2,321,038
(830,085)
(26.3)%
Sales revenues in Japan increased due mainly to an increase in vehicle sales of 151 thousand units and the
favorable impact of price revisions compared with the prior fiscal year. For fiscal 2025 and 2026, exported
vehicle unit sales were 1,941 thousand units and 2,001 thousand units, respectively.
Operating income in Japan decreased due mainly to the expenses and others, and the effects of changes in
exchange rates compared with the prior fiscal year.
North America
Thousands of units
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Toyota’s consolidated vehicle unit sales
..............
2,703
2,934
231
8.5%
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Sales revenues:
Sales of products
............................
16,606,446
18,241,546
1,635,100
9.8%
Financial services
............................
2,693,881
2,838,119
144,238
5.4
Total
..................................
19,300,327
21,079,665
1,779,338
9.2%
Operating costs and expenses
.......................
19,191,519
21,272,219
2,080,700
10.8%
Operating income (loss)
...........................
108,808
(192,554)
(301,362)
—
Sales revenues in North America increased due mainly to an increase in vehicle sales of 231 thousand units
and the favorable impact of price revisions compared with the prior fiscal year.
Operating income in North America decreased due mainly to the expenses and others, and the impact of
U.S. tariffs compared with the prior fiscal year.
83
Europe
Thousands of units
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Toyota’s consolidated vehicle unit sales
..............
1,172
1,183
11
1.0%
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Sales revenues:
Sales of products
............................
5,577,646
5,808,718
231,071
4.1%
Financial services
............................
735,843
892,474
156,631
21.3
Total
..................................
6,313,489
6,701,191
387,702
6.1%
Operating costs and expenses
.......................
5,897,936
6,343,449
445,512
7.6%
Operating income
................................
415,553
357,743
(57,810)
(13.9)%
Sales revenues in Europe increased due mainly to an increase in vehicle sales of 11 thousand units, and the
favorable impacts of changes in exchange rates and price revisions compared with the prior fiscal year.
Operating income in Europe decreased due mainly to the effects of changes in exchange rates compared
with the prior fiscal year.
Asia
Thousands of units
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Toyota’s consolidated vehicle unit sales
..............
1,838
1,759
(79)
(4.3)%
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Sales revenues:
Sales of products
............................
8,701,501
8,963,111
261,609
3.0%
Financial services
............................
286,561
308,266
21,705
7.6
Total
..................................
8,988,062
9,271,377
283,315
3.2%
Operating costs and expenses
.......................
8,091,552
8,401,551
309,999
3.8%
Operating income
................................
896,510
869,826
(26,684)
(3.0)%
Sales revenues in Asia increased due mainly to the favorable impact of price revisions compared with the
prior fiscal year, despite a decrease in vehicle sales of 79 thousand units.
Operating income in Asia decreased due mainly to the effects of changes in exchange rates compared with
the prior fiscal year.
84
Other
Thousands of units
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Toyota’s consolidated vehicle unit sales
..............
1,659
1,637
(22)
(1.3)%
Yen in millions
Year ended March 31,
2026 v. 2025 Change
2025
2026
Amount
Percentage
Sales revenues:
Sales of products
............................
4,023,077
4,215,127
192,050
4.8%
Financial services
............................
498,180
543,866
45,686
9.2
Total
..................................
4,521,257
4,758,993
237,736
5.3%
Operating costs and expenses
.......................
4,268,632
4,430,028
161,396
3.8%
Operating income
................................
252,626
328,966
76,340
30.2%
Sales revenues in Other increased due mainly to the favorable impact of changes in exchange rates
compared with the prior fiscal year, despite a decrease in vehicle sales of 22 thousand units.
Operating income in Other increased due mainly to marketing efforts compared with the prior fiscal year.
The following is a description of changes in operating income by geographic location.
Yen in millions
2026 v. 2025 Change
Japan
North
America
Europe
Asia
Other
Changes in operating income and loss:
Effect of marketing efforts
.....................
265,000
415,000
(30,000)
65,000
45,000
Effect of cost reduction efforts
..................
(145,000)
25,000
15,000
15,000
(30,000)
Effect of changes in exchange rates
..............
(105,000)
25,000
(45,000)
(75,000)
5,000
Increase or decrease in expenses and expense
reduction efforts
...........................
(1,250,000)
(865,000)
(30,000)
(15,000)
(30,000)
Other
......................................
404,915
98,638
32,190
(16,684)
86,340
Total
..................................
(830,085)
(301,362)
(57,810)
(26,684)
76,340
Sales Revenues by Location of External Customers
Yen in millions
Year ended March 31,
2025
2026
Japan
............................................................
7,723,171
7,942,616
North America
.....................................................
18,985,399
20,783,571
Europe
...........................................................
5,979,720
6,396,867
Asia
.............................................................
7,944,206
7,894,843
Other*
...........................................................
7,404,208
7,667,056
Total
........................................................
48,036,704
50,684,952
* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.
85
5.B LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Based on its experiences with financial crises and the Great East Japan Earthquake, Toyota seeks to secure a
sufficient level of on-hand funds, which has been defined as an amount able to cover both six months of fixed
costs in the automotive business and six months of refinancing requirements in the financial services business.
With this level of liquidity, we aim to ensure business continuity under any operating conditions.
Toyota has funded its cash requirements, including those relating to capital expenditures as well as its
research and development activities through cash generated by operations.
In fiscal 2027, Toyota expects to sufficiently fund its cash requirements, including those relating to capital
expenditures as well as its research and development activities, through cash and cash equivalents on hand, cash
generated by operations and debt financing, such as the issuance of corporate bonds and borrowing. Toyota will
use its funds to efficiently invest in maintenance and replacement of conventional manufacturing facilities and
the introduction
of new products and will focus on investment
in areas contributing
to strengthening
competitiveness and future growth for transformation into a mobility company. See “Item 4. Information on the
Company — 4.B Business Overview — Capital Expenditures and Divestitures” for information regarding
Toyota’s material capital expenditures and divestitures for fiscal 2024, 2025 and 2026, 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,
through cash generated by operations and debt financing, such as the issuance of corporate bonds and borrowing,
all by its sales finance subsidiaries. Toyota seeks to expand its ability to raise funds locally in markets around the
world through its network of finance subsidiaries.
Net cash provided by operating activities increased by ¥1,775.9 billion to ¥5,472.9 billion for fiscal 2026,
compared with ¥3,696.9 billion for fiscal 2025. The increase was primarily attributable to the ¥1,260.7 billion
decrease in income taxes paid, net of refunds.
Net cash used in investing activities decreased by ¥2,669.4 billion to ¥1,520.3 billion for fiscal 2026,
compared with ¥4,189.7 billion for fiscal 2025. The decrease was primarily attributable to the ¥2,064.4 billion
increase in proceeds from upon maturity of public and corporate bonds compared to the prior fiscal year.
Net cash used in financing activities was ¥536.6 billion for fiscal 2026, compared with net cash provided by
financing activities of ¥197.2 billion for fiscal 2025, a ¥733.8 billion change. The change was primarily
attributable to the ¥1,084.3 billion increase in payments of long-term debt compared to the prior fiscal year.
For a discussion of cash flows for fiscal 2025 as compared to those for fiscal 2024, see “Item 5. Operating
and Financial Review and Prospects – 5.B. Liquidity and Capital Resources” of Toyota’s Annual Report on Form
20-F for the fiscal year ended March 31, 2025.
Total capital expenditures for property, plant and equipment, including vehicles and equipment on operating
leases, were ¥6,059.7 billion in fiscal 2026, remaining largely unchanged from the ¥5,991.2 billion in total
capital expenditures in fiscal 2025.
Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on
operating leases, to be approximately ¥2,300.0 billion during fiscal 2027.
86
Consolidated Statement of Cash Flows on Non-Financial Services Businesses and Financial Services
Business
Yen in millions
Year ended
March 31, 2025
Year ended
March 31, 2026
(Non-Financial Services Businesses)
Cash flows from operating activities
Net income
.........................................................
4,294,820
3,376,424
Depreciation and amortization
..........................................
1,413,066
1,472,087
Share of profit (loss) of investments accounted for using the equity method
......
(579,619)
(542,072)
Income tax expense
..................................................
1,446,627
935,124
Changes in operating assets and liabilities, and other
........................
(370,839)
744,179
Interest received
.....................................................
363,304
318,422
Dividends received
...................................................
617,644
424,816
Interest paid
........................................................
(100,770)
(90,538)
Income taxes paid, net of refunds
........................................
(2,347,622)
(1,159,061)
Net cash provided by (used in) operating activities
..........................
4,736,610
5,479,380
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others
................
(1,878,342)
(2,119,162)
Additions to equipment leased to others
..................................
(24,855)
(33,176)
Proceeds from sales of fixed assets excluding equipment leased to others
........
68,266
28,647
Proceeds from sales of equipment leased to others
..........................
6,035
7,997
Additions to intangible assets
...........................................
(341,131)
(365,834)
Additions to public and corporate bonds and stocks
.........................
(3,446,017)
(3,816,713)
Proceeds from sales of public and corporate bonds and stocks and upon maturity of
public and corporate bonds
...........................................
3,423,102
5,140,628
Other, net
..........................................................
(618,309)
1,172,580
Net cash provided by (used in) investing activities
..........................
(2,811,251)
14,967
Cash flows from financing activities
Increase (decrease) in short-term debt
....................................
(116,549)
3,307
Proceeds from long-term debt
..........................................
162,735
540,117
Payments of long-term debt
............................................
(306,768)
(939,292)
Dividends paid to Toyota Motor Corporation common shareholders
............
(1,132,329)
(1,238,974)
Dividends paid to non-controlling interests
................................
(122,565)
(120,431)
Reissuance (repurchase) of treasury stock
.................................
(1,179,043)
(39,975)
Other, net
..........................................................
55,560
34,712
Net cash provided by (used in) financing activities
..........................
(2,638,959)
(1,760,535)
Effect of exchange rate changes on cash and cash equivalents
.....................
(88,260)
176,261
Net increase (decrease) in cash and cash equivalents
............................
(801,860)
3,910,073
Cash and cash equivalents at beginning of year
.................................
6,892,817
6,090,957
Net increase (decrease) in cash and cash equivalents resulting from transfer to
assets held for sale
..............................................
—
(115,932)
Cash and cash equivalents at end of year
..............................
6,090,957
9,885,097
87
Yen in millions
Year ended
March 31, 2025
Year ended
March 31, 2026
(Financial Services Business)
Cash flows from operating activities
Net income
.....................................................
495,210
625,307
Depreciation and amortization
......................................
838,167
920,432
Interest income and interest costs related to financial services, net
..........
(769,800)
(833,480)
Share of profit (loss) of investments accounted for using the equity method
..
(11,600)
(10,669)
Income tax expense
...............................................
178,000
232,086
Changes in operating assets and liabilities, and other
....................
(2,405,422)
(1,739,575)
Interest received
.................................................
2,332,296
2,468,460
Dividends received
...............................................
5,651
5,958
Interest paid
....................................................
(1,531,190)
(1,620,645)
Income taxes paid, net of refunds
....................................
(153,692)
(81,619)
Net cash provided by (used in) operating activities
......................
(1,022,379)
(33,745)
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others
............
(28,469)
(29,030)
Additions to equipment leased to others
...............................
(2,972,065)
(2,733,176)
Proceeds from sales of fixed assets excluding equipment leased to others
....
2,555
2,595
Proceeds from sales of equipment leased to others
......................
1,701,864
1,347,608
Additions to intangible assets
.......................................
(13,064)
(12,970)
Additions to public and corporate bonds and stocks
.....................
(519,533)
(473,958)
Proceeds from sales of public and corporate bonds and stocks and upon
maturity of public and corporate bonds
.............................
326,469
376,933
Other, net
......................................................
89,633
43,662
Net cash provided by (used in) investing activities
......................
(1,412,610)
(1,478,336)
Cash flows from financing activities
Increase (decrease) in short-term debt
................................
229,903
(121,594)
Proceeds from long-term debt
......................................
13,251,352
12,408,438
Payments of long-term debt
........................................
(10,618,851)
(11,087,637)
Dividends paid to non-controlling interests
............................
(4,667)
(4,985)
Other, net
......................................................
(4,716)
(0)
Net cash provided by (used in) financing activities
......................
2,853,022
1,194,223
Effect of exchange rate changes on cash and cash equivalents
.................
(45,829)
200,936
Net increase (decrease) in cash and cash equivalents
.........................
372,203
(116,923)
Cash and cash equivalents at beginning of year
.............................
2,519,244
2,891,447
Net increase (decrease) in cash and cash equivalents resulting from transfer to
assets held for sale
.................................................
—
—
Cash and cash equivalents at end of year
..................................
2,891,447
2,774,524
(Consolidated)
Effect of exchange rate changes on cash and cash equivalents
.................
(134,089)
377,197
Net increase (decrease) in cash and cash equivalents
.........................
(429,656)
3,793,150
Cash and cash equivalents at beginning of year
.............................
9,412,060
8,982,404
Net increase (decrease) in cash and cash equivalents resulting from transfer to
assets held for sale
.................................................
—
(115,932)
Cash and cash equivalents at end of year
..................................
8,982,404
12,659,622
88
Financial Position
Cash and cash equivalents were ¥12,659.6 billion as of March 31, 2026. Most of Toyota’s cash and cash
equivalents are held in Japanese yen or in U.S. dollars.
Liquid assets, which Toyota defines as cash and cash equivalents, time deposits, public and corporate bonds
and its investment in monetary trust funds were ¥22,117.9 billion as of March 31, 2026.
Trade accounts and notes receivable, less allowance for doubtful accounts increased during fiscal 2026 by
¥116.2 billion, or 3.2%, to ¥3,795.9 billion. This increase was due mainly to an increase in the impact of changes
in exchange rates.
Inventories increased during fiscal 2026 by ¥536.7 billion, or 11.7%, to ¥5,134.9 billion. This increase was
due mainly to an increase in the impact of changes in exchange rates.
Total
finance
receivables,
net
increased
during
fiscal
2026
by
¥5,341.6
billion,
or
15.9%,
to
¥38,966.6 billion. This increase was due mainly to an increase in loan balance to customers and dealers. Finance
receivables were geographically distributed as follows: in North America 52.2%, in Europe 15.4%, in Asia
11.4%, in Japan 10.0% and in Other 11.0%.
Other financial assets decreased during fiscal 2026 by ¥1,700.3 billion, or 10.1%. This decrease was due
mainly to a decrease in public and corporate bonds.
Property, plant and equipment increased during fiscal 2026 by ¥1,733.6 billion, or 11.3%. This increase was
due mainly to capital expenditures.
Accounts and notes payable increased during fiscal 2026 by ¥329.5 billion, or 6.0%. This increase was due
mainly to an increase in accounts payable associated with parts procurement.
Income taxes payable increased during fiscal 2026 by ¥206.1 billion, or 40.8%. This increase was mainly
due to a decrease in interim payments of income taxes.
Toyota’s total borrowings increased during fiscal 2026 by ¥4,412.5 billion, or 11.4%. Toyota’s short-term
borrowings consist of loans with a weighted-average interest rate of 2.51% and commercial paper with a
weighted-average interest rate of 3.15%. Short-term borrowings increased during fiscal 2026 by ¥234.6 billion,
or 4.3%, to ¥5,699.0 billion. Toyota’s long-term debt mainly consists of unsecured and secured loans, unsecured
notes and medium-term notes, and secured notes with weighted-average interest rates ranging from 2.91% to
7.86%, and maturity dates ranging from 2026 to 2048. The current portion of long-term debt increased during
fiscal 2026 by ¥1,445.6 billion, or 14.1%, to ¥11,718.5 billion and the non-current portion increased by
¥2,554.6 billion, or 11.3%, to ¥25,076.7 billion. The increase in total borrowings resulted mainly from the
increasing demand for financing associated with the increase in the loan balance at financial subsidiaries. As of
March 31, 2026, approximately 47% of long-term debt was denominated in U.S. dollars, 14% in euros, 12% in
Japanese yen, 5% in Australian dollars, 4% in Canadian dollars, and 18% 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, 2026, Toyota’s total interest-bearing debt was 108.2% of Toyota Motor Corporation
shareholders’ equity, compared with 108.0% as of March 31, 2025.
89
The following table provides information on credit ratings of Toyota’s short-term borrowing and long-term
debt from Standard & Poor’s Ratings Group (S&P), Moody’s Ratings (Moody’s), and Rating and Investment
Information, Inc. (R&I), as of May 31, 2026. 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
..........
A+
A1
AAA
Toyota’s net defined benefit liability (asset) of Japanese plans increased during fiscal 2026 by ¥23.1 billion,
or 10.5%, to ¥243.7 billion. The net defined benefit liability (asset) of foreign plans increased during fiscal 2026
by ¥40.2 billion, or 11.5%, to ¥391.0 billion. The amounts of net defined benefit liability (asset) 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 increase in net defined benefit liability (asset) of the Japanese plans reflects mainly a
decrease in plan assets that resulted from a partial return from retirement benefit trusts, despite a decrease in
defined benefit obligations due to an increased discount rate. See note 23 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 continue its business and fund its research and development initiatives, capital expenditures and
financial services operations strategically even if earnings are subject to short-term fluctuations. Toyota believes
that it maintains sufficient liquidity for its present cash 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. In order for Toyota to maintain its high credit ratings, a number of conditions must be met, some of which
are not within Toyota’s control. Such conditions include the general economic condition in Japan and the other
major markets in which Toyota does business.
Toyota uses its securitization program as part of its funding through special purpose entities for its financial
services operations. Toyota is considered as 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 2026.
For information regarding the amounts of non-derivative financial liabilities and derivative financial
liabilities by a remaining contract maturity period, see note 20 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.
90
The following tables summarize Toyota’s contractual obligations and commercial commitments as of
March 31, 2026.
Yen in millions
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 debt
.....................
5,699,083
5,699,083
—
—
—
Long-term debt*
....................
37,506,386
11,882,021
14,999,702
8,093,928
2,530,735
Commitments for the purchase of
property, plant, other assets and
services (note 32)
.................
2,570,912
443,289
518,144
565,469
1,044,010
Total
.....................
45,776,381
18,024,393
15,517,846
8,659,397
3,574,745
Commercial Commitments (note 32):
Maximum potential exposure to
guarantees given in the ordinary course
of business
.......................
1,553,327
546,125
791,437
135,278
80,487
Total
.....................
1,553,327
546,125
791,437
135,278
80,487
* “Long-term debt” represents future principal payments.
Toyota expects to contribute ¥34,336 million domestically and ¥18,488 million overseas to its pension plans
in fiscal 2027.
91
Consolidated Statement of Financial Position on Non-Financial Services Businesses and Financial Services
Business
Yen in millions
March 31, 2025
March 31, 2026
Assets
(Non-Financial Services Businesses)
Current assets
Cash and cash equivalents
................................
6,090,957
9,885,097
Trade accounts and other receivable
.........................
3,689,021
3,835,922
Other financial assets
....................................
6,198,376
3,211,041
Inventories
............................................
4,588,755
5,120,950
Other current assets
......................................
1,034,507
1,288,955
Assets held for sale
......................................
—
2,016,804
Total current assets
......................................
21,601,616
25,358,768
Non-current assets
Property, plant and equipment, net
..........................
9,134,857
9,584,748
Other
.................................................
17,556,285
18,451,708
Total non-current assets
..................................
26,691,142
28,036,455
Total assets
................................................
48,292,758
53,395,223
(Financial Services Business)
Current assets
Cash and cash equivalents
................................
2,891,447
2,774,524
Trade accounts and other receivable
.........................
410,958
454,168
Receivables related to financial services
.....................
11,453,249
13,483,501
Other financial assets
....................................
1,443,042
1,544,390
Other current assets
......................................
414,216
489,695
Total current assets
......................................
16,612,912
18,746,278
Non-current assets
Receivables related to financial services
.....................
22,171,786
25,494,405
Property, plant and equipment, net
..........................
6,198,838
7,482,619
Other
.................................................
1,787,250
2,018,407
Total non-current assets
..................................
30,157,874
34,995,431
Total assets
................................................
46,770,786
53,741,709
(Elimination)
Elimination of assets
.........................................
(1,462,194)
(1,614,601)
(Consolidated)
Total assets
................................................
93,601,350
105,522,331
Note: Assets in non-financial services include unallocated corporate assets.
92
Yen in millions
March 31, 2025
March 31, 2026
Liabilities
(Non-Financial Services Businesses)
Current liabilities
Trade accounts and other payables
..........................
5,195,204
5,492,355
Short-term and current portion of long-term debt
..............
1,188,430
976,235
Accrued expenses
.......................................
1,729,279
2,014,207
Income taxes payable
....................................
454,252
654,751
Other current liabilities
...................................
3,495,075
3,844,179
Liabilities directly associated with assets held for sale
..........
—
694,547
Total current liabilities
...................................
12,062,240
13,676,274
Non-current liabilities
Long-term debt
.........................................
1,547,461
1,823,843
Retirement benefit liabilities
...............................
1,001,227
1,002,213
Other non-current liabilities
...............................
2,442,382
2,520,522
Total non-current liabilities
...............................
4,991,070
5,346,578
Total liabilities
.............................................
17,053,309
19,022,852
(Financial Services Business)
Current liabilities
Trade accounts and other payables
..........................
674,347
777,916
Short-term and current portion of long-term debt
..............
15,111,977
17,042,885
Accrued expenses
.......................................
137,836
142,451
Income taxes payable
....................................
51,248
56,924
Other current liabilities
...................................
2,535,501
3,193,333
Total current liabilities
...................................
18,510,910
21,213,511
Non-current liabilities
Long-term debt
.........................................
21,515,873
23,904,821
Retirement benefit liabilities
...............................
18,341
20,271
Other non-current liabilities
...............................
1,089,654
1,958,944
Total non-current liabilities
...............................
22,623,868
25,884,036
Total liabilities
.............................................
41,134,778
47,097,547
(Elimination)
Elimination of liabilities
......................................
(1,465,650)
(1,618,136)
(Consolidated)
Total liabilities
.............................................
56,722,437
64,502,263
Shareholders’ equity
(Consolidated) Total Toyota Motor Corporation shareholders’ equity
......
35,924,826
39,918,854
(Consolidated) Non-controlling interests
.............................
954,088
1,101,214
(Consolidated) Total shareholders’ equity
............................
36,878,913
41,020,068
(Consolidated) Total liabilities and shareholders’ equity
.................
93,601,350
105,522,331
93
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 ¥151.6 billion as of March 31, 2026.
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
evaluates 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 ¥2,512.7 billion as of March 31, 2026.
Guarantees
See note 32 to the consolidated financial statements for further discussion.
Related Party Transactions
See note 34 to the consolidated financial statements for further discussion.
94
5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
Toyota’s research and development is dedicated to capturing the increasingly diverse and sophisticated
market through the development of attractive, affordable, high-quality products for customers worldwide. The
intellectual property that R&D generates is a vital management resource that Toyota utilizes and protects to
maximize its corporate value.
For a more detailed discussion of our research and development objectives and policies, see “Item 4.
Information on the Company — 4.B Business Overview — Research and Development.”
Toyota’s research and development expenditures were approximately ¥1,522.8 billion in fiscal 2026,
¥1,326.4 billion in fiscal 2025, and ¥1,202.3 billion in fiscal 2024.
Toyota presents research and development expenditures as a supplemental measure that demonstrates the
amount of research and development expenditures undertaken during the relevant reporting period. Toyota defines
research and development expenditures as research and development cost, plus research and development-related
expenditures that were recognized as intangible assets, less amortization expenses for such assets. This measure has
limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of
Toyota’s research and development cost as reported under IFRS Accounting Standards.
For details of the research and development cost recorded in the consolidated statement of income, see
note 28 to the consolidated financial statements.
Toyota operates a global research and development organization with the primary goal of building
automobiles that meet the needs of customers in every region of the world. In Japan, research and development
operations are led by Toyota and Toyota Central Research & Development Laboratories, Inc., which works
closely with Daihatsu, Hino, Toyota Auto Body Co., Ltd., Toyota Motor East Japan, Inc., and many other group
companies. Overseas, Toyota has a worldwide network of technical centers as well as design and motorsports
research and development centers.
Toyota established TRI in January 2016 to accelerate research and development of artificial intelligence
technology, which has significant potential to support future industrial technologies. In July 2017, TRI invested
$100 million to launch a venture capital fund designed to provide financing to startup companies, and is making
investments in newly established promising startup companies in the four areas of artificial intelligence, robotics,
autonomous mobility, and data and cloud technology. TRI successively invested another $100 million in May
2019, $150 million in June 2021 and $150 million in April 2024. In addition, in an aim to achieve carbon
neutrality, TRI established a $150 million fund in June 2021 and additionally invested $150 million in April
2024.
In Japan, Toyota established a new company, Toyota Research Institute — Advanced Development
(“TRI-AD”), in March 2018 to further accelerate its efforts in advanced development for automated driving
technology and related technologies. Its key objectives include creating a smooth software pipeline from research
to commercialization, leveraging data-handling capabilities, strengthening collaboration in development within
the Toyota Group, including TRI, to accelerate development, and recruiting and employing top-level engineers
globally, while cultivating and coordinating strong talent within the Toyota Group. In January 2021, TRI-AD
was reorganized into Woven Planet Group comprising four companies — Woven Planet Holdings, Inc., which is
responsible for decision-making for the entire group and creates new business opportunities; Woven Core, Inc.,
which assumed the business of TRI-AD and is responsible for the development of automated driving
technologies; Woven Alpha, Inc., which is responsible for the development of new projects such as Woven City
and Arene, a software platform; and Woven Capital, L.P. with a total investment value of $800 million, which
invests in growth-stage companies in areas such as autonomous driving mobility, artificial intelligence, and smart
city. Moreover, to bolster overseas research and development initiatives related to automated driving technology
and software platforms, Toyota established Woven Planet North America (“WPNA”) in the United States and
95
Woven Planet United Kingdom in the United Kingdom, and transferred TRI’s automated driving division to
WPNA in May 2022. On April 1, 2023, Woven Planet Holdings, Inc., Woven Core, Inc. and Woven Alpha, Inc.
were merged and changed their name to Woven by Toyota, Inc.
Toyota also established a technical development center in Otemachi, Tokyo, Japan in October 2018 as a site
for development of key IT technologies that collaborates with Woven by Toyota, as well as promotes
collaboration with venture companies and creation of new value by utilizing big data.
Furthermore, Toyota Technical Center Shimoyama was established in Aichi Prefecture as a new R&D base,
with partial operation in April 2019 and full operation in March 2024. Together with Toyota Technical Center,
Toyota Technical Center Shimoyama develops vehicles aimed at “making ever-better cars” by bringing together
members of all kinds of functions, such as vehicle planning, style, design, and evaluation, and by finding
problems in vehicles while running a test course that reproduces a wide variety of severe usage environments
around the world, and by repeating improvements.
The following table provides information on Toyota’s principal research and development facilities.
Facility
Principal Activity
Japan
Toyota Technical Center
.....................
Product planning, style, design, prototype production
and vehicle evaluation
Toyota Technical Center Shimoyama
...........
Product planning, style, design and vehicle
evaluation
Higashi-Fuji Technical Center
.................
Advanced development and advanced research
Tokyo Design Research & Laboratory
..........
Advanced styling designs
Otemachi Office
............................
Development of key IT technologies, creation of new
values by utilizing big data and collaboration with
venture companies
Shibetsu Proving Ground
.....................
Evaluation
Toyota Central R&D Labs., Inc
. ...............
Basic research
Woven by Toyota, Inc
........................
Development of artificial intelligence technology
with a focus on automated driving technology
Development of Woven City and software platform
technologies
United States
Toyota Motor Engineering and Manufacturing
North America, Inc
. .......................
Product planning, design and evaluation of vehicles
manufactured in North America
Calty Design Research, Inc
....................
Design
Toyota Research Institute of North America
(TRI-NA)
...............................
Advanced research relating to “energy and
environment,” “safety” and “mobility infrastructure”
Toyota Research Institute, Inc
.
................
Research and development of artificial intelligence
technology
Europe
Toyota Motor Europe NV/SA
.................
Planning and evaluation of vehicles manufactured in
Europe
Toyota Europe Design Development S.A.R.L
. ....
Design
TOYOTA RACING GmbH
...................
Development of motor sports vehicles
* TOYOTA
RACING
GmbH
renamed
from
TOYOTA
GAZOO
Racing
Europe
GmbH,
effective January 7, 2026.
96
Facility
Principal Activity
TOYOTA GAZOO Racing World Rally Team
Oy
.....................................
Development of motor sports vehicles
Asia Pacific
Toyota Motor Asia (Thailand) Co., Ltd
. .........
Planning and evaluation of vehicles manufactured in
Australia and Asia
China
Intelligent Electro Mobility R&D Center by
TOYOTA (China) Co., Ltd
..................
Environmental technology design and evaluation in
China
FAW Toyota Motor Co., Ltd. Research &
Development Branch
......................
Design, evaluation and certification of vehicles
manufactured in China
GAC Toyota Motor Co., Ltd
...................
Design, evaluation and certification of vehicles
manufactured in China
BYD Toyota EV Technology Co., Ltd
. ..........
Design and evaluation of BEVs
Toyota Motor Technical Research and Service
(Shanghai) Co., Ltd
........................
Research of new technology, construction and system
of automobiles
United Fuel Cell System R&D (Beijing) Co.,
Ltd
.....................................
Development of FC system for commercial vehicles
in China
Lexus Electrified Shanghai Co., Ltd
.............
Design and development of Lexus BEVs
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 build a strong global patent portfolio.
For a further discussion of Toyota’s intellectual property, see “Item 4. Information on the Company — 4.B
Business Overview — Intellectual Property.”
5.D TREND INFORMATION
For a discussion of the trends that affect Toyota’s business and operating results, see “Item 5. Operating and
Financial Review and Prospects — 5.A Operating Results” and “Item 5. Operating and Financial Review and
Prospects — 5.B Liquidity and Capital Resources.”
5.E CRITICAL ACCOUNTING ESTIMATES
Not applicable.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A DIRECTORS AND SENIOR MANAGEMENT
In order to advance its transition to a mobility company, Toyota has reflected on the path it has taken thus
far and has formulated the “Toyota Philosophy” as a roadmap for the future. Toyota’s mission is “Producing
Happiness for All” by expanding the possibilities of people, companies and communities through addressing the
challenges of mobility as a mobility company. In order to do so, Toyota will continue to create new and unique
value with various partners by relentlessly committing towards
monozukuri
(manufacturing), and by fostering
imagination for people and society.
Toyota strives to provide a full lineup of products with “good quality yet affordable prices” globally at the
right place at the right time, and offer products and services that are sympathetic towards customers in each
country and region, through the initiative of “making even better cars” that we have been engaged in since the
97
2008 financial crisis. In order to meet these objectives, following the introduction of “region-based operations,”
the “business unit system” and the “in-house company system” in 2011, 2013 and 2016, respectively, in April
2017 Toyota further clarified that, for the purpose of further accelerating decision-making and operational
execution, members of the Board of Directors are responsible for decision-making and management oversight
and that operating officers are responsible for operational execution. Furthermore, in 2018, Toyota changed the
commencement of operating officers’ terms of office from April to January, reduced corporate strategy functions
and restructured the Japan Sales Business Group based on regions rather than sales channels in an effort to enable
decision-making closer to customers and the field, in order to further accelerate execution in full coordination
with each site. In 2019, in order to further advance Toyota’s “acceleration of management” and the development
of a diverse and talented workforce, the executive structure was changed to be composed only of senior
managing officers and people of higher rank, and a new classification called “senior professional/senior
management” (
kanbushoku
) grouped and replaced the following titles or ranks: managing officers, executive
general managers, (sub-executive managerial level) senior grade 1 and senior grade 2 managers, and grand
masters. From the perspective of appointing the right people to the right positions, senior professionals/senior
management were positioned in a wide range of posts, from those of chief officer, deputy chief officer, plant
general manager, and senior general manager to group manager, to deal with management issues as they arise
and to strengthen their development as part of a diverse and talented workforce through on-site learning and
problem-solving (
genchi genbutsu
). In April 2020, Toyota consolidated the posts of executive vice president and
operating officer into the post of operating officer. In July 2020, Toyota further clarified the roles of operating
officers. Members of management who, together with the president, have cross-functional oversight of the entire
company, were redefined as “operating officers.” In-house company presidents, regional CEOs, and chief
officers, as on-site leaders of business implementation elements, were given authority while being consolidated
into the classification of “senior professional/senior management.” The roles of operating officers and senior
professionals/senior management are to be determined where and as needed, and persons appointed as operating
officers and senior professionals/senior management will change in accordance with the challenges faced and the
path that should be taken, as Toyota exercises greater flexibility in making appointments. However, because of
the rapidly changing business environment, Toyota now recognizes that there is an increasing need for such
executives to fulfill management roles (related to people, goods, and money) together with our President.
Therefore, in April 2022, Toyota reorganized the roles of operating officers and reestablished the position of
“executive vice president,” defining it as an operating officer who is focused on the business from a management
perspective. In April 2023, the role of operating officers was revised to a management team that implements
“product-centered (manufacturing ever-better cars) and region-centered (best-in-town) management” under the
theme of “inheritance and evolution,” and the executive vice presidents were selected upon their extensive
knowledge and experience from the two pillars of products and regions. Based on its basic policy of appointing
the right people to the right positions, Toyota has been swiftly and continuously innovating. Toyota will further
press forward the tide of such innovations, aiming for a corporate structure capable of carrying out management
from a viewpoint that is optimal for a global company.
In order to convey top management’s aspirations and Toyota’s direction to all stakeholders, Toyota
communicates what Toyota is really like through “Toyota Times.”
Toyota believes that it is critical to appoint individuals who practice “product-centered and region-centered
management” and contribute to decision-making aimed at sustainable growth into the future based on the
“Toyota Philosophy.” Moreover, these individuals should be able to play a significant role in transforming
Toyota into a “mobility company” through responding to electrification, intelligence, and diversification and
external partnerships based on trust and friendship and internal two-way interactive teamwork, while working
towards solutions for social challenges such as the climate change issue. Toyota maintains its Board of Directors
and senior management at an adequate size, and ensures they are overall balanced and diverse, including from the
perspective of gender and nationality. Five outside members of the Board of Directors have been appointed in
order to further reflect the opinions of those from outside the company in management’s decision-making
process. Toyota transitioned from a company with Audit & Supervisory Board to a company with Audit &
98
Supervisory Committee in June 2025. Toyota has four members of the Board of Directors who are Audit &
Supervisory Committee members, three of whom are outside Audit & Supervisory Committee members.
Set forth below are brief summaries of Toyota’s members of the Board of Directors.
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
Akio Toyoda
(May 3, 1956)
Chairman of the
Board of Directors
(Representative
Director)
1984 Joined TMC
2000 Member of the Board of Directors of TMC
2002 Managing Director of TMC
2003 Senior Managing Director of TMC
2005 Executive Vice President of TMC
2009 President of TMC
2023 Chairman of the Board of Directors of TMC
(to present)
(important concurrent duties)
Chairman of TOYOTA FUDOSAN CO., LTD.
Director of DENSO Corporation (Scheduled to
retire in June 2026)
Representative Director of ROOKIE Racing, Inc.
Chairman of TOYOTA GAZOO Racing World
Rally Team
24,099
Koji Sato
(October 19, 1969)
Vice Chairman of the
Board of Directors
(Representative
Director)*
1
1992 Joined TMC
2017 Executive General Manager of TMC
2020 Operating Officer of TMC
2021 Operating Officer of TMC (current system)
2023 Operating Officer and President of TMC
President, Member of the Board of Directors
and Operating Officer of TMC
2026 Vice Chairman of the Board of Directors of
TMC (to present)
(important concurrent duties)
Chairman of Japan Automobile Manufacturers
Association, Inc.
667
Hiroki Nakajima
(April 10, 1962)
Executive Vice
President, Member
of the Board of
Directors
(Representative
Director),
Operating Officer
1987 Joined TMC
2014 Executive General Manager of TMC
2015 Managing Officer of TMC
2020 Operating Officer of TMC
2023 Operating Officer and Executive Vice
President of TMC (current system)
Member of the Board of Directors, Operating
Officer, Vice President of TMC
2025 Executive Vice President, Member of the
Board of Directors, Operating Officer of TMC
(to present)
(important concurrent duties)
President and Representative Director of
Commercial Japan Partnership Technologies
Corporation
333
99
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
President and Representative Director of
Commercial Japan Partnership Technologies
Asia Co., Ltd.
Chairman of TOYOTA GAZOO Racing Europe
GmbH
Managing Director of TOYOTA RACING GmbH
Yoichi Miyazaki
(October 19, 1963)
Executive Vice
President, Member
of the Board of
Directors
(Representative
Director),
Operating Officer
1986 Joined TMC
2015 Managing Officer of TMC
2019 Operating Officer of TMC
2022 Operating Officer of TMC (current system)
2023 Operating Officer and Executive Vice
President of TMC
Member of the Board of Directors, Operating
Officer, Vice President of TMC
2025 Executive Vice President, Member of the
Board of Directors, Operating Officer of TMC
(to present)
328
Shigeaki Okamoto
(February 20, 1961)
Outside Member of
the Board of
Directors
1983 Joined the Ministry of Finance
2006 Director for the Budget Bureau, Planning
and Administration Division of Budget Bureau,
Ministry of Finance
2009 Head of Secretariat Division, Minister’s
Secretariat, Ministry of Finance
2012 Deputy Director-General of the Budget
Bureau, Ministry of Finance
2015 Deputy Vice Minister, Ministry of Finance
2017 Director-General of the Budget Bureau,
Ministry of Finance
2018 Administrative Vice Minister, Ministry of
Finance
2020 Retired as Administrative Vice-Minister of
Finance, Ministry of Finance
2022 Deputy Chairperson of the Board of Japan
Tobacco Inc.
2025 Outside Member of the Board of Directors
of TMC (to present)
2026 Chairman of the Board of Japan Tobacco
Inc. (to present)
(important concurrent duties)
Chairman of the Board of Japan Tobacco Inc.
2
Kumi Fujisawa
(March 15, 1967)
Outside Member of
the Board of
Directors
1995 Founder and President of IFIS Limited Ltd.
2000 Director of Think Tank SophiaBank
2011 Public Governor of the Japan Securities
Dealers Association (to present)
2012 Director of Organization for Supporting the
Turnaround of Businesses Damaged by the
Great East Japan Earthquake
2013 President of Think Tank SophiaBank
0
100
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
2014 Outside Director of Toyota Tsusho
Corporation
2018 Outside Director of Net Protections
Holdings, Inc.
2022 Chairperson of Institute for International
Socio-Economic Studies (to present)
2022 Outside Director of Shizuoka Financial
Group, Inc. (to present)
2024 Substitute Audit & Supervisory Board
Member of TMC
2024 Outside Director of Mercari, Inc. (to present)
2025 Outside Member of the Board of Directors
of TMC (to present)
(important concurrent duties)
Chairperson of Institute for International Socio-
Economic Studies
Outside Director of Shizuoka Financial Group,
Inc.
Outside Director of Mercari, Inc.
George Olcott
(May 7, 1955)
Outside Member of
the Board of
Directors who is a
member of the
Audit &
Supervisory
Committee
1986 Joined S.G.Warburg & Co., Ltd
1999 President of UBS Asset Management
(Japan)
2000 Managing Director, Equity Capital Markets,
UBS Warburg Tokyo
2001 Judge Business School, University of
Cambridge
2005 FME Teaching Fellow, Judge Business
School, University of Cambridge
2008 Senior Fellow, Judge Business School,
University of Cambridge
2022 Outside Audit & Supervisory Board Member
of TMC
2025 Member of the Board of Directors who is a
member of the Audit & Supervisory Committee
of TMC (to present)
5
Christopher P.
Reynolds
(January 11, 1963)
Member of the Board
of Directors who is
a member of the
Audit &
Supervisory
Committee
1986 Law clerk for Judge Damon J. Keith, U.S.
Court of Appeals for the Sixth Circuit
1987 Joined Hughes Hubbard & Reed
1989 Joined U.S. Attorney’s Office, Southern
District of New York
1994 Joined Morgan, Lewis & Bockius
2007 Joined Toyota Motor Sales, U.S.A., Inc.
(TMS)
2008 Group Vice President & General Counsel of
TMS
2012 General Counsel of Toyota Motor North
America, Inc. (TMNA)
—
101
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
2015 Managing Officer of TMC (Chief Officer of
General Planning Division, Deputy Chief
Officer of General Administration & Human
Resources Group, General Counsel and Chief
Legal Officer)
2017 Executive Vice President (EVP) of TMNA
2020 Deputy Chief Risk Officer of TMC
2022 Deputy Chief Compliance Officer of TMC
2022 Independent Director of Southwest Airlines
Co. (to present)
2025 Retired from TMNA
2025 Member of the Board of Directors who is a
member of the Audit & Supervisory Committee
of TMC (to present)
(important concurrent duties)
Independent Director of Southwest Airlines Co.
Masahiko Oshima
(September 13, 1960)
Outside Member of
the Board of
Directors who is a
Member of the
Audit &
Supervisory
Committee
1984 Joined The Mitsui Bank Limited
2012 Executive Officer of Sumitomo Mitsui
Banking Corporation (SMBC)
2014 Managing Executive Officer of SMBC
2017 Director and Managing Executive Officer of
SMBC Director and Senior Managing
Executive Officer of SMBC
2018 Senior Managing Corporate Executive
Officer of Sumitomo Mitsui Financial Group,
Inc. (SMFG)
Senior Managing Executive Officer of SMBC
2019 Deputy President and Executive Officer of
SMFG Director and Deputy President of SMBC
2023 Deputy Chairman of SMBC
2023 Outside Member of the Board of Directors
of TMC
2024 Advisor of SMBC
2024 Outside Audit and Supervisory Board
Member, TBS HOLDINGS, INC. (to present)
2024 Chairman and Representative Director, Ares
Management Asia Japan KK. (to present)
2025 Member of the Board of Directors who is a
member of the Audit & Supervisory Committee
of TMC (to present)
(important concurrent duties)
Chairman and Representative Director of Ares
Management Asia Japan KK.
Outside Audit and Supervisory Board Member of
TBS HOLDINGS, INC.
3
Hiromi Osada
(June 11, 1973)
Outside Member of
the Board of
Directors who is a
1999 Joined Chunichi Shimbun Co., Ltd.
1
102
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
Member of the
Audit &
Supervisory
Committee
2021 Editorial writer and Leader for reserve
reporters in the Business News Department of
Chunichi Shimbun Co., Ltd.
2023 Editorial Committee Member and
International General Desk of Chunichi
Shimbun Co., Ltd.
2024 Retired from Chunichi Shimbun Co., Ltd.
2024 Outside Audit & Supervisory Board Member
of TMC
2025 Member of the Board of Directors who is a
member of the Audit & Supervisory Committee
of TMC (to present)
*1
Mr. Koji Sato, who is Vice Chairman of the Board of Directors, will retire as a member of the Board of
Directors effective upon the conclusion of the Ordinary General Meeting of Shareholders scheduled to be
held on June 17, 2026.
TMC has proposed, as an agenda item for resolution at the Ordinary General Meeting of Shareholders
scheduled to be held on June 17, 2026, the “Election of 6 Members of the Board of Directors (Excluding
Directors who are Audit & Supervisory Committee Members).” If this proposal is approved, the following
individual is expected to be appointed as a director of TMC.
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
Kenta Kon
(August 2, 1968)
President, Member of
the Board of
Directors*
1
1991 Joined TMC
2017 General Manager, Accounting Division of
TMC
2018 Managing Officer of TMC Deputy Chief
Officer, General Administration & Human
Resources Group of TMC Deputy Chief
Officer, Accounting Group of TMC
2019 Executive Vice President of Advanced R&D
and Engineering Company of TMC Operating
Officer of TMC Chief Officer of Accounting
Group of TMC
2020 Fellow, Advanced R&D and Engineering
Company of TMC Chief Financial Officer of
TMC
2021 Member of the Board of Directors and
Operating Officer of TMC
2022 Member of the Board of Directors,
Operating Officer and Executive Vice President
of TMC
2023 Member of the Board of Directors of TMC
Representative Director and Chief Financial
Officer of Woven by Toyota, Inc. Director and
Chief Financial Officer of Woven by Toyota,
Inc.
74
103
Name (Date of Birth)
Position
Brief Career Summary and Important Concurrent Duties
Number of
Common Shares
(in thousands)
2025 Operating Officer of TMC In charge of
Mobility 3.0 Office at TMC (to present) Chief
Financial Officer of TMC
2026 Operating Officer and President of TMC
Chief Executive Officer of TMC (to present)
*1
As of the date of this report, Mr. Kon is the Operating Officer and President of TMC and will remain so
following the approval of the proposal at the Ordinary General Meeting of Shareholders mentioned above.
Mr. Kon will also become a Representative Director following such approval.
None of the persons listed above was selected as a member of Board of Directors, Audit & Supervisory
Board Member, Audit & Supervisory Committee member or member of senior management pursuant to an
arrangement or understanding with Toyota’s major shareholders, customers, suppliers or others.
6.B COMPENSATION
Decision Making Policy and Process
Toyota believes that it is critical to appoint individuals who practice “product-centered and region-centered
management” and contribute to decision-making aimed at sustainable growth into the future based on the
“Toyota Philosophy.” Moreover, these individuals should be able to play a significant role in transforming
Toyota into a mobility company based on trust and friendship and internal two-way interactive teamwork, while
working towards the solution of environmental issues, including climate change, as well as social challenges
related to Toyota Motor Corporation and its value chain. Toyota’s director compensation system is an important
means through which to promote various initiatives and is determined based on the following policy.
•
It should be a system that encourages members of the Board of Directors to work to improve the
medium- to long-term corporate value of Toyota.
•
It should be a system that can maintain compensation levels that will allow Toyota to secure and retain
talented personnel.
•
It should be a system that motivates members of the Board of Directors to promote management from
the same viewpoint as our shareholders with a stronger sense of responsibility as corporate managers.
Toyota became a company with an Audit & Supervisory Committee based on a resolution adopted at the
121st Ordinary General Meeting of Shareholders held on June 12, 2025. By resolution of the Board of Directors
held on the same day, changes were made to the policy regarding the determination of remuneration for each
member of the Board of Directors prior to the transition to a company with an Audit & Supervisory Committee,
including specifying that the policy applies to Board of Directors (excluding those who are Audit & Supervisory
Committee members) and other modifications. However, there were no substantive changes to the policy before
and after the transition to a company with an Audit & Supervisory Committee.
The Board of Directors decides by resolution the policy for determining remuneration for and other payments
to each member of the Board of Directors (excluding those who are Audit & Supervisory Committee members).
Remuneration is effectively linked to corporate performance while reflecting individual job responsibilities and
performance. Remuneration for outside members of the Board of Directors and members of the Board of Directors
who are Audit & Supervisory Committee members consists only of fixed payments. As a result, this remuneration is
not readily impacted by business performance, helping to ensure independence from management.
Based on the resolution of the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025 concerning
remuneration for the members of the Board of Directors (excluding those who are Audit & Supervisory Committee
104
members) of Toyota, the maximum cash compensation was set at 3.0 billion yen per year (of which, the maximum
amount payable to outside members of the Board of Directors is 0.3 billion yen per year). Additionally, it was further
resolved that the maximum share compensation for members of the Board of Directors (excluding outside members
of the Board of Directors and members of the Board of Directors who are Audit & Supervisory Committee members)
was set at 4.0 billion yen per year. The number of members of the Board of Directors (excluding those who are
Audit & Supervisory Committee members) upon conclusion of the 121st Ordinary General Shareholders’ Meeting
was six (including two outside members of the Board of Directors).
The amount of remuneration for each member of the Board of Directors (excluding those who are Audit &
Supervisory Committee members) of Toyota and the remuneration system are decided by the Board of Directors
and the “Executive Compensation Meeting,” a majority of the members of which are outside members of the
Board of Directors, to ensure the independence of the decision. See “Item 6. Directors, Senior Management and
Employees — 6.C Board Practices” for the members of the Executive Compensation Meeting. The members of
the meeting are Yoichi Miyazaki (Chairperson), Executive Vice President and a member of the Board of
Directors, and Shigeaki Okamoto and Kumi Fujisawa, each an outside member of the Board of Directors.
The Board of Directors resolves the policy for determining remuneration for and other payments to each member
of the Board of Directors (excluding those who are Audit & Supervisory Committee members) and the executive
remuneration system. The Board of Directors also resolves to delegate the determination of the amount of
remuneration for each member of the Board of Directors (excluding those who are Audit & Supervisory Committee
members) for a given fiscal year to the Executive Compensation Meeting.
The Executive Compensation Meeting reviews the remuneration system for members of Board of Directors
(excluding those who are Audit & Supervisory Committee members) and senior management on which it will
consult with the Board of Directors and determines the amount of remuneration for each member of the Board of
Directors (excluding those who are Audit & Supervisory Committee members), taking into account factors such
as corporate performance as well as individual job responsibilities and performance, in accordance with the
policy for determining remuneration for and other payments to each member of the Board of Directors
(excluding those who are Audit & Supervisory Committee members) established by the Board of Directors. The
Board of Directors considers that such decisions made by the Executive Compensation Meeting are in line with
the policy for determining remuneration for and other payments to each member of the Board of Directors
(excluding those who are Audit & Supervisory Committee members).
The total amount of remuneration for members of the Board of Directors who are Audit & Supervisory
Committee members is set at no more than 360 million yen per year based on a resolution at the 121st Ordinary
General Shareholders’ Meeting held on June 12, 2025. The number of members of the Board of Directors who
are Audit & Supervisory Committee members as resolved at the Ordinary General Shareholders’ Meeting is four
(including three outside members of the Board of Directors).
Remuneration for members of the Board of Directors who are Audit & Supervisory Committee members is
discussed and determined by members of the Board of Directors who are Audit & Supervisory Committee
members within the scope determined by resolution of the shareholders’ meeting.
Executive Compensation Meetings were held in May, July, October, November and December 2025 and
January, February, March and April 2026 to discuss and determine the amount of remuneration for fiscal 2026
and other relevant matters.
Remuneration for the members of the Board of Directors (excluding those who are Audit & Supervisory
Committee members) was determined with the unanimous consent of the Executive Compensation Meeting.
The principal topics discussed at Executive Compensation Meetings included:
•
Remuneration level for each position and job responsibility
105
•
Evaluation of actual results of fiscal 2026
•
Determination of the amount of remuneration for each member of the Board of Directors
* The amount of remuneration for each outside member of the Board of Directors (excluding those who are
Audit & Supervisory Committee members) and the amount of remuneration for each internal member of the
Board of Directors (excluding those who are Audit & Supervisory Committee members) were determined at
the Executive Compensation Meeting held in May 2025 and April 2026, respectively.
Method of Determining Performance-based Remuneration (Bonus and Share Compensation)
Directors with Japanese Citizenship (Excluding Outside Members of the Board of Directors and Members of
the Board of Directors who are Audit & Supervisory Committee Members)
Toyota sets the total amount of compensation that each member of the Board of Directors receives annually
(“Annual Total Remuneration”) at an appropriate level based on position and duties by referencing compensation
levels benchmarked against global companies selected based on the size of each person’s role and other factors.
Toyota makes sure that STI (short term incentive) and LTI (long term incentive) account for around 20%
and 50% of the Annual Total Remuneration, respectively, and performance-based remuneration, which is STI
and LTI combined, account for around 70%. STI is provided in the form of cash compensation based on
“consolidated operating income,” “fluctuation of Toyota’s market capitalization*,” and “individual performance
evaluation.” LTI is provided in the form of share compensation based on “multiple financial indicators,”
“non-financial indicator,” and “individual performance evaluation.” In addition, there are cases where LTI may
be paid in cash to retiring members of the Board of Directors (excluding outside members of the Board of
Directors and members of the Board of Directors who are Audit & Supervisory Committee members) and
members of the Board of Directors who do not reside in Japan (excluding outside members of the Board of
Directors and members of the Board of Directors who are Audit & Supervisory Committee members).
* Calculated by multiplying the closing price of Toyota’s common stock on the Tokyo Stock Exchange by the
number of shares issued after deducting the number of shares of treasury stock
Composition of Compensation
Type of Remuneration
% of Total
Remuneration
Remuneration
Method
Concept
Base compensation*
Around 30%
Cash
compensation
The percentage of total
remuneration represented by
LTI is designed to increase as
an individual’s roles and
duties become greater.
STI (Short Term Incentive)
Around 20%
Cash
compensation
LTI (Long Term Incentive)
Around 50%
Share
compensation
*
Other types of compensation such as fringe benefits and various allowances (e.g., a certain monetary
payment that may be made following the retirement of a member of the Board of Directors who retires due
to death, determined by taking into comprehensive consideration the role, duties, and other relevant factors
of such director) may be provided to members of the Board of Directors within an appropriate range.
106
Concept of Performance Evaluating Indicators
STI
Financial
indicators
(1) Consolidated operating
income (single year)
Indicator for evaluating Toyota’s efforts based on
short-term business performance
(2) Fluctuation of Toyota’s
market capitalization
Corporate value indicator for shareholders and
investors to evaluate Toyota’s efforts
Individual performance evaluation
Qualitative evaluation of performance of each
member of the Board of Directors
LTI
Financial
indicators
(3) Consolidated operating
income (multiple years)
Indicator for evaluating Toyota’s medium- to
long-term efforts based on business performance
(4) Total shareholder
return
Corporate value indicator for shareholders and
investors to evaluate Toyota’s medium- to long-
term efforts
(5) Return on equity
Non-financial
indicator
(6) Progress of efforts to
resolve sustainability
issues
Indicator for evaluating Toyota’s medium- to
long-term efforts based on the degree of corporate
value enhancement
Individual performance evaluation
Qualitative evaluation of performance of each
member of the Board of Directors
Method and Reference Value for Each Performance Evaluating Indicator and Evaluation Result
STI
Evaluation
Weight
Evaluation Method
Reference
Value
Evaluation
Result
(1) Consolidated
operating income
(single year)
70%
Evaluate the degree of attainment of
consolidated operating income of
the fiscal year, using the average
consolidated operating income of
Toyota over the last 10 fiscal years
as a reference value (set in 2023)
2.5 trillion yen
134%
(2) Fluctuation
of Toyota’s
market
capitalization
30%
Comparatively evaluate the
fluctuation of TMC’s market
capitalization for the fiscal year
(average from January through
March), using the market
capitalization of Toyota and TOPIX
for the previous fiscal year (average
from January through March) as
reference values
Toyota: 36.1
trillion yen
TOPIX: 2,709.83
107
LTI
Evaluation
Weight
Evaluation Method
Reference
Value
Evaluation
Result
(3) Consolidated
operating
income
(multiple years)
35%
Evaluate the degree of attainment of
consolidated operating income for
the last three fiscal years, including
the fiscal year in question, using the
average consolidated operating
income of Toyota over the last 10
fiscal years as a reference value (set
in 2023)
2.5 trillion yen
130%
(4) Total
shareholder
return
17.5%
Comparatively evaluate Toyota’s
total shareholder return, using the
rate of change calculated by
dividing the sum of the stock price
of Toyota on the last day of the
fiscal year and the cumulative
amount of dividend per share
during the period from the fiscal
year that is four years before the
fiscal year in question through the
fiscal year in question by the stock
price on the last day of the fiscal
year that is five years before the
fiscal year in question and the rate
of change in TOPIX Net Total
Return calculated in the same
manner as reference values
TOPIX: 202.2%
(5) Return on
equity
17.5%
Comparatively evaluate Toyota’s
return on equity for the fiscal year
using the levels recommended by
the Ito Review as reference values
8%
LTI
Evaluation
Weight
Evaluation Method
Reference
Value
Evaluation
Result
(6) Progress of
efforts to resolve
sustainability
issues
30%
Comprehensively evaluate
quantitative and qualitative KPIs
(amount of reduction in GHG
emissions, indices in employee
engagement, and governance, etc.)
that are linked to business activities
and established based on six
materiality themes*
For each KPI,
principally
assessed based
on the average
over the
preceding five-
year period
*
The six key issues identified by Toyota are: (1) Expanding the Value of Mobility; (2) Safety & Reliability;
(3) Coexistence of Humanity & the Earth (including carbon neutrality); (4) Supporting the Community and
Employment; (5) Active Participation for All; and (6) Strong Production and Business Operation
108
Concept of Individual Performance Evaluation
For the determination of Annual Total Remuneration, adjustments to individual performance evaluations are
made to the amounts of the STI base amount and the LTI base amount that reflect the evaluation results of
financial and non-financial indicators. The evaluation takes into account various factors, such as initiatives
(including the ESG perspective) based on the Toyota Philosophy and initiatives toward medium- to long-term
corporate value enhancement, as well as trust from his or her peers and contribution to the promotion of human
resources development. The range of adjustments based on individual performance evaluations is set within the
range of 50% above or below of the STI base amount and the LTI base amount, which reflect the performance
evaluation results of financial and non-financial indicators, commensurate with position and job responsibilities.
The amount of performance-based remuneration for each member of the Board of Directors is calculated based
on evaluation results. Given the magnitude of roles and responsibilities of the Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors, and the President and member of the Board of Directors,
we have determined that individual remuneration is to be adjusted solely based on company-wide performance
evaluations, not reflecting an individual performance evaluation.
Directors with Foreign Citizenship (Excluding Outside Members of the Board of Directors and Members of the
Board of Directors who are Audit & Supervisory Committee Members)
Fixed remuneration and performance-based remuneration are set based on the remuneration levels and
structures that allow Toyota to secure and retain talented personnel. Annual Total Remuneration levels as well as
the percentages of fixed remuneration and performance-based remuneration in total remuneration are set, taking
into account each member’s job responsibilities and the remuneration standards of the entity for which such
member previously worked (application determined individually). Performance-based remuneration consists of
STI and LTI as is the case with directors with Japanese citizenship (excluding outside members of the Board of
Directors and members of the Board of Directors who are Audit & Supervisory Committee members). The
amounts of STI and LTI change in the same manner by reflecting STI and LTI performance evaluating indicators
set for directors with Japanese citizenship (excluding outside members of the Board of Directors and members of
the Board of Directors who are Audit & Supervisory Committee members) and individual performance
evaluation results. In addition, there are cases where Toyota provide income tax compensation for certain
members of the Board of Directors in light of the difference in income tax rates with that applied to them when
they were at their former affiliation.
Additional Information Regarding Share Compensation
For additional details regarding share compensation provided to Members of the Board of Directors of
Toyota, see “Item 6. Directors, Senior Management and Employees — 6.E Share Ownership.”
Compensation
The aggregate amount of remuneration, including bonuses, accrued for all members of the Board of
Directors (and Audit & Supervisory Board members before the transition to a company with an Audit &
Supervisory Committee in June 2025) as a group by Toyota for services in all capacities was ¥4,405 million
during fiscal 2026.
Toyota Motor Corporation and its subsidiaries have not set aside or accrued any amounts to provide
pension, retirement or similar benefits to members of the Board of Directors (and Audit & Supervisory Board
members before the transition to a company with an Audit & Supervisory Committee in June 2025) of Toyota
Motor Corporation.
109
Toyota’s Annual Securities Report filed with the Kanto Local Bureau of Finance on June 10, 2026,
contained the following information concerning compensation in fiscal 2026 on a consolidated basis for members
of the Board of Directors and Audit & Supervisory Board members whose total compensation exceeded
¥100 million during such period:
Compensation per Type (millions of yen)
Performance-based
Compensation
Name, Position
Classification of Company
Fixed
Compensation
Bonus
Share
Compensation*
1
Retirement
Benefits
Total
Compensation
Akio Toyoda, Member of the
Board of Directors
........
Toyota Motor Corporation
396
620
1,097
(368)
—
2,113
Koji Sato, Member of the
Board of Directors
........
Toyota Motor Corporation
197
200
406*
2
—
803
Hiroki Nakajima, Member of
the Board of Directors
.....
Toyota Motor Corporation
95
168
213
(72)
—
476
Yoichi Miyazaki, Member of
the Board of Directors
.....
Toyota Motor Corporation
100
168
213
(72)
—
481
*1
Numbers in parentheses are the number of shares, provided in thousands of shares, rounded to the nearest
1,000 shares.
*2
Share compensation will be paid in cash to Koji Sato, who will retire as the Vice Chairman of the Board of
Directors upon the conclusion of the 122nd Ordinary General Shareholders’ Meeting to be held on June 17,
2026.
The amounts above were recorded as expenses in fiscal 2026.
6.C BOARD PRACTICES
Toyota’s articles of incorporation provide that the number of members of the Board of Directors is no more
than 20, and the number of members of the Board of Directors who are Audit & Supervisory Committee
members is no more than seven. Shareholders elect the members of the Board of Directors at the general
shareholders’ meeting. The normal term of office of members of the Board of Directors (excluding members of
the Board of Directors who are Audit & Supervisory Committee members) is one year, and that of members of
the Board of Directors who are Audit & Supervisory Committee members is two years. Members of the Board of
Directors may serve any number of consecutive terms.
The Board of Directors may appoint one Chairman of the Board of Directors 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 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 members of the Board of Directors is party to a service
contract with Toyota or any of its subsidiaries that provides for benefits upon termination of employment.
Under the provisions of the Companies Act, if Toyota decides the terms of an agreement promising that
Toyota will compensate a member of the Board of Directors for all or part of certain expenses incurred by the
member of the Board of Directors, such a decision must be made by a resolution of the Board of Directors. Under
the provisions of the Companies Act, if Toyota decides the terms of an insurance agreement to be executed with
an insurer, under which a member of the Board of Directors is the insured, and which promises that the insurer
will compensate for damage arising from the member of the Board of Directors being held liable in relation to
the execution of his or her duties or from a liability claim filed against the member of the Board of Directors,
such decision must be made by a resolution of the Board of Directors.
Under the Companies Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its Board
of Directors, exempt members of the Board of Directors (including former members of the Board of Directors)
110
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
member of the Board of Directors (excluding executive members of the Board of Directors, among others) 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 Companies Act, Toyota must have at least three members of the Board of Directors who are
Audit & Supervisory Committee members. A majority of the members of the Board of Directors who are
Audit & Supervisory Committee members are required to be “outside” members of the Board of Directors, which
is any person who satisfies all of the following requirements:
(a)
A person who is not, and has never been during the ten year period before becoming an outside
member of the Board of Directors, an executive director (a member of the Board of Directors who
engages in the execution of business), executive officer, manager or employee (collectively, “Executive
Director, etc.”) of Toyota or its subsidiaries;
(b)
if a person was a member of the Board of Directors, accounting advisor (in the case that an accounting
advisor is a legal entity, a member of such entity who is in charge of its affairs) or Audit & Supervisory
Board member (excluding those who have ever been Executive Directors, etc.) of Toyota or any of its
subsidiaries at any time during the ten year period before becoming an outside member of the Board of
Directors, such person who has not been an Executive Director, etc. of Toyota or any of its subsidiaries
during the ten year period before becoming a member of the Board of Directors, accounting counselor
or Audit & Supervisory Board member; and
(c)
a person who is not a spouse or relative within the second degree of kinship of a member of the Board
of Directors, manager, or other key employee of Toyota.
A member of the Board of Directors who is an Audit & Supervisory Committee member may not concurrently
act as an executive member of the Board of Directors, manager, or other employees of Toyota or its subsidiary, or
accounting advisor (if the accounting advisor is a corporation, the member who is in charge of its affairs) or an
executive officer of Toyota or any of its subsidiaries. Audit & Supervisory Committee 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 Committee members also audit the execution of duties of Toyota’s
members of the Board of Directors. Audit & Supervisory Committee members are not required to be, and Toyota’s
Audit & Supervisory Committee members are not, certified public accountants.
Toyota does not have a remuneration committee. However, members of Toyota’s Executive Compensation
Meeting discuss remuneration for members of the Board of Directors.
The Executive Compensation Meeting reviews the remuneration system for members of the Board of
Directors and senior management and determines the amount of remuneration for each member of the Board of
Directors, taking into account factors such as corporate performance as well as individual job responsibilities and
performance. The members of the meeting are Yoichi Miyazaki (Chairperson), a member of the Board of
Directors, and Shigeaki Okamoto and Kumi Fujisawa, each an outside member of the Board of Directors.
111
6.D EMPLOYEES
The total number of Toyota employees, on a consolidated basis, was 390,927 as of March 31, 2026, 383,853
as of March 31, 2025, and 380,793 as of March 31, 2024. The following tables set forth a breakdown of persons
employed by business segment and by geographic location as of March 31, 2026.
Segment
Number of
Employees
Location
Number of
Employees
Automotive
..........................
343,952
Japan
.............................
207,137
Financial services
.....................
16,222
North America
......................
65,411
All other
.............................
23,934
Europe
............................
24,741
Unallocated
..........................
6,819
Asia
..............................
66,331
Other*
............................
27,307
Total
...............................
390,927
Total
.............................
390,927
* “Other” consists of Central and South America,
Oceania, Africa and the Middle East.
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 compose 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. In fiscal 2026, the
wage raises and bonuses were at the level demanded by the labor union.
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 99,032 during fiscal 2026.
6.E SHARE OWNERSHIP
For information on the number of shares of Toyota’s common stock held by each member of the Board of
Directors as of June 2026, see “Item 6. Directors, Senior Management and Employees — 6.A Directors and
Senior Management.”
None of Toyota’s shares of common stock entitles the holder to any preferential voting rights. As of
March 31, 2026, Toyota does not have any stock option plan for which stock options or stock acquisition rights
are exercisable or will become exercisable in the future.
112
Toyota’s Board of Directors resolves the restricted share compensation within the maximum restricted share
compensation amount of 4.0 billion yen per year (also, the total number of Toyota’s shares of common stock to
be allotted shall not exceed a maximum of 4 million shares per year in total for members of the Board of
Directors (excluding outside members of the Board of Directors and members of the Board of Directors who are
Audit & Supervisory Committee members; “Eligible Members”)) established at the 121st Ordinary General
Shareholders’ Meeting held on June 12, 2025. The overview of the share compensation is as follows.
Eligible Persons
Members of the Board of Directors of TMC (excluding Outside Members
of the Board of Directors and Audit & Supervisory Committee Members)
and Operating Officers of TMC who do not also serve as a member of the
Board of Directors
and
Members of the board of directors of certain subsidiaries of TMC
(excluding outside members of the board of directors and audit &
supervisory committee members) and operating officers of certain
subsidiaries of TMC who do not also serve as a member of the board of
directors
Total amount of the share
compensation
Maximum of 4.0 billion yen per year (the Eligible Members of the Board
of Directors will make an in-kind contribution of all monetary claims
granted within the said amount to receive delivery of the common stock to
be issued or disposed of for the allotment)
Amount of the share
compensation payable to
each member of the Board of
Directors
Set each year considering factors such as corporate results, duties, and
performance
Type of shares to be allotted
and method of allotment
Issue or disposal of common stock (with transfer restrictions under an
allotment agreement)
Total number of shares to be
allotted
Maximum of 4,000,000 shares per year in total to the Eligible Members of
the Board of Directors
(Provided, however, that if a stock split, including a gratis allotment, or a
reverse stock split of Toyota’s common stock is carried out after June 12,
2025, or in case of events that otherwise require an adjustment to the total
number of Toyota’s shares of common stock to be issued or disposed of as
restricted share compensation, such total number of shares will be adjusted
to a reasonable extent.)
Amount to be paid
Determined by the Board of Directors of TMC based on the closing price
of TMC’s common stock on the Tokyo Stock Exchange on the business
day prior to each resolution of the Board of Directors, within a range that
is not particularly advantageous to the Eligible Members of the Board of
Directors
Transfer restriction period
A period of three to fifty years from the allotment date, which is
determined by the Board of Directors of TMC in advance
113
Conditions for removal of
transfer restrictions
Members of the Board of Directors of TMC (excluding Outside Members
of the Board of Directors and Audit & Supervisory Committee Members)
and Operating Officers of TMC who do not also serve as a member of the
Board of Directors:
Restrictions will be removed upon the expiration of the transfer restriction
period.
However, restrictions on all of the allotted shares which the Eligible
Person has will also be removed in the case of resignation from the
position of member of the Board of Directors or an operating officer who
does not also serve as a member of the Board of Directors of TMC due to
expiration of the term of office, death, or other legitimate reasons.
Members of the board of directors of certain subsidiaries of TMC
(excluding outside members of the board of directors and audit &
supervisory committee members) and operating officers of certain
subsidiaries of TMC who do not also serve as a member of the board of
directors:
Restrictions will be removed upon the expiration of the transfer restriction
period.
However, restrictions on all of the allotted shares which the Eligible
Person has will also be removed in the case of resignation from all of the
following positions due to expiration of the term of office or other
legitimate reasons: member of the board of directors of a subsidiary of
TMC, operating officer of a subsidiary of TMC who does not also serve as
a director, or member of the Board of Directors of TMC or Operating
Officer of TMC who does not also serve as a member of the Board of
Directors.
Gratis acquisition by Toyota
TMC will naturally acquire at no cost all of the allotted shares for which
the transfer restrictions have not been lifted at the time of the expiration of
the transfer restriction period, or at the time of the lifting of the transfer
restrictions stipulated. Other grounds for gratis acquisition shall be
stipulated by the allocation contract of the restricted stock based on a
resolution of the Board of Directors of TMC.
If an Eligible Member of the Board of Directors does not reside in Japan at the time of receiving an
allotment of restricted shares, Toyota may grant restricted share units instead of the restricted shares above to
relieve the recipients from the burden of compliance with laws and regulations in their country of residence and
tax disadvantages. The only conditions different from Toyota’s restricted share compensation plan are that the
delivery of common shares will be upon the expiration of a period equivalent to the transfer restriction period and
that in the event of the death of an Eligible Member of the Board of Directors, it will be a payment of money to
the successors of members of the Board of Directors of Toyota in lieu of an issuance of common shares. Both the
restricted share compensation plan and the restricted share unit plan shall be managed together within the total
amount of share compensation applicable.
In some cases, share compensation for a retiring Eligible Member of the Board of Directors may be allotted to
them without any transfer restrictions. In addition, share compensation may be paid in cash to a retiring Eligible
Member of the Board of Directors or an Eligible Member of the Board of Directors who does not reside in Japan.
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
114
association. As of March 31, 2026, the employee stock ownership association held 68,566,067 shares of Toyota’s
common stock.
On March 24, 2025, the Board of Directors resolved to introduce a share-based compensation plan using an
employee stock ownership plan trust structure (the “ESOP Trust”) for employees in “Senior Professional / Senior
Management (
Kanbushoku
)” positions who satisfy certain requirements (the “Eligible Employees”). The
following table provides a summary of the ESOP Trust.
Category
Details
Trust type
.....................
A money trust other than an individually-operated designated money
trust (third party benefit trust)
Trust purpose
..................
To provide incentives to Eligible Employees
Settlor
........................
TMC
Trustees
.......................
Mitsubishi UFJ Trust and Banking Corporation (Co-trustee: The Master
Trust Bank of Japan, Ltd.)
Beneficiaries
...................
Eligible Employees satisfying the beneficiary requirements
Trust administrator
..............
A third party that does not have any interest in TMC (certified public
accountant)
Trust agreement date
.............
August 25, 2025
Trust period
....................
From August 25, 2025 to August 31, 2026
Exercise of voting rights
..........
The trustee will exercise the voting rights of TMC shares by following
the instructions of the trust administrator that reflect the exercise of
voting rights by the beneficiary candidates.
Type of acquired shares
..........
Common stock of TMC
Amount of trust money
...........
1.5 billion yen (includes trust fees and trust expenses)
Method of acquisition of shares
....
Acquisition from TMC (disposition of treasury stock)
Timing of acquisition of shares
....
August 28, 2025
Holders of vested rights
..........
TMC
Residual assets
.................
Residual assets that can be received by TMC, as the beneficiary, shall be
limited to the trust expense reserve, calculated by deducting the cost for
acquiring shares from trust money.
No shares have been granted under the ESOP Trust.
6.F DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED
COMPENSATION
None.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A MAJOR SHAREHOLDERS
As of March 31, 2026, 15,794,987,460 shares of Toyota’s common stock (of which 2,761,055,486 shares
were treasury stock and 13,033,931,974 shares were outstanding) were issued.
Subsequent to March 31, 2026, pursuant to the written resolution in lieu of a resolution of the Board of
Directors dated June 3, 2025, the resolution of the Board of Directors dated January 14, 2026, and the written
115
resolution in lieu of a resolution of the Board of Directors dated March 30, 2026, Toyota conducted a tender offer
to repurchase shares of its common stock from existing shareholders, pursuant to which Toyota repurchased
1,192,330,962 shares of its common stock at 3,067 yen per share, for an aggregate purchase price of
approximately 3.65 trillion yen, during the period from March 31, 2026 to April 27, 2026. The repurchased
shares became treasury shares upon repurchase. Toyota has announced that, pursuant to a written resolution dated
June 3, 2025 in lieu of a resolution of the Board of Directors, it will retire 1,200,000,000 shares of its common
stock held as treasury shares on June 30, 2026, representing approximately 7.6% of the total number of shares
issued as of March 31, 2026. 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 American Depositary Shares, or 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 that can be ascertained from public filings, the following table
sets forth the beneficial ownership of holders of 5% or more of Toyota’s common stock as of March 31, 2026.
Information concerning 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.
Name of Beneficial Owner
Number of
Shares of
Common Stock
(in thousands)
Percentage of
Outstanding
Voting Shares of
Common Stock
Toyota Industries Corporation*
.......................................
1,192,331
9.17
*
Subsequently, pursuant to the written resolution in lieu of a resolution of the Board of Directors dated June
3, 2025, the resolution of the Board of Directors dated January 14, 2026, and the written resolution in lieu of
a resolution of the Board of Directors dated March 30, 2026, Toyota conducted a tender offer to repurchase
shares
of
its
common
stock
from
existing
shareholders,
pursuant
to
which
Toyota
repurchased
1,192,330,962 shares of its common stock at 3,067 yen per share, for an aggregate purchase price of
approximately 3.65 trillion yen, during the period from March 31, 2026 to April 27, 2026. As a result of
Toyota Industries Corporation having tendered its Toyota shares of common stock in Toyota’s tender offer,
on May 25, 2026, the commencement date of the settlement of such tender offer, the number of Toyota
shares of common stock held by Toyota Industries Corporation decreased to 1,242,720 (representing 0.1%
of the outstanding shares of Toyota common stock as of March 31, 2026).
According to The Bank of New York Mellon, depositary for Toyota’s ADSs (the “Depositary”), as of
March 31, 2026, 355,369,125 shares of Toyota’s common stock were held in the form of ADSs and there were
1,679 ADS holders of record and 915,350 beneficial owners in the United States. According to Toyota’s register
of shareholders, as of March 31, 2026, there were 1,272,096 holders of common stock of record worldwide. As
of March 31, 2026, there were 723 record holders of Toyota’s common stock with addresses in the United States,
whose shareholdings represented approximately 12.1% 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.
116
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, among others, from numerous suppliers throughout the
world in the ordinary course of business, including Toyota’s associates and joint ventures 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, among others, from these associates and joint ventures in the amount of
¥14,239.5 billion in fiscal 2026. Toyota also sells its products and services, among others, to Toyota’s associates
and joint ventures 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, among others, to these associates and joint ventures in
the amount of ¥4,095.3 billion in fiscal 2026. See note 34 of Toyota’s consolidated financial statements for
additional information regarding Toyota’s investments in and transactions with associates and joint ventures.
Loans
Toyota regularly has trade accounts and other receivables by, and accounts payable to, Toyota’s associates
and joint ventures 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 associates and
joint ventures in the amount of ¥706.3 billion as of March 31, 2026. Toyota had outstanding trade accounts and
other payables to these associates and joint ventures in the amount of ¥1,865.0 billion as of March 31, 2026.
Toyota, from time to time, provides short- to medium-term loans to its associates and joint ventures, as well
as loans under a loan program established by certain subsidiaries to assist their executives and members of the
Board of Directors with the purchase of homes. As of March 31, 2026, an aggregate amount of ¥57.8 billion in
loans was outstanding to its associates and joint ventures accounted for by the equity method. 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.
4.
Not applicable.
5.
Not applicable.
6.
Export Sales. See “Item 5. Operating and Financial Review and Prospects — 5.A Operating Results —
Overview — Geographic Breakdown.”
7.
Legal and Arbitration Proceedings. See “Item 4. Information on the Company — 4.B Business Overview —
Legal Proceedings.”
8.
Dividend Information.
117
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend.
Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to a
resolution of its Board of Directors. Toyota’s Board of Directors resolves to pay year-end dividends to holders of
common stock and registered pledgees of common stock of record as of March 31, the record date, in each year.
In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash
distributions from its distributable surplus to holders of common stock and pledgees of common stock of record
as of September 30, the record date, in each year by a resolution of its Board of Directors.
In addition, under the Companies Act, dividends may be paid to holders of common stock and pledgees of
record of common stock 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. Under the Companies Act,
dividends may be distributed in cash or (except in the case of interim dividends mentioned in the third preceding
paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.
The following table sets forth the dividends declared per share of common stock 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 Common Share
Period Ended
Yen
U.S. dollars
September 30, 2023
.......................................................
30.0
0.20
March 31, 2024
..........................................................
45.0
0.30
September 30, 2024
.......................................................
40.0
0.28
March 31, 2025
..........................................................
50.0
0.33
September 30, 2025
.......................................................
45.0
0.30
March 31, 2026
..........................................................
50.0
0.31
Toyota deems improving shareholder returns as one of its priority management policies, and it will continue
to work to improve its corporate culture to realize sustainable growth in order to enhance its corporate value.
Toyota will strive for the stable and continuous increase of dividends.
With a view to surviving tough competition and transitioning to a mobility company, Toyota will aim to
utilize its internal funds mainly for investment in growth for the next generation, such as environmental
technologies to achieve a carbon-neutral society and safety technologies for the safety and security of its
customers, and also for the stakeholders such as employees, business partners and local communities.
Considering these factors, with respect to the dividends for fiscal 2026, Toyota determined to pay a year-end
dividend of 50 yen per share of common stock by a resolution of the Board of Directors pursuant to Toyota’s
articles of incorporation. As a result, combined with the interim dividend of 45 yen per share of common stock,
the annual dividend was 95 yen per share of common stock, and the total amount of the dividends on common
stock for the year was 1,238.2 billion yen.
Furthermore, pursuant to the written resolution in lieu of a resolution of the Board of Directors dated June 3,
2025, the resolution of the Board of Directors dated January 14, 2026, and the written resolution in lieu of a
resolution of the Board of Directors dated March 30, 2026, Toyota conducted a tender offer to repurchase shares
of its common stock from existing shareholders, pursuant to which Toyota repurchased 1,192,330,962 shares of
its common stock at 3,067 yen per share, for an aggregate purchase price of approximately 3.65 trillion yen,
during the period from March 31, 2026 to April 27, 2026. The repurchased shares became treasury shares upon
repurchase. Toyota has announced that, pursuant to a written resolution dated June 3, 2025 in lieu of a resolution
118
of the Board of Directors, it will retire 1,200,000,000 shares of its common stock held as treasury shares on
June 30, 2026, representing approximately 7.6% of the total number of shares issued as of March 31, 2026.
Toyota intends to repurchase shares flexibly by taking into consideration the price level of its common stock
and other factors and to utilize share repurchases to respond to requests for the sale of Toyota’s shares as needed.
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
Shares of Toyota common stock are traded on the Prime Market of the Tokyo Stock Exchange and the
Nagoya Stock Exchange under the ticker symbol “7203” in Japan, and on the London Stock Exchange under the
ticker symbol “TYT.” Toyota’s ADSs, each representing ten shares of Toyota common stock, are listed on the
New York Stock Exchange, or NYSE, under the ticker symbol “TM.”
9.B PLAN OF DISTRIBUTION
Not applicable.
9.C MARKETS
The primary trading market for Toyota’s common stock is the Prime Market of the Tokyo Stock Exchange.
The common stock is also listed on the Nagoya Stock Exchange and on the London Stock Exchange.
Since September 29, 1999, American Depositary Shares, each equal to ten shares of Toyota’s common
stock, have been traded and listed on the New York Stock Exchange through a sponsored ADS 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 ADS facilities.
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
Toyota’s authorized number of shares as of March 31, 2026 was 50,000,000,000 shares, of which
15,794,987,460 shares of common stock have been issued. Subsequent to March 31, 2026, pursuant to a written
resolution dated June 3, 2025 in lieu of a resolution of the board of directors, Toyota has announced that it will
retire 1,200,000,000 shares of its common stock held as treasury shares on June 30, 2026, representing
approximately 7.6% of the total number of shares as of March 31, 2026.
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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 Companies Act, Act Concerning Book-Entry Transfer of Corporate Bonds, Shares
and Other Securities and related legislation.
General
Toyota does not issue share certificates for its shares. In accordance with the Companies Act, the Book-
Entry Transfer Act and Toyota’s articles of incorporation, Toyota’s common stock 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 common stock will generally become effective once the transfer is
recorded in the transferee’s account. There are no restrictions imposed by Toyota’s articles of incorporation or
share handling regulations on the transfer of common stock. 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 holder of common stock 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.
A holder of common stock must have a transfer account to transfer shares. Holders of common stock 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 the holders of Toyota’s common stock
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 common stock recorded or registered on Toyota’s register of shareholders
will be treated as holders of common stock of Toyota and may exercise rights, such as voting rights, and will
receive dividends (if any) and notices to holders of common stock directly from Toyota. Holders of common
stock 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. A holder of
common stock 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;
120
•
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, 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;
•
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 power generation and the supply and sale of electric power;
•
the sale of goods related to each of the preceding items and mineral oil;
•
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
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend.
Toyota’s articles of incorporation provide that retained earnings can be distributed as dividends pursuant to a
resolution of its Board of Directors. Toyota’s Board of Directors resolves to pay year-end dividends to
shareholders and registered pledgees of record as of March 31, the record date, in each year.
In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash
distributions from its distributable surplus to holders of stock and pledgees of stock of record as of September 30,
the record date, in each year by a resolution of its Board of Directors.
In addition, under the Companies 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. Under the Companies Act, dividends may be distributed
in cash or (except in the case of interim dividends mentioned in the second preceding paragraph) in kind, subject
to limitations on distributable surplus and to certain other conditions.
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Dividends — Distributable Amount
Under the Companies 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 Companies 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 items provided for by the Companies Act and
the ordinance of the Ministry of Justice, and the amount of surplus distributable for dividends is calculated by
adding to and subtracting from this amount the amounts of items provided for by the Companies 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.
Under the Companies 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.
Japanese Unit Share System
General
. Consistent with the requirements of the Companies 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.
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.
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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 and the Companies Act.
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 Companies 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.
Under the Companies
Act, Toyota shall implement
the electronic
provision measures
(“Electronic
Provision”) for the information contained in the reference materials, etc. for general shareholders’ meetings.
The convocation notice of shareholders’ meeting must set forth the information contained in the reference
materials, etc. for general shareholders’ meetings being provided through the Electronic Provision and the URL
of the website used for the Electronic Provision, in addition to the place, the time and the purpose of the meeting.
The information contained in the reference materials, etc. for general shareholders’ meetings must be posted on a
website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the
convocation notice of shareholders’ meeting is dispatched until the date on which three months have elapsed
from the meeting. In general, any shareholder is entitled to request printed paper copies of the information
contained in the reference materials, etc. for general shareholders’ meetings by the record date for voting rights at
the relevant general shareholders’ meeting.
Holders of common stock shall have voting rights exercisable at a general shareholders’ 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 Companies Act, a resolution can be adopted at a
general shareholders’ meeting by a majority of the shares having voting rights represented at the meeting. The
Companies Act and Toyota’s articles of incorporation require a quorum for the election of members of the Board
of Directors 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 members of the Board 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 or through the internet. 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. 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 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.
123
The Companies Act and Toyota’s articles of incorporation provide 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 Committee member;
(6)
the exemption of liability of a member of the Board of Directors 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 transfer in entirety or in part of shares or equity interest of a subsidiary under certain conditions;
(12) the taking over of the entire business of any other corporation with certain exceptions in which a
shareholders’ resolution is not required;
(13) 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;
(14) company split with certain exceptions in which a shareholders’ resolution is not required; or
(15) share delivery 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.
Rights to be Allotted Shares
Shareholders have no preemptive rights under Toyota’s articles of incorporation. Under the Companies 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.
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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 or registered pledgees 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 all 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 (in the case of common stock, 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 on the Japanese stock exchanges on the business day
preceding a record date (or if the record date is not a business day, one 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 of shares 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 holder. 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.
Any 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 “Item 10. Additional Information —
10.B Memorandum and Articles of Association — Dividends.”
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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 Companies Act generally prohibits any subsidiary of Toyota from acquiring shares of Toyota.
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. 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 material 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 following is a general summary of major Japanese foreign exchange control regulations applicable to
holders of shares of capital stock or voting rights (including ADSs) of Toyota, and to others intending to
consummate other actions such as obtaining consent from other investors holding voting rights and consenting to
certain proposals at a general shareholders meeting, who are “exchange non-residents” or “foreign investors,” as
described below. The statements regarding Japanese foreign exchange control regulations set forth below are
based on the laws and regulations in force and as interpreted by the Japanese authorities as of the date of this
annual report and are subject to subsequent changes in the applicable Japanese laws or interpretations thereof.
This summary is not exhaustive of all possible foreign exchange control considerations that may apply to a
particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange
control consequences of the acquisition, ownership and disposition of shares of capital stock or voting rights of
Toyota by consulting their own advisors.
The Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, as amended, the “FEFTA”)
and the cabinet orders and ministerial ordinances thereunder (collectively, the “Foreign Exchange Regulations”)
govern the acquisition and holding of shares of capital stock and voting rights 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:
(i)
individuals who do not reside in Japan; and
(ii)
corporations whose principal offices are located outside Japan.
126
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:
(i)
individuals who are exchange non-residents;
(ii)
corporations or other organizations that are organized under the laws of foreign countries or whose
principal offices are located outside of Japan;
(iii) Japanese corporations of which 50% or more of their total voting rights are held directly or indirectly
by individuals who are exchange non-residents and/or corporations or other organizations falling
within (i) and/or (ii) above;
(iv) partnerships under the Civil Code of Japan (Act No. 89 of 1896, as amended) established to invest in
corporations, limited partnerships for investment under the Limited Partnership Act for Investment of
Japan (Act No. 90 of 1998, as amended), or any other similar partnerships under foreign law, of which
(a) 50% or more of the total contributions are made by individuals and/or corporations falling within
(i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange
Regulations or (b) a majority of the general partners are individuals and/or corporations falling within
(i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange
Regulations; and
(v)
corporations or other organizations, a majority of whose officers, or officers having the power of
representation, are individuals who are exchange non-residents.
Acquisition of Shares
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 (other than
those relating to an “inward direct investment” set out below). 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 general, 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 (i) the transfer was made through a bank or financial instruments business operator licensed or registered
under Japanese law or other entity prescribed by the Foreign Exchange Regulations acting as an agent or
intermediary or (ii) the acquisition constitutes an “inward direct investment” described below.
Inward Direct Investment in Shares of Listed Companies
On May 8, 2020, an amendment to the Foreign Exchange Regulations came into effect. Upon the full
implementation of the Amendment as of June 7, 2020, the requirements and procedures regarding the prior
notifications of inward direct investments to the Minister of Finance and any other competent Ministers under the
FEFTA,
were
amended.
Additionally,
a
partial
amendment
to
the
Foreign
Exchange
Regulations
was
promulgated on April 4, 2025, and the amendments became effective and applicable on May 19, 2025. As a
result, Japanese listed companies are classified into the following categories:
(i)
companies engaged in businesses excluding certain businesses designated by the Foreign Exchange
Regulations as designated businesses (the “Designated Businesses”);
(ii)
companies engaged in Designated Businesses other than the Designated Business designated by the
Foreign
Exchange
Regulations
as
core
sector
businesses
(the
“Non-Core
Sector
Designated
Businesses”);
127
(iii) companies engaged in Designated Businesses designated by the Foreign Exchange Regulations as core
sector businesses (the “Core Sector Designated Businesses”) (excluding companies in (iv) below); and
(iv) companies that are “Specified Essential Infrastructure Service Provider” under the Economic Security
Promotion
Act
(Act
on
the
Promotion
of
Ensuring
National
Security
through
Integrated
Implementation of Economic Measures) and engage in businesses that fall within the core business (the
“Specified Core Business Operators”).
For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that
classifies Japanese listed companies into the above categories. According to the list published by the Minister of
Finance as of July 15, 2025, the businesses which are currently engaged in by Toyota are classified as category
(iii) i.e., the Core Sector Designated Businesses above.
Definition of Inward Direct Investment
If a foreign investor acquires shares or voting rights 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 1% or more of the issued shares or the total
number of voting rights of the relevant company, such acquisition constitutes an “inward direct investment.” In
addition, an acquisition of the authority to exercise, or instruct to exercise, voting rights held by other shareholders
that results in the foreign investor, in combination with any existing shareholding, directly or indirectly holding
1% or more of the total number of voting rights of the relevant company constitutes an “inward direct
investment.” Furthermore, if a foreign investor manages, on a discretionary basis, shares or voting rights of a
Japanese company that is listed on a Japanese stock exchange and in combination with any existing management,
directly or indirectly manages 1% or more of the issued shares or the total number of voting rights of the relevant
company, such discretionary investment management generally constitutes an “inward direct investment.”
In addition to the acquisitions of shares or voting rights described above, if a foreign investor (i) is granted
the authority to exercise proxy voting rights on behalf of other shareholders of the relevant company regarding
certain matters which may control substantially or have a material influence on the management of such
company, such as the election or removal of directors, or (ii) obtains consent from another foreign investor
holding the voting rights of the relevant company to exercise the voting rights of such company jointly, and, in
each case, as a result of these arrangements, the number of the voting rights directly or indirectly held by the
foreign investor, including the total number of the voting rights subject to such proxy, or the sum of the number
of the voting rights directly or indirectly held by the foreign investor and such other foreign investors subject to
such joint voting agreement, as the case may be, is 10% or more of the total number of voting rights of the
relevant company, each such arrangement regarding voting rights (hereinafter referred to as a “voting
arrangement”) also constitutes an “inward direct investment.” Additionally, if a foreign investor who directly or
indirectly holds 1% or more of the total voting rights of a Japanese listed company consents, at a general meeting
of shareholders, to certain proposals having a material influence on the management of such company such as
(i) election of such foreign investor or its related persons (as defined in the Foreign Exchange Regulations) as
directors or Audit & Supervisory Board members of the relevant company or (ii) transfer or discontinuation of its
business, such consent will also constitute an “inward direct investment.”
Prior Notification Requirements
If a foreign investor intends to consummate an “inward direct investment” as described above, in certain
circumstances, such as where the foreign investor is in a country that is not listed on an exemption schedule in
the Foreign Exchange Regulations or where that Japanese company is engaged (as Toyota is currently) in one or
more Designated Businesses, prior notification of the relevant inward direct investment must be filed with the
Minister of Finance and any other competent Ministers.
128
However, a foreign investor seeking to consummate an “inward direct investment” may be eligible for the
exemptions, if certain conditions are met.
In the case of an acquisition (including discretionary investment management) of shares or voting rights or
the authority to exercise, directly or through instructions, voting rights of a Japanese listed company that is
engaged (as Toyota is currently) in one or more Core Sector Designated Businesses, the foreign investor may be
exempted from the prior notification requirement, if, as a result of such acquisition, the foreign investor directly
or indirectly holds less than 10% of the total number of issued shares or voting rights of the relevant company,
and such foreign investor complies with the following conditions:
(i)
the foreign investor or its closely-related persons (as defined in the Foreign Exchange Regulations) will
not become directors or Audit & Supervisory Board members of the relevant company;
(ii)
the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange
Regulations) at a general meeting of shareholders, including transfer or discontinuation of the
Designated Businesses of the relevant company;
(iii) the foreign investor will not access non-public technical information in relation to the Designated
Businesses of the relevant company, or take certain other actions that may lead to the leak of such
non-public technical information (as prescribed in the Foreign Exchange Regulations);
(iv) the foreign investor will not attend, and will not cause any persons designated by it to attend, meetings
of the relevant company’s Board of Directors, or meetings of committees having authority to make
important decisions, in respect of the Core Sector Designated Businesses of the relevant company;
(v)
the foreign investor will not make, and will not cause any persons designated by it to make, proposals
to such board or committees or their members in writing or electronic form requesting any response or
actions by certain deadlines in respect of the Core Sector Designated Businesses of the relevant
company;
If a foreign investor who is not themselves a “Specified Foreign Investor” (as defined below) under the
Foreign Exchange Regulations is deemed to be an equivalent entity to a Specified Foreign Investor (an entity
obligated to cooperate in information gathering activities of a foreign government pursuant to a contract with a
foreign government or pursuant to laws and regulations of a foreign country (“Specified Foreign Investor”)), then
such foreign investor may be exempted from the prior notification requirement if they meet conditions (vi) and
(vii) below in addition to conditions (i) through (v) above:
(vi) the
foreign
investor
will
not
knowingly
obtain
non-public
information
regarding
the
relevant
company’s Core Sector Designated Businesses nor otherwise engage in certain acts (as prescribed in
the Foreign Exchange Regulations) that may result in leakage of other non-public information.
(vii) the foreign investor will not serve as an employee or other personnel of the relevant company in
relation to its Core Sector Designated Business, nor cause any of its closely related parties (as defined
under the Foreign Exchange Regulations) to serve as an employee or other personnel of the relevant
company at the foreign investor’s direction. Furthermore, the foreign investor will not solicit any
officer, employee or other personnel of the relevant company to work for itself or for any third party.
However, if a person equivalent to a Specified Foreign Investor acquires (including in cases of discretionary
investment management) shares or voting rights or the authority to exercise, directly or through directions, voting
rights of a Japanese listed company engaged in one or more Core Sector Designated Businesses which qualifies
as a Specified Core Business Operator, such person equivalent to a Specified Foreign Investor is not permitted to
use the exemption described above under any circumstances.
In addition, in the case of an acquisition (including investment discretionary management) of shares or
voting rights or the authority to exercise, either directly or through instructions, voting rights of a Japanese listed
company that is engaged in one or more Non-Core Sector Designated Businesses, the foreign investor may be
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exempted from the prior notification requirement, including in the case where, as a result of such acquisition, the
foreign investor holds 10% or more of the total number of issued shares or the total number of voting rights of
the relevant company, which would have required prior notification, if such foreign investor complies with the
conditions (i) through (iii) above (the “Exemption Conditions”).
Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated
by the Foreign Exchange Regulations (including (a) investors who have records of certain sanctions due to
violations of the FEFTA, (b) certain investors who are state-owned enterprises or other related entities excluding
those who are accredited by the Minister of Finance, and (c) above-mentioned Specified Foreign Investors
prescribed in the Foreign Exchange Regulations), in no event may such foreign investor be eligible for the
exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors
described in the foregoing sentence, falls under a category of certain foreign financial institutions (as prescribed
in the Foreign Exchange Regulations) and complies with the Exemption Conditions, such foreign investor may
be eligible for the exemptions, even if the acquisition results in such foreign investor’s directly or indirectly
holding 10% or more of the total number of issued shares or voting rights of a corporation engaged in one or
more Core Sector Designated Businesses.
In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed
company engaged one or more Designated Businesses or consents to a proposal at a general meeting of
shareholders of such company, in each case, that constitutes an “inward direct investment” as described above, in
certain circumstances, prior notification of the relevant inward direct investment must be filed with the Minister
of Finance and any other competent Ministers. However, the exemptions from the prior notification requirements
may be available in the cases where the relevant voting arrangement is regarding matters other than certain
matters which may control substantially or have a material influence on the management of the relevant
company, such as the election or removal of directors, which would have required prior notification.
Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification
requirements.
Procedures for Prior Notification
If such prior notification is filed, the proposed inward direct investment may not be consummated until after 30
days have passed from the date of filing, although this screening period may be shortened to two weeks unless such
Ministers deem it necessary to review the proposed inward direct investment. The Ministers may extend the
screening period up to five months if they deem it necessary to review the proposed inward direct investment and
may recommend any modification or abandonment of the proposed inward direct investment and, if the foreign
investor does not accept such recommendation, the Ministers may order the modification or abandonment of such
inward direct investment. In addition, if the Ministers consider the proposed inward direct investment to be an
inward direct investment that is likely to cause damage to the national security of Japan and, if a foreign investor
(i) consummates such inward direct investment without filing the prior notification described above; consummates
such inward direct investment before the expiration of the screening period described above; in connection with
such inward direct investment, makes false statements in the prior notification described above; or (ii) does not
follow the recommendation or order issued by the Ministers to modify or abandon such inward direct investment,
the Ministers may order such foreign investor to dispose of all or part of the shares acquired or take other measures.
Post Facto Reporting Requirements
A foreign investor who consummates an inward direct investment as described above relating to a Japanese
listed company that is engaged in one or more Designated Businesses, but is not subject to the prior notification
requirements described above due to the exemptions from such prior notification requirements, in general, must
file a report of the relevant inward direct investment with the Minister of Finance and any other competent
Ministers having jurisdiction over such Japanese company within 45 days of such inward direct investment
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when, as a result of such acquisition, the foreign investor (excluding, in the cases of (i) and (ii) below, a foreign
investor who falls under a category of certain foreign financial institutions (as prescribed in the Foreign
Exchange Regulations)) directly or indirectly holds (i) 1% or more but less than 3% of the total number of issued
shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total number of issued shares
or voting rights, for the first time, or (iii) 10% or more of the total number of issued shares or voting rights.
In addition, if a foreign investor consummates the inward direct investment described above through the
acquisition (including investment discretionary management) of shares or voting rights or the authority to
exercise, directly or through instructions, voting rights of a Japanese listed company that is not engaged in the
Designated Businesses (which is not subject to the prior notification requirements described above) and, as a
result of such acquisition, such foreign investor holds 10% or more of shares or voting rights of the total number
of issued shares or voting rights of the relevant company, such foreign investor must file a report of the relevant
inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction
over such Japanese company within 45 days of such inward direct investment.
Additionally, if a foreign investor consummates the inward direct investment described above through a
voting arrangement with respect to a Japanese listed company that is not engaged in the Designated Businesses
(which is not subject to the prior notification requirements described above), such foreign investor must file a
report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers
having jurisdiction over such Japanese company within 45 days of such inward direct investment.
Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification
requirements.
Dividends and Proceeds of Sale
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 material 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 U.S.
alternative minimum taxes, investors that own or are treated as owning 10% or more of Toyota’s stock (by vote
or value), 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.
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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:
1.
an individual who is a citizen or resident of the United States;
2.
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;
3.
an estate the income of which is subject to U.S. federal income tax without regard to its source; or
4.
a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S.
persons (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the
“Code”)), 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:
1.
is a resident of the United States for purposes of the Treaty;
2.
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
3.
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 U.S. federal income taxation
(such as the estate and gift tax or the Medicare tax on net investment income) and does not discuss any aspects of
Japanese taxation other than income taxation, as limited to national taxes, inheritance and gift taxation. This
summary also does not cover any U.S. 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 American Depositary Receipts 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
Holders”) who are holders of shares of common stock or of ADSs of Toyota. 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.
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Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese
corporations. Stock splits are, in general, not taxable events.
In the absence of an applicable income tax treaty, convention or agreement reducing the maximum rate of
Japanese withholding tax or allowing an 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 that, 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 non-resident
Holder who is an individual holding three percent or more of the total issued shares of the relevant Japanese
corporation, the aforementioned 20.42 percent withholding tax rate is reduced to 15.315 percent for dividends
due and payable on or before December 31, 2047. These rates include 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 “reconstruction surtax”). This overall 15.315% and 20.42% withholding tax rate continues to
apply until December 31, 2047, while the breakdown of the 0.315% and 0.42% surtax portion is (i) the
reconstruction surtax of 0.315% (or 2.1% of 15%) and 0.42% (or 2.1% of 20%) until December 31, 2026, and
(ii) during the period beginning on January 1, 2027 and ending on December 31, 2047, the reconstruction surtax
of 0.165% (or 1.1% of 15%) and 0.22% (or 1.1% of 20%) and another special additional withholding tax of
0.15% (or 1.0% of 15%) and 0.2% (or 1.0% of 20%) to fund strengthening Japan’s national defense capabilities
(the “defense surtax”). The 2026 tax reform, which was promulgated on March 31, 2026, has introduced the
defense surtax while accordingly reducing the reconstruction surtax, to maintain the overall 15.315% and 20.42%
withholding tax rate.
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, ten percent or five percent for
portfolio investors (15 percent under the income tax treaties in force with, among other countries, Canada,
Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway and Singapore, ten
percent under the income tax treaties with, among other countries, Australia, Austria, Belgium, France, Hong
Kong, the Netherlands, Portugal, Sweden, Switzerland, the U.K. and the United States, and five percent under the
income tax treaties with, among other countries, Spain).
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 ten
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 (as defined in the Treaty) are exempt from Japanese income tax by way of
withholding or otherwise, provided that such dividends are not 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 the 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 and Special Income Tax for Reconstruction 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 filing procedure is available for non-resident Holders to claim treaty
benefits of exemption from or reduction of Japanese withholding tax by submitting a Special Application Form for
Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction
on Dividends of Listed Stock (together with any other required forms and documents). With respect to ADSs, this
reduced rate or exemption is applicable if the Depositary or its agent submits, together with other documents, two
Special Application Forms (one before payment of dividends, the other within eight months after the recording date
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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 proof of taxpayer status, residence and beneficial
ownership (as applicable) and to provide other information or documents as may be required by 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
fails to submit the required application in advance, will be entitled to claim the refund of Japanese 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 entire amount of Japanese 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. In addition, Eligible U.S. Holders are exempt from 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 done, 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
United States and Japan.
U.S. Federal Income Taxation
U.S. Holders
The following discussion is a summary of the material U.S. federal income tax consequences to
U.S. Holders that hold 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 non-U.S. 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,
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regardless of whether the payment is converted into U.S. dollars on that date. Generally, any gain or 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 will be applied first to reduce such holder’s tax basis in its
shares of common stock or ADSs, thereby increasing the amount of gain or decreasing the amount of loss
recognized on a subsequent disposition of the shares of common stock or ADSs. Then, to the extent such
distribution exceeds such U.S. Holder’s adjusted tax basis in those shares of common stock and ADSs, such
excess 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. The limitation
on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this
purpose, dividends paid by Toyota will generally be “passive category income” or, in the case of certain
U.S. Holders, “general category income.” 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, subject to a number of
complex limitations and conditions, including those introduced by recently issued U.S. Treasury regulations that
apply to foreign income taxes paid or accrued in taxable years beginning on or after December 28, 2021. A
U.S. Holder’s use of a foreign tax credit with respect to any such Japanese income or withholding taxes would
generally not be allowed unless such U.S. Holder elects benefits under an applicable income tax treaty with
respect to such tax. A U.S. Holder who does not elect to claim a credit for any creditable foreign income taxes
paid during the taxable year may instead claim a deduction in the computation of such U.S. Holder’s taxable
income, subject to generally applicable limitations. An election to deduct foreign taxes instead of claiming
foreign tax credits must apply to all creditable foreign taxes paid or accrued in 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 during which such
U.S. holder is not protected from the risk of loss; 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
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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.
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, 2026, 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) on an annual basis, subject
to certain exceptions based on the value of PFIC stock held. 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).
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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
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 24% 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 and Reporting (Individuals)”, or IRS Form W-8BEN-E, entitled “Certificate of Status of
Beneficial Owner for United States Tax Withholding and Reporting (Entities)” (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.
137
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 access this
information through the SEC’s website (https://www.sec.gov). In addition, 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: Capital Strategy &
Affiliated Companies, Finance Division, telephone number: +81-565-28-2121.
10.I SUBSIDIARY INFORMATION
Not applicable.
10.J ANNUAL REPORT TO SECURITY HOLDERS
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 3 to the
consolidated financial statements and further disclosure is provided in notes 20 and 21 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.
Market risk analyses of risks such as foreign exchange risk, interest rate risk, commodity price fluctuation
risk and stock price fluctuation risk are provided in note 20 to the consolidated financial statements.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A DEBT SECURITIES
Not applicable.
12.B WARRANTS AND RIGHTS
Not applicable.
138
12.C OTHER SECURITIES
Not applicable.
12.D AMERICAN DEPOSITARY SHARES
Fees and Charges for Holders of American Depositary Shares
The Bank of New York Mellon, as Depositary for the ADSs, 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. The
Depositary’s principal executive office is located at 240 Greenwich Street, 8th Floor West, New York, NY
10286, United States of America.
Persons depositing or withdrawing shares must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
•
Delivery
of
ADSs,
including
those
resulting
from a distribution, sale or exercise of shares or
rights or other property
•
Surrender
of
ADSs
for
the
purpose
of
withdrawal including if the deposit agreement
terminates
$0.05 (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 you had been shares and the
shares had been deposited for delivery of ADSs
•
Distribution of securities or rights distributed to
holders
of
deposited
securities
that
are
distributed by the Depositary to ADS registered
holders
$0.05 (or less) per ADS per year
•
General depositary services
Registration fees
•
Registration of transfer of shares on Toyota’s
share
register
to
or
from
the
name
of
the
Depositary or its nominee or the custodian or its
nominee when shares are deposited or withdrawn
Fees and expenses of the Depositary
•
Cable
(including
SWIFT)
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
Any other charges payable by the Depositary, the
custodian or their respective agents in connection with
the servicing of the deposited securities
•
As necessary
Fees Incurred in Fiscal 2026
For fiscal 2026, the Depositary paid to Toyota, or paid to a third party at Toyota’s instruction, an aggregate
of $980,058.75 for standard out-of-pocket maintenance costs for the ADSs (consisting of the expenses of postage
139
and envelopes for mailing annual reports, printing and distributing dividend checks, stationery, postage,
facsimile, and telephone calls), Toyota’s continuing annual stock exchange listing fees with respect to the ADSs,
expenses relating to Toyota’s annual general shareholders’ meeting that are incurred with respect to Toyota’s
ADS holders and 50% of the net dividend fees collected by the Depositary.
Fees to be Paid in the Future
With regards to the ADS program, the Depositary has agreed to pay the standard out-of-pocket maintenance
costs for the ADSs, 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 pay for
investor relations expenses, the continuing annual stock exchange listing fees with respect to the ADSs, and any
other program related expenses. The limit on the amount of expenses for which the Depositary will pay is the
sum of $300,000 annually. In addition, the Depositary has agreed to pay Toyota 50% of the net dividend fees
collected by the Depositary during each annual period towards the aforementioned expenses.
140
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 fiscal 2026. Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the Form 20-F that Toyota files under the Securities Exchange Act of
1934, as amended (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 decisions regarding
required disclosure. The disclosure controls and procedures also ensure 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 principal
executive officer, and the principal financial officer. 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 President and Representative Director as well
as the member of the Board of Directors 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 IFRS Accounting Standards. 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 IFRS Accounting Standards, and that Toyota’s receipts and
expenditures are being made only in accordance with authorizations of Toyota’s management and
members of the Board of 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.
141
Toyota’s management conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that Toyota’s internal control over financial reporting was
effective as of March 31, 2026.
PricewaterhouseCoopers Japan LLC, 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, 2026, as stated in its report included herein.
(c) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
Toyota’s independent registered public accounting firm, PricewaterhouseCoopers Japan LLC, 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 2026 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 Committee, in accordance with the Companies Act. Toyota’s
Audit & Supervisory Committee is comprised of four members of the Board of Directors who are Audit &
Supervisory Committee members, three of whom are outside and independent directors. Each member of the
Board of Directors who is an Audit & Supervisory Committee member has been appointed at Toyota’s meetings
of shareholders, and the Audit & Supervisory Committee has certain statutory powers independently, including
auditing the business affairs and accounts of Toyota.
Toyota’s Audit & Supervisory Committee has determined that it does not have an “audit committee
financial expert” serving on the Audit & Supervisory Committee. The qualifications for, and powers of, the
Audit & Supervisory Committee member delineated in the Companies Act are different from those anticipated
for any audit committee financial expert. Audit & Supervisory Committee 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 Committee member has the authority to consult
internal and external experts on accounting matters. Each Audit & Supervisory Committee member must fulfill
the requirements under Japanese laws and regulations and otherwise follow Japanese corporate governance
practices and, accordingly, Toyota’s Audit & Supervisory Committee has confirmed that it is not necessarily in
Toyota’s best interest to nominate as Audit & Supervisory Committee member a person who meets the definition
of audit committee financial expert. Although Toyota does not have an audit committee financial expert on its
Audit & Supervisory Committee, Toyota believes that Toyota’s current corporate governance structure, taken as
a whole, including the Audit & Supervisory Committee members’ ability to consult internal and external experts,
is fully equivalent to a structure having an audit committee financial expert on its Audit & Supervisory
Committee.
142
ITEM 16B. CODE OF ETHICS
Toyota has adopted a code of ethics that applies to its members of the Board of Directors and operating
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 Japan LLC has audited the financial statements of Toyota included in this annual
report on Form 20-F.
The following table presents the aggregate fees for professional services and other services rendered by
PricewaterhouseCoopers Japan LLC and the various network and member firms of PricewaterhouseCoopers to
Toyota in fiscal 2025 and fiscal 2026.
Yen in millions
2025
2026
Audit Fees
(1)
................................................................
8,779
8,780
Audit-related Fees
(2)
..........................................................
134
231
Tax Fees
(3)
.................................................................
453
378
All Other Fees
(4)
.............................................................
60
46
Total
.....................................................................
9,426
9,435
(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.
(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 agreed-upon or expanded audit procedures; 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; expatriate tax assistance and compliance.
(4)
All Other Fees primarily include fees billed for risk management advisory services; services providing
information related to automotive market conditions; and other advisory services.
Policies and Procedures of the Audit & Supervisory Committee
Below is a summary of the current policies and procedures of the Audit & Supervisory Committee for the
pre-approval of audit and permissible non-audit services performed by Toyota’s independent public accountants.
Under the policy, specified operating officers or managers 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 Committee, which reviews and
determines whether or not to grant the request in advance. Upon the general pre-approval of the Audit &
Supervisory Committee, the specified operating officers or managers 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.
143
The Audit & Supervisory Committee 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 specified operating
officers or managers. 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 made by an
Audit & Supervisory Committee member, who is designated in advance by a resolution of the Audit & Supervisory
Committee, in which case such Audit & Supervisory Committee member shall report such decision at the next
meeting of the Audit & Supervisory Committee. The performance of audit and permissible non-audit services and
the payment of fees are subject to review by the Audit & Supervisory Committee at least once every fiscal year.
With respect to fiscal 2026, none of the audit related fees, tax fees or all other fees described in the table
above were approved by the Audit & Supervisory Committee pursuant to the de minimis exception provided by
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. With respect to fiscal 2025, none of the audit related fees,
tax fees or all other fees described in the table above were approved by the Audit & Supervisory Board, which
used to approve such transactions prior to TMC becoming a company with an Audit & Supervisory Committee,
pursuant to the de minimis exception provided by paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
As of the date of this annual report on Form 20-F, we do not rely on any of the exemptions contained in
paragraph (b)(1)(iv), the general exemption contained in paragraph (c)(3) or the last sentence of paragraph (a)(3)
of Rule 10A-3 under the Exchange Act.
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 2026:
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, 2025 – April 30, 2025
......................
16,226,828
2,462
16,226,100
—
May 1, 2025 – May 31, 2025
.......................
387
2,700
—
—
June 1, 2025 – June 30, 2025
.......................
715
2,627
—
—
July 1, 2025 – July 31, 2025
........................
550
2,523
—
—
August 1, 2025 – August 31, 2025
...................
697
2,836
—
—
September 1, 2025 – September 30, 2025
..............
778
2,916
—
—
October 1, 2025 – October 31, 2025
..................
926
2,941
—
—
November 1, 2025 – November 30, 2025
..............
521
3,166
—
—
December 1, 2025 – December 31, 2025
..............
1,045
3,244
—
—
January 1, 2026 – January 31, 2026
..................
819
3,504
—
—
February 1, 2026 – February 28, 2026
................
760
3,663
—
—
March 1, 2026 – March 31, 2026
....................
674
3,566
—
—
Total
..........................................
16,234,700
—
16,226,100
—
(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
144
accordance with Toyota’s share handling regulations. Toyota is required to comply with such requests
pursuant to the Companies Act. See “Item 10. Additional Information — 10.B Memorandum and Articles of
Association — Japanese Unit Share System.” The number of shares purchased not pursuant to publicly
announced plans or programs conducted in fiscal 2026 is 8,600.
(2)
Subsequent to March 31, 2026, pursuant to the written resolution in lieu of a resolution of the Board of
Directors dated June 3, 2025, the resolution of the Board of Directors dated January 14, 2026, and the
written resolution in lieu of a resolution of the Board of Directors dated March 30, 2026, Toyota conducted
a tender offer to repurchase shares of its common stock from existing shareholders, pursuant to which
Toyota repurchased 1,192,330,962 shares of its common stock at 3,067 yen per share, for an aggregate
purchase price of approximately 3.65 trillion yen, during the period from March 31, 2026 to April 27, 2026.
The repurchased shares became treasury shares upon repurchase.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
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
corporate governance standards under Section 303A of the NYSE Listed Company Manual (the “NYSE
Corporate Governance Rules”). More specifically, Toyota is exempt from the NYSE Corporate Governance
Rules, except for requirements that (a) Toyota’s Audit & Supervisory Committee satisfies the requirements of
Rule 10A-3 under 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), (b) and (e), (d) Toyota must submit annual and interim written affirmations to
the NYSE, and (e) Toyota must adopt and comply with a written policy providing that it will recover erroneously
awarded incentive-based compensation from its executive officers in the event that it is required to prepare an
accounting restatement due to the material noncompliance by Toyota with any financial reporting requirement
under the securities laws. Toyota’s corporate governance practices and those followed by domestic companies
under the NYSE Corporate Governance Rules have the following significant differences:
1
.
Members of the Board of Directors
. The NYSE Corporate Governance Rules require U.S. listed
companies generally to have a majority of the board be “independent directors,” as defined under the NYSE
Corporate Governance Rules. The NYSE Corporate Governance Rules also require that the non-management
directors of each U.S. listed company meet at regularly scheduled executive sessions without management. As a
foreign private issuer, neither rule applies to Toyota. Unlike the NYSE Corporate Governance Rules, neither the
Companies Act nor the regulations of the Japanese stock exchanges require, and accordingly Toyota does not
have, an internal corporate organ or committee comprised solely of “independent directors” as defined under the
regulations of the Japanese stock exchanges.
The Companies Act requires Toyota to have “outside” members of the Board of Directors, as defined under
the Companies Act. Toyota currently has five outside members of the Board of Directors. An “outside” member
of the Board of Directors refers to:
(a)
a person who is not, and has never been during the ten year period before becoming an outside member
of the Board of Directors, an Executive Director of Toyota or its subsidiaries;
(b)
if a person was a member of the Board of Directors, 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) or Audit
and Supervisory Board member (excluding those who have ever been Executive Directors, etc.) of
145
Toyota or any of its subsidiaries at any time during the ten year period before becoming an outside
member of the Board of Directors, such person who has not been an Executive Director, etc. of Toyota
or any of its subsidiaries during the ten year period before becoming a member of the Board of
Directors, accounting counselor or Audit and Supervisory Board member; and
(c)
a person who is not a spouse or relative within the second degree of kinship of any member of the
Board of Directors, manager or other key employee of Toyota.
Such qualifications for an “outside” member of the Board of Directors 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),” defined under the relevant regulations of the Japanese stock exchanges as
“outside directors” (as defined under the Companies Act), who are unlikely to have any conflicts of interests with
Toyota’s general shareholders. Each of the outside members of the Board of Directors of Toyota satisfies the
“independent director” requirements under the regulations of the Japanese stock exchanges. The Japanese
Corporate Governance Code provides that certain listed companies, including Toyota, should appoint at least
one-third of their directors as “independent outside directors” as defined based on the criteria for assessing
director independence established by Toyota in line with the independence standards of the Japanese stock
exchanges. Each of the outside members of the Board of Directors of Toyota satisfies the “independent outside
director” requirements under the independence standards of the Japanese stock exchanges. To ensure our outside
members of the Board of Directors participate in decision-making from an independent standpoint and reflect the
opinions of more diverse stakeholders in management, Toyota has clarified the unique roles of and expectations
for Toyota’s outside members of the Board of Directors and revised the independence assessment criteria. The
definition of “independent director” and “outside director” reflecting such criteria is different from that of the
definition of independent director under the NYSE Corporate Governance Rules.
The roles of and expectations for outside members of the Board of Directors are as follows.
To believe in and uphold the Toyota Philosophy, have a high interest in our company’s business and people,
and understand our company and its surrounding environment by having close dialogues with top management
To contribute to decision-making for our company’s sustainable growth and medium- to long-term
enhancement in our corporate value as well as to solutions to social issues
To contribute to greater added value of the Board of Directors’ decision-making while supervising business
execution, utilizing their abundant experience and advanced expertise based on their recognition of diverse
stakeholders’ opinions
To provide advice and support on key issues and business strategies, etc., in addition to matters presented to
the Board of Directors
(For outside members of the Board of Directors who are Audit & Supervisory Committee members)
In addition to the above, to conduct audits from a fair and neutral standpoint, utilizing their abundant
experience and advanced expertise
The independence assessment criteria of Toyota are as follows.
Outside members of the Board of Directors who satisfy the requirements stipulated by the Companies Act
and do not fall into any of the following categories are deemed to be independent.
1.
History of belonging to affiliated companies: Persons who are currently functioning as executive
directors, members of the Audit & Supervisory Committee (excluding outside members of the Board of
146
Directors) or Audit and Supervisory Board, operating officers, or employees of our company and its
consolidated subsidiaries. Or those who functioned as executive directors, members of the Audit &
Supervisory Committee (excluding outside members of the Board of Directors) or the Audit and
Supervisory Board, operating officers, or employees at any time during the last ten years.
2.
Major business partners: Persons who are executing business in companies, etc. (executive directors,
executive officers, operating officers, employees, or any equivalents; the same shall apply hereunder)
where the amount of the transaction with our company and its consolidated subsidiaries is more than
2% of the consolidated net sales of their company or our company and its consolidated subsidiaries in
any of the last three fiscal years.
3.
Major lenders: Persons who are executing business in companies from which our company and its
consolidated subsidiaries borrowed funds amounting to more than 2% of the consolidated total assets
of our company and its consolidated subsidiaries in any of the last three fiscal years.
4.
Highly paid experts: Consultants, accountants, or jurists who earned more than US$120,000 a year
directly from our company and its consolidated subsidiaries as remuneration (excluding that for the
function of outside executives) in any of the last three fiscal years.
5.
Large contribution: Persons who (or persons belonging to organizations that) received contributions
amounting to more than US$120,000 a year from our company and its consolidated subsidiaries in any
of the last three fiscal years.
6.
Major shareholders: Persons who are executing business in companies, etc., that are ranked tenth or
higher in terms of the ownership ratio of our company’s shares or for which our company is ranked
tenth or higher in terms of the ownership ratio of their shares.
7.
Affiliated audit firms: Persons who currently belong to or belonged to, at any time during the last ten
years, the audit firms serving as accounting auditors of our company and its consolidated subsidiaries.
8.
Close relatives: Spouses, or relatives within the second degree of kinship, of members of the Board of
Directors, the Audit & Supervisory Committee or Audit and Supervisory Board, operating officers, key
employees of our company and its consolidated subsidiaries, or persons falling into the above 1 to 6
(excluding non-key persons).
9.
Mutual executive dispatch: Persons who are executing business in companies that are accepting one or
more member(s) of the Board of Directors or the Audit and Supervisory Board from our company and
its consolidated subsidiaries.
10.
Term of office: Persons whose term of office as an outside executive is longer than 12 years.
Persons who fall within any of the above-listed categories may be determined as independent, under the
condition
that
our company discloses
the reason for the determination
when such persons satisfy
the
requirements for outside executives stipulated in the Companies Act and are substantially independent, and thus,
a conflict of interest against general shareholders is deemed not to emerge.
2. Nominating / Corporate Governance and Compensation Committees
. Under the Companies Act, Toyota
has elected to structure its corporate governance system as a company with an audit & supervisory committee.
Toyota, as a Japanese company with an audit & supervisory committee, is not required to 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.
However, members of Toyota’s Executive Appointment Meeting, a majority of whom are outside directors,
discuss recommendations to the Board of Directors concerning the appointment and dismissal of members of the
Board of Directors. Members of the Executive Compensation Meeting, a majority of whom are outside directors,
review the remuneration system for members of Board of Directors (excluding for Audit & Supervisory
Committee members) and senior management as well as determine the amount of remuneration for each member
147
of the Board of Directors (excluding for Audit & Supervisory Committee members). The Japanese Corporate
Governance Code provides that certain listed companies, including Toyota, generally should have the majority of
the members of each of certain committees be independent directors, and those committees of Toyota satisfy that
principle.
Pursuant to the Companies Act, Toyota’s Board of Directors nominates and submits a proposal for the
appointment of members of the Board of Directors for shareholder approval. The shareholders vote on such
nomination at the general shareholders’ meeting. The Companies Act requires that the limits or calculation
formula of the remuneration, bonus and any other benefits in compensation for the execution of duties
(“remuneration, etc.”) of directors, the kind of remuneration, etc. (in case that the remuneration, etc. are other
than cash (excluding shares and stock acquisition rights)) to be received by directors, and the limits of
remuneration, etc. that are shares and stock acquisition rights to be granted to directors 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 member of the Board of Directors (excluding
Audit & Supervisory Committee members) is broadly delegated to the Board of Directors and the distribution of
remuneration among each Audit & Supervisory Committee member is determined by consultation among the
Audit & Supervisory Committee members.
3. Audit Committee
. In addition to satisfying the requirements of Rule 10A-3 under the Exchange Act
(including that each member meet the independence requirements of Rule 10A-3(b)(1) ), audit committees of
companies listed on the NYSE generally are supposed to satisfy additional requirements, such as each member
needing to be also an “independent director” as defined under the NYSE Corporate Governance Rules, and
having specified purposes, duties and responsibilities. Toyota is not subject to the aforementioned additional
requirements.
Pursuant to the requirements of the Companies Act, Toyota elects its Audit & Supervisory Committee
members and the other members of the Board of Directors separately through a resolution adopted at a general
shareholders’ meeting. The Companies Act of Japan stipulates that the Audit & Supervisory Committee must
consist of at least three members of the Board of Directors. Toyota currently has four Audit & Supervisory
Committee members.
Under the Companies Act, a majority of the Audit & Supervisory Committee members must be “outside”
members of the Board of Directors. An “outside” member of the Board of Directors is any person who satisfies
all of the requirements as described above in “1. Members of the Board of Directors.”:
Three of the Audit & Supervisory Committee members of Toyota are “outside” members of the Board of
Directors and satisfy the “independent director” requirements under the regulations of the Japanese stock
exchanges, as described above in “1. Members of the Board of Directors.”
Unlike the NYSE Corporate Governance Rules, the Companies Act, among other matters, does not require
Audit & Supervisory Committee members to establish an “expertise in accounting or financial management” nor
are they required to present other special knowledge and experience. Toyota’s Board of Directors has not
determined that any of its Audit & Supervisory Committee members has “expertise in accounting or financial
management,” as set forth in the NYSE Corporate Governance Rules. However, the Japanese Corporate
Governance Code indicates that persons with appropriate experience and skills as well as necessary knowledge of
finance, accounting, and laws should be appointed as Audit & Supervisory Committee members, and in
particular, one or more Audit & Supervisory Committee members who have sufficient knowledge of finance and
accounting matters should be appointed. Toyota has appointed persons who are able to provide opinions and
advice regarding management based on their broader experience and discretion beyond finance and accounting.
Under the Companies Act, the Audit & Supervisory Committee may determine the auditing policies and methods
of investigating the conditions of Toyota’s business and assets and prepares auditors’ reports. Further, the
Audit & Supervisory Committee makes decisions concerning proposals relating to the appointment and dismissal
148
of accounting auditors; it also has the authority to dismiss the accounting auditor when certain matters specified
under the Companies Act occur.
U.S. domestic issuers listed on NYSE are required to disclose the charter of their audit committees.
Japanese law and the regulations of the Japanese stock exchanges do not require such disclosure, and
accordingly, we do not disclose our Audit & Supervisory Committee charter.
4. Corporate Governance Guidelines
. Unlike the NYSE Corporate Governance Rules, Toyota is not
required to comply with the Japanese Corporate Governance Code under Japanese laws and regulations,
including the Companies Act, the Financial Instruments and Exchange Law of Japan and the regulations of the
Japanese stock exchanges. However, if Toyota does not comply with the Japanese Corporate Governance Code,
it is required to explain the reasons why it does not do so in accordance with the regulations of the Japanese stock
exchanges. In addition, Toyota is required to resolve at the Board of Directors matters relating to a system, which
is required under the ordinance of the Ministry of Justice (“internal control system” or “
naibu-tosei
”), to ensure
the execution of duties of the members of the Board of Directors to comply with laws, regulations and articles of
incorporation, and any other systems to ensure the adequacy of the business, 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 the regulations of the Japanese stock exchanges in respect of timely disclosure.
5. Code of Business Conduct and Ethics
. Similar to the NYSE Corporate Governance Rules, under the
Japanese Corporate Governance Code, Toyota is encouraged to adopt a code of conduct regarding ethical
business activities for members of the Board of Directors, officers and employees. Toyota has resolved matters
relating to maintenance of an “internal control system,” or “
naibu-tosei,”
in order to ensure its employees
comply with laws, regulations and the articles of incorporation, etc., pursuant to the Companies Act, and Toyota
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 “Item 16B. Code of Ethics”
for additional information.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
149
ITEM 16J. INSIDER TRADING POLICIES
Toyota has adopted an insider trading policy that is reasonably designed to promote compliance with
applicable insider trading laws, rules and regulations, and any listing standards applicable to Toyota. A copy is
filed as Exhibit 19.1 to this annual report.
ITEM 16K. CYBERSECURITY
Cybersecurity Risk Management and Strategy
The process at TMC for managing cybersecurity risks is integrated into the TGRS, a company-wide risk
management framework based on ISO and COSO. For instance, based on the TGRS, TMC identifies
cybersecurity risks, determines their degree of significance, and sets priorities to enable an effective response.
For a further discussion of TMC’s company-wide risk management, see “Item 4. Information on the Company —
4.B Business Overview — Toyota’s Approach to and Initiatives Towards Sustainability — Risk Management” in
this annual report.
As part of TMC’s cybersecurity risk management process, TMC has a cybersecurity team established within
the digital information and communication group that gathers information concerning cybersecurity-related
trends and case examples relating to other companies from third parties such as governmental security agencies,
cybersecurity companies and software vendors, and monitors cyberattacks from external sources. In addition, by
being a member of the Automotive Information Sharing & Analysis Center (Auto-ISAC) in Japan and the U.S.,
TMC is able to learn promptly about problematic events that occur within the industry and puts the information
to use to improve and implement cybersecurity measures. Furthermore, TMC also actively collaborates with
outside experts to gain outside knowledge and uses it to improve security. TMC also is a member of the Nippon
Computer Security Incident Response Team (CSIRT) Association, which shares information about incidents,
vulnerabilities, and signs of attacks, among member companies.
The team also shares information about security threats with Toyota’s overseas regional headquarters, which
then share information within their own regions and implement countermeasures as necessary. Similarly, in the
area of product security, the groups in charge of automotive security within the specialized team promotes
automotive security initiatives throughout the entire automotive lifecycle in collaboration with the automotive
development field, including product development with security-by-design and multi-layered protection in mind,
in addition to compliance with international regulations and standards such as UNR155*
1
and ISO/SAE 21434*
2
,
and the collection and monitoring of threat and vulnerability information.
*1
Regulations concerning cybersecurity, which were adopted at the World Forum for the Harmonization of
Vehicle Regulations (WP.29) in June 2020
*2
International standards concerning cyber security of electrical/electronic systems of automobiles
TMC also provides information security training for all of TMC’s employees, including secondees and
dispatched employees, such as through activities to raise awareness during “Information Quality Months,”
educational or warning information displayed at the startup of individuals’ personal computers, and unannounced
training to test responses to targeted-attack-type emails.
In addition, third-party organizations with expertise in cybersecurity and risk management evaluate, based
on such standards as those of the U.S National Institute of Standards and Technology Cybersecurity Framework
(NIST CSF), NIST’s Special Publications (SP) Series, ISO and International Electrotechnical Commission (IEC),
the condition of the management and technical aspects of TMC’s security measures for information technology,
operational technology, products and other areas. TMC implements measures to address problems identified
through these evaluations as needed, working to raise the level of security.
TMC has an ongoing process in place to monitor known access routes to its systems, block potential threats,
and evaluate incidents as they are identified. This process also applies to the systems of certain subsidiaries as
well as certain third-party distributors, suppliers, and service providers.
150
TMC has issued the All Toyota Security Guidelines (“ATSG”), which are guidelines for identifying and
mitigating cybersecurity risks, to TMC’s consolidated subsidiaries, as well as third party dealers and rental or
leasing agencies in Japan, requesting them to conduct self-inspections covering more than 100 items and enhance
cybersecurity measures. In addition, the cybersecurity team carries out on-site audits by visiting the subsidiaries
and other entities that the ATSG applies to, to check responses to the ATSG and the status of implementation of
physical security measures at each company. TMC has also requested TMC’s key suppliers to enhance their
cybersecurity measures based on the guidelines that are equivalent to the ATSG.
No material cybersecurity incident has occurred to Toyota to date. In fiscal 2026, Toyota did not identify
cybersecurity risks from cybersecurity threats, including as a result of past cybersecurity incidents, that are
reasonably likely to materially affect Toyota, including its business strategy, results of operations, or financial
condition. However, despite the capabilities, processes, and other security measures we employ that we believe
are designed to assess, identify, and mitigate the risk of cybersecurity incidents, we may not be aware of all
vulnerabilities or might not accurately assess the risks of incidents, and such preventative measures cannot
provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks. For a
further discussion of risks that may materially affect Toyota if a cybersecurity threat materializes and other
matters, see “Item 3. Key Information — 3.D Risk Factors” in this annual report.
Cybersecurity Governance
TMC considers cybersecurity risk to be a particularly important risk within its risk management framework
and one of the areas of focus for its Board of Directors, Audit & Supervisory Committee, and management. As
part of the company-wide risk management process, in addition to developing the TGRS described above, TMC
has established a governance and risk subcommittee that includes members of the Board of Directors and
Audit & Supervisory Committee, as well as the chief officer of the cyber security office as a member in charge of
cybersecurity. The subcommittee discusses cybersecurity as one of the company-wide risks.
TMC’s cybersecurity team is led by the chief officer and reports serious cybersecurity risks or incidents to
the Board of Directors and the Audit & Supervisory Committee as they arise.
In addition, the members of the Information Quality Management Meeting, which is held approximately
twice a year, receives reports on and oversees the status of cybersecurity risks and incidents at TMC. This body,
chaired by the chief officer, is attended by responsible personnel assigned to each security area, such as
confidential information management, information systems, and supply chain. Participants report and share
information about security risks and the status of incidents.
Of such information, material matters are reported by the chief officer to the Board of Directors and
Audit & Supervisory Committee through the CRO, who is responsible for overall risk management.
In addition to the meeting mentioned above, the cybersecurity team coordinates with Audit & Supervisory
Committee members, communicating with them when they make inquiries about the state of TMC’s approach to
cybersecurity and incident trends in the world.
TMC’s process for identifying, tracking and managing cybersecurity risks on a daily basis is primarily
carried out by the cybersecurity team led by the chief officer.
The cybersecurity team consists of professionals with cybersecurity expertise. Among the members, the
chief officer has gained experience in the development of in-vehicle software and on-board devices since joining
TMC and has insights into information technologies such as software and cloud services. The chief officer also
gained experience in the field of cybersecurity since 2016, when he became an officer of Toyota’s Connected
Company, and thus has knowledge of and insights into cybersecurity. TMC has a process where cybersecurity
incidents at TMC or TMC’s group companies or suppliers is reported to an appropriate cybersecurity team in a
timely manner as it occurs and escalated to the chief officer according to the severity of the incident.
151
In addition, TMC has the Toyota Motor Corporation-Security Incident Response Team (TMC-SIRT), a
response team including members of management, and has established a system to take appropriate and prompt
action to resolve incidents. The TMC-SIRT does not only respond to cybersecurity incidents at TMC, but also
provides support for incidents at TMC’s subsidiaries in Japan and overseas and key suppliers in Japan as
necessary to bring the situation under control.
The chief officer is responsible for managing the cybersecurity risks and strategic processes described
above, as well as overseeing the prevention, mitigation, detection, and remediation of cybersecurity incidents.
152
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.
153
TOYOTA MOTOR CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:2743)
.....................
F-2
Consolidated statement of financial position
.................................................
F-4
Consolidated statement of income
.........................................................
F-6
Consolidated statement of comprehensive income
............................................
F-7
Consolidated statement of changes in equity
................................................
F-8
Consolidated statement of cash flows
......................................................
F - 10
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 equity method investees in which the Company holds 50% or less ownership have been
omitted because none meet the significance tests specified in Rule 3-09 of Regulation S-X.
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Toyota Jidosha Kabushiki Kaisha
(“Toyota Motor Corporation”)
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Toyota Motor Corporation and its subsidiaries
(collectively referred to as the “Company”) as of March 31, 2026 and 2025, and the related consolidated statements of income, comprehensive
income, changes in equity and cash flows for each of the three years in the period ended March 31, 2026, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial
reporting as of March 31, 2026, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended
March 31, 2026 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on
criteria established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated 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 the Company’s
consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. 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.
Definition and Limitations of Internal Control over Financial Reporting
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.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that
were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to
F-2
the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
Liabilities for the costs of recalls and other safety measures
As described in Notes 3 and 24 to the consolidated financial statements, the Company accrues for costs of recalls and other safety measures.
As of March 31, 2026, estimated liabilities for the costs of recalls and other safety measures totaled ¥1,431,112 million and were included in
liabilities for quality assurance in the consolidated statement of financial position. The Company generally measures the 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. However, when circumstances warrant, the Company measures liabilities for costs of a particular recall or other safety
measures using an individual model when they are probable and reasonably estimable. Management calculates the liabilities for the costs of
recalls and other safety measures that are determined comprehensively based on the accumulated amount of repair cost paid per unit and
pattern of actual payment occurrence.
The principal considerations for our determination that performing procedures relating to liabilities for the costs of recalls and other safety
measures that are determined comprehensively is a critical audit matter are 1) significant judgment and estimation was required by
management when developing the liabilities which in turn led to a high degree of auditor judgment and subjectivity in performing procedures
to evaluate management’s assumptions; and 2) significant audit effort was necessary relating to testing the accumulated amount of repair cost
paid per unit and pattern of actual payment occurrence utilized in developing the estimate. In addition, the audit effort included the
involvement of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence
obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to liabilities for the costs of recalls
and other safety measures, including controls related to the determination of the significant assumptions and data used to calculate the
liabilities that are determined comprehensively. These procedures also included, among others: 1) testing management’s process for
estimating the liabilities, including evaluating the reasonableness of the significant assumptions; and 2) testing of the completeness and
accuracy of the data used in the estimate. Professionals with specialized skill and knowledge were used to assist in testing the liabilities by
developing an independent range of reasonable estimated loss based on the Company’s data and independently developed assumptions.
Allowance for credit losses—Retail finance receivables
As described in Notes 3, 8 and 20 to the consolidated financial statements, the Company measures an allowance for credit losses on its retail
finance receivables by estimating the expected credit losses at the reporting date. As of March 31, 2026, ¥382,152 million of the allowance for
credit losses corresponding to ¥31,837,922 million of retail finance receivables was recorded in the consolidated statement of financial
position. The allowance for credit losses on retail finance receivables is measured 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, forward-looking information including movements of the world
economy and other pertinent factors. In calculating the expected credit losses, the Company uses the probability of a default and the loss rate
in the event of a default based on past experience and then reflects adjustments based on its forecasts of current and future economic
conditions. Retail finance receivables within the United States represent approximately half of the consolidated retail finance receivables as of
March 31, 2026.
The principal considerations for our determination that performing procedures relating to the allowance for credit losses on retail finance
receivables is a critical audit matter are 1) significant judgment was required by management when determining assumptions of the probability
of a default, the loss rate in the event of a default, and adjustments based on the forecasts of current and future economic conditions used in
the estimating of the allowance for credit losses, which in turn led to a high degree of auditor judgment and subjectivity in performing
procedures to evaluate management’s assumptions and adjustments; and 2) there was a high level of complexity in assessing audit evidence
related to management’s estimate. In addition, the audit effort included the involvement of professionals with specialized skill and knowledge
to assist in performing these procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s allowance for
credit losses on retail finance receivables, including controls over data supporting the assumptions, such as the probability of a default and the
loss rate in the event of a default based on past experience, and adjustments used to determine the allowance. These procedures also included,
among others, testing management’s process for estimating the allowance, including evaluating the reasonableness of the assumptions and
adjustments. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the assumptions and
adjustments determined by management.
/s/ PricewaterhouseCoopers Japan LLC
Nagoya, Japan
June 10, 2026
We have served as the Company’s auditor since 2006.
F-3
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Yen in millions
Notes
March 31, 2025
March 31, 2026
Assets
Current assets
Cash and cash equivalents
.................................
6
Trade accounts and other receivables
........................
7
Receivables related to financial services
......................
8
Other financial assets
.....................................
9
Inventories
.............................................
10
Income tax receivable
....................................
Other current assets
......................................
Subtotal
...............................................
Assets held for sale
......................................
11
Total current assets
..................................
Non-current assets
Investments accounted for using the equity method
.............
12
Receivables related to financial services
......................
8
Other financial assets
.....................................
9
Property, plant and equipment
Land
..............................................
13
Buildings
..........................................
13
Machinery and equipment
.............................
13
Vehicles and equipment on operating leases
...............
13
Construction in progress
..............................
13
Total property, plant and equipment, at cost
...............
13
Less - Accumulated depreciation and impairment losses
.....
13
(18,533,826 )
(19,504,000 )
Total property, plant and equipment, net
..................
13
Right of use assets
.......................................
14
Intangible assets
.........................................
15
Deferred tax assets
.......................................
16
Other non-current assets
..................................
23
Total non-current assets
...................................
Total assets
.................................................
The accompanying notes are an integral part of these consolidated financial statements
F-4
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION—(Continued)
Yen in millions
Notes
March 31, 2025
March 31, 2026
Liabilities
Current liabilities
Trade accounts and other payables
..........................
17
Short-term and current portion of long-term debt
..............
18
Accrued expenses
.......................................
Other financial liabilities
.................................
19
Income taxes payable
....................................
Liabilities for quality assurance
............................
24
Provisions
.............................................
25
Other current liabilities
...................................
Subtotal
...............................................
Liabilities directly associated with assets held for sale
..........
11
Total current liabilities
...................................
Non-current liabilities
Long-term debt
.........................................
18
Other financial liabilities
.................................
19
Retirement benefit liabilities
..............................
23
Deferred tax liabilities
...................................
16
Provisions
.............................................
25
Other non-current liabilities
...............................
Total non-current liabilities
...............................
Total liabilities
.............................................
Shareholders’ equity
Common stock
.........................................
26
Additional paid-in capital
.................................
26
Retained earnings
.......................................
26
Other components of equity
...............................
26
Other comprehensive income associated with assets held for sale
....
11,26
Treasury stock
..........................................
26
(4,415,943 )
(4,455,410 )
Total Toyota Motor Corporation shareholders’ equity
..........
26
Non-controlling interests
.................................
Total shareholders’ equity
....................................
Total liabilities and shareholders’ equity
.............................
The accompanying notes are an integral part of these consolidated financial statements
F-5
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Yen in millions
Notes
For the year ended
March 31, 2024
For the year ended
March 31, 2025
For the year ended
March 31, 2026
Sales revenues
Sales of products
..................
27
Financial services
..................
27
Total sales revenues
................
27
Costs and expenses
Cost of products sold
...............
Cost of financial services
............
Selling, general and administrative
....
Total costs and expenses
............
Operating income
......................
Share of profit (loss) of investments
accounted for using the equity method
...
12
Other finance income
...................
29
Other finance costs
.....................
29
(103,709 )
(190,711 )
(86,746 )
Foreign exchange gain (loss), net
..........
Other income (loss), net
.................
(43,497 )
(74,239 )
Income before income taxes
..............
Income tax expense
....................
16
Net income
...........................
Net income attributable to
Toyota Motor Corporation
...........
Non-controlling interests
............
Net income
.......................
Yen
Earnings per share attributable to Toyota
Motor Corporation
Basic and Diluted
..................
30
The accompanying notes are an integral part of these consolidated financial statements
F-6
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Yen in millions
Notes
For the year ended
March 31, 2024
For the year ended
March 31, 2025
For the year ended
March 31, 2026
Net income
...........................
Other comprehensive income, net of tax
Items that will not be reclassified to
profit (loss)
Net changes in revaluation of
financial assets measured at fair
value through other
comprehensive income
........
26
Remeasurements of defined benefit
plans
......................
26
(109,598 )
Share of other comprehensive
income of equity method
investees
...................
12,26
(63,213 )
Total of items that will not be
reclassified to profit (loss)
.....
(70,682 )
Items that may be reclassified
subsequently to profit (loss)
Exchange differences on
translating foreign operations . . .
26
(827,848 )
Net changes in revaluation of
financial assets measured at fair
value through other
comprehensive income
........
26
(53,181 )
Share of other comprehensive
income of equity method
investees
...................
12,26
Total of items that may be
reclassified subsequently to
profit (loss)
.................
(675,349 )
Total other comprehensive income, net
of tax
..........................
26
(746,031 )
Comprehensive income
.................
Comprehensive income for the period
attributable to
Toyota Motor Corporation
...........
Non-controlling interests
............
Comprehensive income
.............
The accompanying notes are an integral part of these consolidated financial statements
F-7
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended March 31, 2024
Yen in millions
Notes
Common
stock
Additional
paid-in
capital
Retained
earnings
Other
components
of equity
Treasury
stock
Toyota Motor
Corporation
shareholders’
equity
Non-
controlling
interests
Total
shareholders’
equity
Balances at April 1, 2023
..........
(3,736,562 ) 28,338,706
Comprehensive income
Net income
.................
Other comprehensive income,
net of tax
................
26
Total comprehensive income . . .
Transactions with owners and other
Dividends paid
..............
26
(880,197 )
(880,197 )
(90,309 )
(970,506 )
Repurchase of treasury stock . . .
26
(231,069 )
(231,069 )
(231,069 )
Reissuance of treasury stock . . .
26
Equity transactions and other . . .
(7,188 )
(7,188 )
(5,546 )
(12,735 )
Total transactions with owners
and other
.................
(6,926 )
(880,197 )
(230,420 ) (1,117,543 )
(95,856 ) (1,213,398 )
Reclassification to retained
earnings
.....................
26
(387,334 )
Balances at March 31, 2024
........
(3,966,982 ) 34,220,991
For the year ended March 31, 2025
Yen in millions
Notes
Common
stock
Additional
paid-in
capital
Retained
earnings
Other
components
of equity
Treasury
stock
Toyota Motor
Corporation
shareholders’
equity
Non-
controlling
interests
Total
shareholders’
equity
Balances at April 1, 2024
..........
(3,966,982 ) 34,220,991
Comprehensive income
Net income
.................
Other comprehensive income,
net of tax
................
26
(753,264 )
(753,264 )
(746,031 )
Total comprehensive income . . .
(753,264 )
Transactions with owners and other
Dividends paid
..............
26
(1,132,329 )
(1,132,329 )
(127,232 ) (1,259,560 )
Repurchase of treasury stock . . .
26
(1,179,043 ) (1,179,043 )
(1,179,043 )
Reissuance of treasury stock . . .
26
Retirement of treasury stock
...
26
(1,953 )
(727,264 )
Equity transactions and other . . .
Total transactions with owners
and other
.................
(1,859,593 )
(448,961 ) (2,307,987 )
(96,162 ) (2,404,149 )
Reclassification to retained
earnings
.....................
26
(140,359 )
Balances at March 31, 2025
........
(4,415,943 ) 35,924,826
The accompanying notes are an integral part of these consolidated financial statements
F-8
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY—(Continued)
For the year ended March 31, 2026
Yen in millions
Notes
Common
stock
Additional
paid-in
capital
Retained
earnings
Other
components
of equity
Other
comprehensive
income
associated
with assets
held for sale
Treasury
stock
Toyota Motor
Corporation
shareholders’
equity
Non-
controlling
interests
Total
shareholders’
equity
Balances at April 1, 2025
..
(4,415,943 ) 35,924,826
Comprehensive income
Net income
..........
Other comprehensive
income, net of tax
..
26
Total comprehensive
income
...........
Transactions with owners
and other
Dividends paid
.......
26
(1,238,974 )
(1,238,974 )
(125,416 ) (1,364,389 )
Repurchase of treasury
stock
.............
26
(39,975 )
(39,975 )
(39,975 )
Reissuance of treasury
stock
.............
26
Retirement of treasury
stock
.............
26
Equity transactions and
other
.............
(36,984 )
(36,984 )
Total transactions with
owners and other . . .
(35,626 )(1,238,974 )
(39,467 ) (1,314,067 )
(60,483 ) (1,374,550 )
Reclassification to retained
earnings
..............
26
(259,516 )
Transfer to other
comprehensive income
associated with assets
held for sale
...........
11
26
(266,596 )
Balances at
March 31, 2026
........
(4,455,410 ) 39,918,854
The accompanying notes are an integral part of these consolidated financial statements
F-9
TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Yen in millions
Notes
For the year ended
March 31, 2024
For the year ended
March 31, 2025
For the year ended
March 31, 2026
Cash flows from operating activities
Net income
...........................................
Depreciation and amortization
............................
Interest income and interest costs related to financial services,
net
................................................
(713,506 )
(747,742 )
(809,088 )
Share of profit (loss) of investments accounted for using the
equity method
.......................................
(763,137 )
(591,219 )
(552,742 )
Income tax expense
....................................
Changes in operating assets and liabilities, and other
..........
(3,975,836 )
(2,815,549 )
(976,558 )
(Increase) decrease in trade accounts and other
receivables
.....................................
(859,239 )
(539,370 )
(Increase) decrease in receivables related to financial
services
........................................
(3,398,434 )
(2,389,665 )
(2,017,214 )
(Increase) decrease in inventories
.....................
(207,529 )
(70,654 )
(468,883 )
(Increase) decrease in other current assets
...............
(326,365 )
(462,114 )
(175,944 )
Increase (decrease) in trade accounts and other payables . . .
Increase (decrease) in other current liabilities
............
Increase (decrease) in retirement benefit liabilities
........
(161 )
Other, net
........................................
(411,358 )
(987,645 )
Interest received
.......................................
Dividends received
.....................................
Interest paid
..........................................
(1,148,392 )
(1,609,083 )
(1,685,013 )
Income taxes paid, net of refunds
.........................
(1,124,322 )
(2,501,315 )
(1,240,680 )
Net cash provided by (used in) operating activities
............
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others . .
(1,846,447 )
(1,906,811 )
(2,148,192 )
Additions to equipment leased to others
....................
(2,867,660 )
(2,996,920 )
(2,766,352 )
Proceeds from sales of fixed assets excluding equipment leased
to others
...........................................
Proceeds from sales of equipment leased to others
............
Additions to intangible assets
............................
(334,287 )
(354,196 )
(378,804 )
Additions to public and corporate bonds and stocks
...........
(2,972,779 )
(3,965,550 )
(4,290,671 )
Proceeds from sales of public and corporate bonds and stocks . . .
Proceeds upon maturity of public and corporate bonds
.........
Other, net
............................................
35
(1,392,565 )
(494,551 )
Net cash provided by (used in) investing activities
............
(4,998,751 )
(4,189,736 )
(1,520,307 )
Cash flows from financing activities
Increase (decrease) in short-term debt
......................
18
(90,691 )
Proceeds from long-term debt
............................
18
Payments of long-term debt
..............................
18
(8,752,329 )
(10,872,262 )
(11,956,541 )
Dividends paid to Toyota Motor Corporation common
shareholders
........................................
26
(880,197 )
(1,132,329 )
(1,238,974 )
Dividends paid to non-controlling interests
..................
(90,309 )
(127,232 )
(125,416 )
Reissuance (repurchase) of treasury stock
...................
(231,069 )
(1,179,043 )
(39,975 )
Other, net
............................................
(7,627 )
Net cash provided by (used in) financing activities
............
(536,659 )
Effect of exchange rate changes on cash and cash equivalents
.......
(134,089 )
Net increase (decrease) in cash and cash equivalents
..............
(429,656 )
Cash and cash equivalents at beginning of year
..................
6
Net increase (decrease) in cash and cash equivalents resulting from
transfer to assets held for sale
..............................
11
(115,932 )
Cash and cash equivalents at end of year
........................
6
The accompanying notes are an integral part of these consolidated financial statements
F-10
F-11
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TMC is a limited liability, joint-stock company located in Japan
registered in Toyota City, Aichi Prefecture . The consolidated financial statements of the group consist of TMC,
its consolidated subsidiaries (collectively, “Toyota”) and their interests in associates and joint ventures.
compact cars, SUVs, trucks and related parts and accessories throughout the world. In addition, Toyota and its
associates provide financing, vehicle leasing and certain other financial services primarily to its dealers and their
Toyota’s consolidated financial statements have been prepared in accordance with IFRS Accounting
Standards as issued by the IASB.
Toyota’s consolidated financial statements have been prepared on a historical cost basis, except for certain
financial assets and liabilities measured at fair value and assets and liabilities associated with defined benefit
The consolidated financial statements are presented in Japanese yen, which is the functional currency of
TMC. All financial information presented in Japanese yen has been rounded to the nearest million Japanese yen,
(Consolidated statement of financial position)
Provisions, which were included in “Other current liabilities” and “Other non-current liabilities” for the year
ended March 31, 2025, have been reclassified and presented as separate line items for the year ended March 31,
2026, due to the increased materiality and for the purpose of providing a clearer presentation of the financial
position.
To reflect this change in presentation, amounts for the year ended March 31, 2025 have also been
reclassified and presented accordingly.
As a result of this reclassification, ¥413,352 million previously presented in “Other current liabilities” has
been reclassified to “Provisions” within current liabilities, and ¥301,103 million previously presented in “Other
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-12
.
Material accounting policies
The consolidated financial statements include the accounts of TMC, its subsidiaries that are controlled by
TMC, and those structured entities that are controlled by Toyota. Toyota controls an entity when Toyota is
exposed or has rights to variable returns from involvement with the entity, and has the ability to affect those
returns by using its power over the entity.
The financial statements of subsidiaries have been adjusted in order to ensure consistency with the
accounting policies adopted by Toyota as necessary. All significant intercompany balances and transactions as
well as related unrealized profits have been eliminated in consolidation.
Changes in a subsidiary’s ownership interests that do not result in a loss of control are accounted for as
equity transactions. When control over a subsidiary is lost, any gain or loss on the disposal of the interest sold is
Associates are entities over which Toyota has a significant influence over the decisions on financial and
operating policies, but does not have control or joint control.
Joint ventures are entities over which two or more parties including Toyota have joint control, based on a
contractual arrangement, and financial and business decisions about the relevant activities of which require
unanimous consent of the parties that have joint control.
Investments in associates and joint ventures are accounted for using the equity method. The financial
statements of associates and joint ventures have been adjusted in order to ensure consistency with the accounting
policies adopted by Toyota as necessary.
When the use of the equity method is discontinued from the date when the investees are determined to be no
longer associates or joint ventures, any gain or loss on such disposal of the investment is recognized in profit or
(1) Foreign currency transactions
Foreign currency transactions are translated into the respective functional currencies of Toyota at the
exchange rates prevailing when such transactions occur. All foreign currency receivables and payables are
translated into the respective functional currencies at the applicable exchange rates at the end of the reporting
period. Non-monetary assets and liabilities in foreign currencies that are measured at fair value are translated into
the functional currency using the exchange rate on the date when the fair value was measured. Gains or losses on
exchange differences arising from settlement of foreign currency receivables and payables or on their translations
at the end of the reporting date are recognized in profit or loss. Furthermore, exchange differences arising from
equity financial assets measured at fair value through other comprehensive income are recognized as other
comprehensive income.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-13
(2) Foreign operations
All assets and liabilities of foreign subsidiaries, associates and joint ventures (collectively, “foreign
operations”) that use a functional currency other than Japanese yen are translated into Japanese yen at the
exchange rates at the end of the reporting period. All revenues and expenses of foreign operations are translated
into Japanese yen at the average exchange rate for the period unless the exchange rate fluctuates widely.
Exchange differences arising from such translations are recognized in other comprehensive income and
accumulated in other components of equity in the consolidated statement of financial position. When a foreign
operation is disposed of and control, significant influence or joint control over the foreign operation is lost, the
cumulative amount of exchange differences relating to the foreign operation is reclassified from equity to profit
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments that are
readily convertible to cash and are subject to insignificant risk of changes in value with three months or less
(i) Initial recognition and measurement
Toyota initially recognizes financial assets when it becomes a party to a contract and, except for derivatives,
classifies financial assets into “financial assets measured at amortized cost”, “debt and equity financial assets
measured at fair value through other comprehensive income”, or “financial assets measured at fair value through
profit or loss”. Sales and purchases of financial assets in the normal course of business are recognized and
derecognized at the trade date.
Financial assets classified as measured at fair value through profit or loss are measured at fair value, while
other financial assets are initially recognized at fair value plus transaction costs directly attributable to their
acquisition. Trade receivables that do not contain significant financing components are measured at the
transaction price.
(a) Financial assets measured at amortized cost
Toyota classifies a financial asset as measured at amortized cost if both of the following conditions are met:
The asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
(b) Debt financial assets measured at fair value through other comprehensive income
Debt financial assets are measured at fair value through other comprehensive income only if it meets both of
the following conditions:
The asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets; and
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-14
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
(c) Equity financial assets measured at fair value through other comprehensive income
Equity financial assets such as shares held mainly for the purpose of maintaining or enhancing business
relationships with investees are irrevocably designated at initial recognition as financial assets measured at fair
value through other comprehensive income.
Financial assets other than (a) to (c) are classified as financial assets measured at fair value through profit or
(ii) Subsequent measurement
After initial recognition, financial assets are measured based on the following classification.
(a) Financial assets measured at amortized cost
Financial assets measured at amortized cost are measured at amortized cost using the effective interest
method.
(b) Debt financial assets measured at fair value through other comprehensive income
Subsequent changes in fair value of the financial assets are recognized as other comprehensive income.
Impairment gains or losses, interest income and foreign exchange gains and losses are recognized in profit or
loss. When the financial assets are derecognized, the cumulative gain or loss recognized in other comprehensive
income is reclassified from other components of equity to profit or loss.
(c) Equity financial assets measured at fair value through other comprehensive income
Subsequent changes in fair value of the financial assets are recognized as other comprehensive income.
When the financial assets are derecognized, the cumulative gain or loss recognized through other comprehensive
income is reclassified from other components of equity to retained earnings. Dividends from equity financial
assets are recognized in profit or loss.
(d) Financial assets measured at fair value through profit or loss
Subsequent changes in the fair value of the financial assets are recognized in profit or loss.
An allowance for credit losses is provided for expected credit losses on financial assets that are measured at
amortized cost as well as debt financial assets measured at fair value through other comprehensive income. An
allowance for credit losses is also provided for expected credit losses on loan commitments or financial guarantee
agreements that are off-balance sheet credit exposures.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-15
At the end of the reporting period, Toyota assesses whether the credit risk on financial assets has
significantly increased since initial recognition. At the end of the reporting period, if Toyota identifies a
significant increase in credit risk, allowances for credit losses are measured as being equal to the amount of
expected credit losses that would result from default events that are possible over the expected life of a financial
asset. At the end of the reporting period, if the credit risk for a financial instrument has not increased
significantly since its initial recognition, allowances for credit losses are measured as being equal to the amount
of the expected credit losses caused by default events that may occur within 12 months from the end of the
reporting period.
For accounts receivable that are included in “Trade accounts and other receivables” and receivables
regarding finance lease, the allowance is continuously measured at amounts equal to expected credit losses over
the expected life of financial assets and presented as “Allowance for doubtful accounts” in each note. Also,
please see Note 3 “Allowance for credit losses on finance receivables” about the allowance for credit losses on
finance receivables.
The amount of expected credit losses is measured as the present value of all cash short-falls resulting from
the difference between the cash flows due to Toyota in accordance with the contract and cash flows that Toyota
expects to receive, and such amount is recognized in profit or loss. A reversal of the allowance for credit losses
resulting from a reduction in the amount of expected credit losses is recognized in profit or loss.
If there is objective evidence of impairment such as significant financial difficulty of a borrower, or a
default or delinquency by a borrower, interest income is measured applying the effective interest method to the
net carrying amount of the financial asset (after deducting the allowance for credit loss). Financial assets are
written off either partially or fully when there is no reasonable expectation of recovering a financial asset in its
Toyota derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or
when Toyota transfers the contractual right to receive cash flows from financial assets in transactions in which
substantially all the risks and rewards of ownership of the asset are transferred to another entity. When Toyota
maintains control over a transferred financial asset in a situation in which it has neither transferred nor retained
substantially all of its risk and economic value, Toyota recognizes the retained interest on such financial asset
(i) Initial recognition and measurement
Toyota initially measures financial liabilities other than derivatives at fair value less transaction costs
directly attributable to the issuance of financial liabilities.
(ii) Subsequent measurement
Toyota subsequently measures financial liabilities at amortized cost using the effective interest method.
Amortization under the effective interest method and gains or losses on derecognition are recognized as finance
income or costs in profit or loss.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-16
Toyota derecognizes financial liabilities when the financial liabilities expire; that is, when the liability
Toyota employs derivative financial instruments, including forward foreign exchange contracts, foreign
currency options, interest rate swaps, interest rate currency swap agreements and interest rate options, to manage
mainly its exposure to fluctuations in interest rates and foreign currency exchange rates. Toyota is unable to or
has elected not to apply hedge accounting. All derivative transactions are measured at fair value as assets or
liabilities.
Finance receivables recorded on Toyota’s consolidated statement of financial position are net of any
unearned financial 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 finance receivable portfolios is based primarily on qualitative considerations of the
nature of Toyota’s business operations and finance receivables. The three portfolios within finance receivables
are as follows:
(1) Retail receivables portfolio
The retail receivables portfolio consists of retail installment sales contracts acquired mainly from dealers
(“auto loans”) including credit card loans. These acquired contracts must first meet specified credit standards,
and 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.
Toyota manages the retail receivables portfolio as one portfolio based on common risk characteristics
associated with the underlying finance receivables, the similarity of the credit risks, and quantitative materiality.
(2) Finance lease receivables portfolio
Finance lease receivables are related to new vehicle lease contracts. 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 MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-17
Toyota
manages
the
finance
lease
receivables
portfolio
as
one
portfolio
based
on
common
risk
characteristics associated with the underlying finance receivables and the similarity of the credit risks.
(3) Wholesale and other dealer loan receivables portfolio
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 and/or personal assets, as additional security. If a dealer defaults, Toyota has the right to
liquidate any assets acquired.
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 manages the wholesale and other dealer loan receivables portfolio as one portfolio based on the risk
The allowance for credit losses on finance receivables is measured at the portfolio level, 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, forward-looking information including movements of the world economy and
other pertinent factors. Furthermore, portfolios are grouped based on similarities of risk characteristics, such as
product and collateral classes, when calculating expected credit losses in the aggregate.
(1) Retail receivables portfolio
With respect to retail receivables, Toyota reviews whether the credit risk on finance receivables has
increased significantly. To evaluate this risk, Toyota considers the changes for the possibility of a credit loss
occurring or days in arrears as an index. Toyota assesses the significant increases in credit risk when contractual
payments are more than 30 days past due. When the credit risk on finance receivables has not increased
significantly since initial recognition, Toyota measures the loss allowance for those finance receivables at an
amount equal to 12-month expected credit losses at the reporting date.
Meanwhile, Toyota measures the loss allowance for finance receivables at an amount equal to the lifetime
expected credit losses if the credit risk on those finance receivables has increased significantly since initial
recognition at the reporting date. Toyota calculates the loss allowance for finance receivables at an amount equal
to the lifetime expected credit losses by considering historical credit loss experience and future collectability,
when there is evidence that finance receivables are credit-impaired such as a breach of contract due to default or
delayed contractual payments.
In calculating expected credit losses, Toyota uses the probability of a default and the loss rate in the event of
a default based on past experience and then incorporates its forecasts of current and future economic conditions.
Suspension of payment over a certain period of time and/or situations where contractual obligations are not
being met are considered as being in default in accordance with internal management rules.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-18
(2) Finance lease receivables portfolio
With respect to the finance lease receivables portfolio, Toyota always measures loss allowance at an amount
equal to lifetime expected credit losses. Suspension of payment over a certain period of time and/or situations
where contractual obligations are not being met are considered as being in default in accordance with internal
management rules.
(3) Wholesale and other dealer loan receivables portfolio
With respect to the wholesale and other dealer loan receivables portfolio, receivables are segmented
primarily by credit qualities based on internal risk assessments. Toyota reviews the change of the segment as an
indicator whether the credit risk on finance receivables has increased significantly since initial recognition to
assess these receivables for credit risk. Toyota assesses the significant increases in credit risk when contractual
payments are more than 30 days past due. If the credit risk on finance receivables has not increased significantly
since initial recognition, Toyota measures the loss allowance for those finance receivables at an amount equal to
12-month expected credit losses at the reporting date.
Meanwhile, Toyota measures the loss allowance for finance receivables at an amount equal to the lifetime
expected credit losses if the credit risk on those finance receivables has increased significantly since initial
recognition at the reporting date. Toyota calculates the loss allowance for finance receivables at an amount equal
to the lifetime expected credit losses by considering historical credit loss experience and future collectability,
when there is evidence that finance receivables are credit-impaired such as a debtor’s worsened financial
condition, breach of contract due to default or delayed contractual payments.
In calculating expected credit losses, Toyota uses the probability of a default and the loss rate in the event of
a default based on past experience and then reflects its forecasts of current and future economic conditions.
Suspension of payment over a certain period of time and/or situations where contractual obligations are not
being met are considered as defaults in accordance with internal management rules.
Although Toyota considers the allowance for credit losses on finance receivables 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. Future changes in the economy that
impact consumer confidence such as increasing interest rates and a rise in the unemployment rate as well as
higher debt balances, coupled with deterioration in actual and expected used vehicle values, could negatively
Inventories are valued at cost, not in excess of net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business less the estimated original cost and estimated selling expense to
product completion. The cost of inventories includes purchase costs, conversion costs and other costs incurred in
bringing the inventories to their present location and condition. The cost is determined principally by using the
Non-current assets held for sale -
Toyota classifies a non-current asset or asset group that will be recovered principally through a sales
transaction rather than through continuing use as held for sale if the asset or disposal group sale is highly
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-19
probable within one year, it is available for immediate sale in its present condition, and the appropriate level of
management of Toyota is committed to a plan to sell the asset or disposal group.
The non-current asset held for sale is not depreciated or amortized, and is measured at the lower of its
carrying amount and the fair value less costs to sell.
depreciation and impairment losses. Expenditures relating to major renewals and improvements are capitalized; minor
replacements, maintenance and repairs are charged to current operations as incurred. Depreciation of property, plant
and equipment, except for land that is not subject to depreciation, is calculated on the straight-line method over the
estimated useful life of the respective assets according to general class, type of structure and use. The estimated useful
lives range from 2 to 65 years for buildings and from 2 to 20 years for machinery and equipment.
The depreciation method, useful lives and residual values of property, plant and equipment are reviewed
annually at each fiscal year end, and changes are adopted prospectively, if applicable.
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.
Right of use assets that are held as rental assets are included within “Vehicles and equipment on operating leases,
net.” “Vehicles and equipment on operating leases” are depreciated 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
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. At the end of each reporting period,
Toyota evaluates the estimated residual value to cover probable estimated losses related to unguaranteed residual
values on its owned portfolio. The estimate is calculated 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. Toyota evaluates the foregoing factors, develops several potential loss scenarios, and evaluates the
estimated residual value to determine whether it is considered adequate to cover the probable range of losses.
By evaluating estimated residual value, Toyota reflects in depreciation the amount it considers to be
Intangible assets are measured based on the cost model and carried at their cost less accumulated
amortization and impairment losses.
The estimated useful lives and the amortization method of intangible assets are reviewed annually at each
fiscal year end, and changes are adopted prospectively, if appropriate.
(1) Capitalized development cost
Development expenditure for a product is capitalized only when there is technical and commercial
feasibility of completing the development, Toyota has the intention, ability and sufficient resources to use the
outcome of the development, it is probable that the outcome will generate a future economic benefit, and the cost
can be measured reliably.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-20
Capitalized development cost is amortized using the straight-line method over the expected product life
cycle of the developed product ranging mainly from 5 to 10 years.
(2) Other intangible assets
Other intangible assets mainly consist of software for internal use and are amortized using the straight-line
method over their estimated useful lives, mainly 5 years. Goodwill is not material to Toyota’s consolidated
At the end of the reporting period, the carrying amounts of non-financial assets, other than inventories and
deferred tax assets, are assessed to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset or cash-generating unit is estimated. An impairment loss is
recognized when the carrying amount of an asset or cash-generating unit exceeds its recoverable amount. The
At the inception of a contract, Toyota assesses whether the contract is, or contains, a lease.
(1) Lessee
Toyota recognizes a right of use asset and a lease liability at the lease commencement date. The cost of the
right of use asset is measured as the initial amount of the lease liability, adjusted for any lease payments made at
or before the commencement date. The lease liability is initially measured at the present value of the lease
payments that have not been paid as of the commencement date.
After the commencement date, Toyota applies a cost model and subsequently depreciates the right of use
asset using a straight-line method from the commencement date to the earlier of the end of the useful life of the
right of use asset or the end of the lease term. The lease liability is measured at amortized cost using the effective
interest method. In the consolidated statement of financial position, the lease liability is included in short-term
and long-term debt. Interest on the lease liability is recognized in profit or loss over the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the lease liability.
Many lease contracts relating to land and buildings entered into by Toyota include extension options
exercisable by Toyota as lessee for various purposes, such as to ensure business flexibility. Toyota assesses
whether it is reasonably certain to exercise an extension option, and if it is reasonably certain to do so, the
extension option is included in the lease term.
Toyota recognizes lease payments for leases with a lease term of 12 months or less as an expense on a
straight-line basis over the lease term.
(2) Lessor
With respect to lessor lease transactions, Toyota determines at the commencement date whether each lease
is a finance lease or operating lease.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-21
A lease is classified as a finance lease if it transfers substantially all of the risks and rewards incidental to
ownership of an underlying asset. Otherwise, leases are classified as operating leases.
Toyota has both defined benefit and defined contribution plans for employees’ retirement benefits.
(1) Defined benefit plan
The present value of defined benefit obligations and service cost are principally determined for each plan
using the projected unit credit method. The net defined benefit liability (asset) is the present value of the defined
benefit obligations less the fair value of plan assets. If the fair value of plan assets is in excess of the present
value of defined benefit obligations, the amount of any asset to be recognized is limited to the present value of
any economic benefits available in the form of refunds from the plan and reductions in future contributions to the
plan. Current service cost and net interest on the net defined benefit liability (asset) are recognized as net income
(loss) on the statement of net income.
Past service cost is recognized in profit or loss upon occurrence.
Toyota recognizes the difference arising from remeasurement of the net defined benefit liability (asset)
including actuarial gains and losses in other comprehensive income when it is incurred and reclassifies it
immediately to retained earnings.
(2) Defined contribution plan
For defined contribution plans, when employees render services, contribution payables are recognized in
Liabilities for quality assurance -
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. 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. An estimate of
warranty claims accrued for each fiscal year is calculated based on the estimate of warranty claims per unit. The
estimate of warranty claims per unit is calculated comprehensively by dividing the actual amounts of warranty
claims by the number of sales units for the fiscal year.
Toyota accrues for costs of recalls and other safety measures, as well as product warranty cost described
above. Toyota generally measures 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.
However, when circumstances warrant, Toyota measures “liabilities for a particular recall or other safety
measures” using an individual model when they are probable and reasonably estimable.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-22
A portion of “liabilities for recalls and other safety measures” recorded in the consolidated statement of
financial position is calculated comprehensively based on the “expected liability for the cost of recalls and other
safety measures” in consideration of the “accumulated amount of repair cost paid”. As such, this liability is
evaluated every period based on new data and is 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” is 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 comprehensively 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. Such differences are
considered as part of our estimation process for future recalls and other safety measures.
Liabilities for product warranties and liabilities for recalls and other safety measures have been combined
into “Liabilities for quality assurance” in the consolidated statement of financial position. Product warranty costs
and costs of recalls and other safety measures are included in cost of products sold in the consolidated statement
of income.
The foregoing evaluations are inherently uncertain, as they require material estimates as described above.
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 automotive operations.
Provisions -
Provisions are recognized when present legal or constructive obligations exist as a result of past events, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and
a reliable estimate can be made of the amount of the obligations.
In automotive operations, performance obligations are satisfied when completed vehicles and parts are
delivered to locations agreed upon with dealers. For parts used in production, revenue is recognized when they
are loaded onto a ship or delivered to manufacturing entities. We do not have any significant payment terms, as
payment is received at or shortly after the point of sale.
Toyota’s sales incentive programs principally consist of cash payments to dealers calculated based on total
vehicle volumes or unit sales of certain models during a specified period. Toyota accrues these incentives as
reductions of revenue upon the sale of the related vehicles, based on the amount determined under the respective
incentive programs using the most likely amount method.
Certain
vehicle
sales
include
a
contractual
right
that
entitles
customers
to
complimentary
vehicle
maintenance. Toyota uses an observable price to determine the stand-alone selling price for separate performance
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-23
obligations, or applies a cost-plus margin approach when an observable price is not available. Revenues from
such maintenance contracts are deferred and recognized over the contract period based on the expected costs of
satisfying the performance obligations.
Revenues from vehicle sales that include a guarantee of the minimum resale value are recognized on a
straight-line basis from the date of sale to the first date on which the guarantee can be exercised, in accordance
with IFRS 16. The underlying vehicles are recorded as assets and depreciated in accordance with Toyota’s
depreciation policy.
Interest income from financial services is recognized using the effective interest method. Revenues from
operating leases are recognized on a straight-line basis over the lease term.
If the period between satisfaction of the performance obligation and receipt of consideration is one year or
less, as a practical expedient, Toyota does not adjust the promised amount of consideration for the effects of a
significant financing component.
Revenue is recognized net of taxes collected from customers and subsequently remitted to governmental
Income tax expenses are presented as the aggregate amount of current taxes and deferred taxes.
temporary differences between the carrying amount of assets or liabilities in the consolidated statement of
financial position and the tax base of the assets or liabilities and carryforwards of unused tax losses and tax
credits.
Deferred tax assets are recognized for all future deductible amounts, to the extent that it is probable that we
will have sufficient profit to utilize the benefit of future deductible amounts.
Deferred
tax
liabilities
for
taxable
temporary
differences
arising
from
investments
in
subsidiaries,
associates, and interest in joint ventures are recognized in principle. However, they are not recognized when
Toyota is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply in the
period when the assets are realized or the liabilities are settled, based on the tax rates and tax laws enacted or
substantively enacted at the end of the reporting period. The measurement of deferred tax assets and deferred tax
liabilities reflects the tax consequences that would follow from the manner in which Toyota expects, at the end of
Basic earnings per share attributable to Toyota Motor Corporation is calculated by dividing net income
attributable to Toyota Motor Corporation by the weighted-average number of common shares outstanding with
adjustment for treasury stock during the reporting period. Diluted earnings per share attributable to Toyota Motor
Corporation is calculated by dividing net income attributable to Toyota Motor Corporation by the weighted-
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-24
Share-based payment -
Toyota has introduced a share-based compensation plan utilizing a stock-granting ESOP trust, and
compensation determined under the plan is measured at the fair value of the Company’s common shares on the
grant date and recognized as an expense over the vesting period from the grant date until vesting.
The impact will arise in connection with customer financing within the financial services segment. Toyota is
currently evaluating the impact of the adoption of these standards and interpretations on Toyota’s consolidated
financial statements.
Reporting periods in |
||||
Mandatory adoption |
which Toyota is |
|||
(from fiscal years |
scheduled to adopt |
Overview of new or amended standards |
||
Standards |
Standards names |
beginning on or after) |
the standards |
and interpretations |
Improved comparability in the |
||||
statement of profit or loss (income |
||||
statement) |
||||
Presentation and |
Fiscal year ending |
Enhanced transparency of |
||
IFRS 18 |
disclosure in |
January 1, 2027 |
management-defined performance |
|
financial statements |
March 31, 2028 |
measures |
||
More useful grouping of |
||||
information in the financial |
||||
statements |
The preparation of the consolidated financial statements in conformity with IFRS Accounting Standards
requires management to make judgments, estimates, and assumptions that affect the application of accounting
policies, the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets
and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are
reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
Information about important estimation and judgments that have significant effects on the amounts
recognized in the consolidated financial statements is as follows:
Scope of subsidiaries, associates, and joint ventures (Note 3 “Basis of consolidation”)
Intangible assets incurred by research and development (Note 3 “Intangible assets”)
Information about accounting estimates and assumption that affect the application of accounting policies
and the reported amounts of assets and liabilities, and financial statements based on IFRS Accounting Standards
is as follows:
Liabilities for quality assurance (Note 3 “Liabilities for quality assurance” and Note 24)
Allowance for credit losses on finance receivables (Note 3 “Allowance for credit losses on finance
receivables” and Note 20 (2))
Impairment of non-financial assets (Note 3 “Impairment of non-financial assets” and Note 13)
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-25
Employee benefit obligations (Note 3 “Employee benefit obligations” and Note 23)
Fair value measurements (Note 21)
Recoverability of deferred tax assets (Note 3 “Income taxes” and Note 16)
(1) Outline of reporting segments
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, SUVs, trucks and related parts and accessories. The Financial services segment consists
primarily of financing and vehicle leasing operations to assist in the merchandising of Toyota’s products as well
as other products. The All other segment includes telecommunications and other businesses.
(2) Segment information
As of and for the year ended March 31, 2024
| Yen in millions |
|||||
Inter-segment |
|||||
Elimination/ |
|||||
Financial |
Unallocated |
||||
Automotive |
services |
All other |
Amount |
Consolidated |
|
Sales revenues |
|||||
Revenues from external customers .... |
41,080,731 |
3,447,195 |
567,399 |
— |
45,095,325 |
Inter-segment revenues and transfers . . . |
185,473 |
37,003 |
800,766 |
(1,023,242) |
— |
Total ........................ |
41,266,204 |
3,484,198 |
1,368,164 |
(1,023,242) |
45,095,325 |
Operating expenses .................... |
36,644,729 |
2,914,175 |
1,192,923 |
(1,009,437) |
39,742,390 |
Operating income ...................... |
4,621,475 |
570,023 |
175,241 |
(13,805) |
5,352,934 |
Total assets ........................... |
29,351,344 |
43,834,183 |
3,011,363 |
13,917,406 |
90,114,296 |
Investments accounted for using the equity |
|||||
method ............................ |
5,114,364 |
110,308 |
282,888 |
202,546 |
5,710,106 |
Depreciation and amortization ............ |
1,268,479 |
784,013 |
34,574 |
— |
2,087,066 |
Capital expenditures .................... |
2,011,361 |
2,763,931 |
103,242 |
(30,492) |
4,848,042 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-26
As of and for the year ended March 31, 2025
| Yen in millions | |||||
Inter-segment | |||||
Elimination/ | |||||
Financial | Unallocated | ||||
Automotive | services | All other | Amount | Consolidated | |
Sales revenues | |||||
Revenues from external customers .... | 42,996,299 | 4,437,827 | 602,578 | — | 48,036,704 |
Inter-segment revenues and transfers . . . | 203,566 | 43,353 | 844,536 | (1,091,455) | — |
Total ........................ | 43,199,865 | 4,481,180 | 1,447,114 | (1,091,455) | 48,036,704 |
Operating expenses .................... | 39,259,587 | 3,797,661 | 1,265,920 | (1,082,050) | 43,241,118 |
Operating income ...................... | 3,940,278 | 683,519 | 181,194 | (9,405) | 4,795,586 |
Total assets ........................... | 30,117,987 | 46,770,786 | 2,884,421 | 13,828,157 | 93,601,350 |
Investments accounted for using the equity | |||||
method ............................ | 5,201,784 | 112,640 | 309,121 | 174,505 | 5,798,051 |
Depreciation and amortization ............ | 1,378,107 | 838,167 | 34,958 | — | 2,251,233 |
Capital expenditures .................... | 2,193,872 | 3,687,890 | 100,941 | 8,565 | 5,991,268 |
As of and for the year ended March 31, 2026
| Yen in millions | |||||
Inter-segment | |||||
Elimination/ | |||||
Financial | Unallocated | ||||
Automotive | services | All other | Amount | Consolidated | |
Sales revenues | |||||
Revenues from external customers ... | 45,201,924 | 4,819,003 | 664,026 | — | 50,684,952 |
Inter-segment revenues and | |||||
transfers ...................... | 215,779 | 38,112 | 987,387 | (1,241,278) | — |
Total ....................... | 45,417,703 | 4,857,115 | 1,651,412 | (1,241,278) | 50,684,952 |
Operating expenses ................... | 42,640,654 | 4,005,394 | 1,519,333 | (1,246,644) | 46,918,736 |
Operating income ..................... | 2,777,049 | 851,722 | 132,079 | 5,366 | 3,766,216 |
Total assets .......................... | 33,182,372 | 53,741,709 | 4,066,133 | 14,532,118 | 105,522,331 |
Investments accounted for using the equity | |||||
method ........................... | 4,763,577 | 124,393 | 304,242 | 150,336 | 5,342,548 |
Depreciation and amortization ........... | 1,417,242 | 920,432 | 54,846 | — | 2,392,519 |
Capital expenditures ................... | 2,453,641 | 3,511,937 | 64,749 | 29,452 | 6,059,779 |
Accounting policies applied by each segment are in conformity with those of Toyota’s consolidated
financial statements. Transfers between industry segments are made at individually negotiated prices.
Unallocated amounts included in assets represent assets held for corporate purposes, which mainly consist
of cash and cash equivalents and financial assets measured at fair value through other comprehensive income,
and balances as of March 31, 2024, 2025 and 2026 are ¥15,790,074 million, ¥15,643,613 million and
¥16,571,156 million, respectively.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-27
(3) Geographic information
Revenues from external customers and non-current assets attributable to each country, including the entity’s
country of domicile and foreign countries, for the years ended March 31, 2024, 2025 and 2026 are as follows:
Revenues from external customers
| Yen in millions |
|||
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Japan ..................................................... |
10,193,556 |
10,719,120 |
10,985,614 |
United States ............................................... |
15,784,361 |
16,981,710 |
18,493,969 |
Other ..................................................... |
19,117,407 |
20,335,874 |
21,205,369 |
Total ................................................. |
45,095,325 |
48,036,704 |
50,684,952 |
Non-current assets
| Yen in millions |
|||
| March 31, |
|||
2024 |
2025 |
2026 |
|
Japan ..................................................... |
5,827,404 |
6,246,879 |
6,525,712 |
United States ............................................... |
6,679,478 |
7,242,318 |
8,388,696 |
Other ..................................................... |
3,979,378 |
4,214,833 |
4,874,091 |
Total ................................................. |
16,486,260 |
17,704,029 |
19,788,499 |
Cash and cash equivalents consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Cash and deposits ..................................................... |
6,344,691 |
9,077,428 |
Negotiable certificate of deposit and other ................................. |
2,637,713 |
3,582,193 |
Total ........................................................... |
8,982,404 |
12,659,622 |
Trade accounts and other receivables consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Accounts and notes receivables .......................................... |
2,480,370 |
2,082,717 |
Other receivables ..................................................... |
1,236,794 |
1,744,175 |
Allowance for doubtful accounts ......................................... |
(37,442) |
(30,906) |
Total ........................................................... |
3,679,722 |
3,795,986 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-28
Trade accounts and other receivables which are unconditional rights to consideration are classified as
financial assets measured at amortized cost. Receivables from contracts with customers correspond to “Accounts
and notes receivables” and the balance as of April 1, 2024 is ¥2,672,434 million.
Changes in the allowance for doubtful accounts consist of the following:
Yen in millions |
||
For the years ended March 31, |
||
2025 |
2026 |
|
Allowance for doubtful accounts at beginning of year ......................... |
122,105 |
127,296 |
Provision for doubtful accounts, net of reversal .............................. |
9,835 |
8,060 |
Write-offs ........................................................... |
(3,128) |
(9,646) |
Other ............................................................... |
(1,516) |
(7,850) |
Allowance for doubtful accounts at end of year .............................. |
127,296 |
117,860 |
“Other” includes currency translation adjustments and transfers to assets held for sale.
A portion of the allowance for doubtful accounts is attributed to certain non-current receivable balances
Finance receivables consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Retail ............................................................... |
27,638,021 |
31,837,922 |
Finance leases ........................................................ |
3,437,970 |
4,154,650 |
Wholesale and other dealer loans ......................................... |
4,902,537 |
5,821,931 |
Total ........................................................... |
35,978,528 |
41,814,504 |
Deferred origination costs ............................................... |
446,538 |
475,032 |
Less - Unearned income ................................................ |
(2,349,215) |
(2,820,138) |
Less - Allowance for credit losses |
||
Retail ........................................................... |
(356,304) |
(382,152) |
Finance leases .................................................... |
(56,721) |
(67,560) |
Wholesale and other dealer loans ..................................... |
(37,791) |
(53,031) |
Total finance receivables, net ............................................ |
33,625,035 |
38,966,655 |
Current assets ........................................................ |
11,453,249 |
13,478,474 |
Non-current assets ..................................................... |
22,171,786 |
25,488,182 |
Total finance receivables, net ............................................ |
33,625,035 |
38,966,655 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-29
Finance receivables were geographically distributed as follows:
March 31, | ||
2025 | 2026 | |
North America ....................................................... | 53.9% | 52.2% |
Europe .............................................................. | 15.0 | 15.4 |
Asia ................................................................ | 11.7 | 11.4 |
Japan ............................................................... | 8.9 | 10.0 |
Other ............................................................... | 10.5 | 11.0 |
Finance receivables are classified as financial assets measured at amortized cost.
The contractual maturity of retail receivables, future lease payments to be received for finance leases, and
wholesale receivables and other dealer loans are as follows:
| Yen in millions | |||
| March 31, 2025 | |||
Wholesale and other | |||
Retail | Finance leases | dealer loans | |
Within 1 year ......................................... | 7,518,918 | 1,041,282 | 3,617,276 |
Between 1 and 2 years .................................. | 6,317,972 | 745,842 | 367,663 |
Between 2 and 3 years .................................. | 5,500,349 | 576,552 | 231,623 |
Between 3 and 4 years .................................. | 4,265,070 | 320,721 | 162,658 |
Between 4 and 5 years .................................. | 2,623,094 | 101,389 | 119,871 |
Later than 5 years ...................................... | 1,412,619 | 28,371 | 403,444 |
Total ............................................ | 27,638,021 | 2,814,157 | 4,902,537 |
| Yen in millions | |||
| March 31, 2026 | |||
Wholesale and other | |||
Retail | Finance leases | dealer loans | |
Within 1 year ......................................... | 8,659,405 | 1,248,720 | 4,481,525 |
Between 1 and 2 years .................................. | 7,365,657 | 904,612 | 452,366 |
Between 2 and 3 years .................................. | 6,372,603 | 681,364 | 233,452 |
Between 3 and 4 years .................................. | 4,916,999 | 338,381 | 168,333 |
Between 4 and 5 years .................................. | 2,841,501 | 126,279 | 134,005 |
Later than 5 years ...................................... | 1,681,757 | 31,306 | 352,251 |
Total ............................................ | 31,837,922 | 3,330,663 | 5,821,931 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-30
Finance leases receivables consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Lease payments .......................................................... |
2,814,157 |
3,330,663 |
Estimated unguaranteed residual values ....................................... |
623,812 |
823,988 |
Total .......................................................... |
3,437,970 |
4,154,650 |
Deferred origination costs .................................................. |
25,342 |
32,556 |
Less - Unearned income ................................................... |
(372,987) |
(435,157) |
Less - Allowance for credit losses ........................................... |
(56,721) |
(67,560) |
Finance leases receivables, net .......................................... |
3,033,603 |
3,684,489 |
Other financial assets consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Financial assets measured at amortized cost |
||
Time deposits ..................................................... |
2,264,841 |
988,027 |
Other ............................................................ |
837,954 |
752,598 |
Financial assets measured at fair value through profit or loss |
||
Public and corporate bonds ........................................... |
231,713 |
267,623 |
Stocks ........................................................... |
46,215 |
884,667 |
Investment trusts ................................................... |
618,228 |
648,189 |
Derivatives ....................................................... |
483,378 |
479,447 |
Financial assets measured at fair value through other comprehensive income |
||
Public and corporate bonds ........................................... |
9,078,437 |
7,533,460 |
Stocks ........................................................... |
3,246,885 |
3,554,379 |
Other ............................................................ |
10,947 |
9,855 |
Total ........................................................ |
16,818,600 |
15,118,244 |
Current assets ......................................................... |
6,935,759 |
3,982,445 |
Non-current assets ...................................................... |
9,882,841 |
11,135,799 |
Total ........................................................ |
16,818,600 |
15,118,244 |
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 other
appropriate issuers, 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
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-31
anticipate significant losses due to the nature of its counterparties. Counterparties to Toyota’s financial
instruments represent, in general, international financial institutions and other appropriate issuers. Additionally,
Toyota does not have significant exposure to any individual counterparty. Toyota believes that the overall credit
risk related to its financial instruments is not significant.
Public and corporate bonds included in financial assets measured at fair value through other comprehensive
income include securities loaned of ¥623,223 million and ¥2,594,946 million as of March 31, 2025 and 2026,
respectively.
Major securities included in stocks measured at fair value through other comprehensive income as of
March 31, 2025 and 2026 are as follows:
Yen in millions |
||
March 31, |
||
Issue |
2025 |
2026 |
KDDI CORPORATION ................................................... |
959,347 |
989,627 |
NTT, Inc ................................................................ |
292,242 |
317,487 |
MS&AD Insurance Group Holdings, Inc ....................................... |
340,482 |
283,836 |
Mitsubishi UFJ Financial Group, Inc .......................................... |
206,749 |
267,304 |
SUZUKI MOTOR CORPORATION ......................................... |
173,760 |
180,048 |
To facilitate the efficient and effective utilization of assets, Toyota derecognizes stocks measured at fair
value
through
other
comprehensive
income
by
way
of
sale.
Fair
value
and
total
accumulated
other
comprehensive income at derecognition are as follows:
Yen in millions |
||
For the years ended |
||
March 31, |
||
2025 |
2026 |
|
Total fair value .......................................................... |
681,271 |
277,319 |
Accumulated other comprehensive income, net ................................. |
512,976 |
217,516 |
Inventories consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Products ................................................................ |
2,875,405 |
3,208,980 |
Work in process .......................................................... |
486,552 |
626,422 |
Raw materials ........................................................... |
1,013,621 |
1,050,559 |
Supplies and other ........................................................ |
222,654 |
249,034 |
Total .............................................................. |
4,598,232 |
5,134,996 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-32
(1) The business integration of Mitsubishi Fuso Truck and Bus Corporation and Hino Motors, Ltd.
As of the effective date of the business integration between Mitsubishi Fuso Truck and Bus Corporation
(“MFTBC”) and Hino Motors, Ltd. (“Hino”) (automotive segment) (April 1, 2026), Hino is no longer a
consolidated subsidiary of Toyota.
The assets, liabilities, and related other comprehensive income of Hino and its consolidated subsidiaries
have been reclassified as held for sale, and are presented at the end of the year ended March 31, 2026 as assets
held for sale, liabilities directly associated with assets held for sale, and other comprehensive income associated
with assets held for sale. However, assets and liabilities related to Hino’s Hamura plant are not classified as held
for sale because that plant will become a consolidated subsidiary of Toyota before the business integration in the
year ending March 31, 2027 as Toyota Motor Hamura, Inc.
Among the disposal group classified as held for sale, some land parcels had a fair value less costs to sell that
was below their carrying amount. Accordingly, these assets were measured at fair value less costs to sell. A loss
of ¥2,995 million recognized as a result was recorded under “Selling, General and Administrative Expenses” on
the consolidated statement of income. The fair value measurement is classified as Level 3 in the fair value
hierarchy.
(2) Review of capital relationship with Toyota Industries Corporation
On March 24, 2026, Toyota Fudosan Co., Ltd. completed a tender offer for the shares of Toyota Industries
Corporation (“Toyota Industries”) (automotive segment). Because a squeeze-out procedure and the planned sale
of the Toyota Industries shares held by Toyota are expected to be completed in the year ending March 31, 2027,
Toyota has reclassified its holdings of Toyota Industries shares and related other comprehensive income as held
for sale. Accordingly, at the end of the year ended March 31, 2026, investments accounted for using the equity
method totaling ¥788,898 million were included in assets held for sale, and related other comprehensive income
of ¥264,035 million (Net changes in revaluation of financial assets measured at fair value through other
comprehensive income of ¥155,804 million and exchange differences on translating foreign operations of
¥108,231 million) was included in other comprehensive income related to assets held for sale.
Because the fair value less costs to sell (the expected sale price) in this share transfer exceeds the carrying
amount, the disposal group classified as held for sale is measured at its carrying amount. The fair value
measurement is classified as Level 3 in the fair value hierarchy.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-33
The breakdown of assets held for sale at the end of the year ended March 31, 2026, together with the related
liabilities and other comprehensive income, is as follows:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Assets held for sale | ||
Cash and cash equivalents .............................................. | — | 115,932 |
Trade accounts and other receivables ..................................... | — | 229,138 |
Inventories .......................................................... | — | 230,229 |
Investments accounted for using the equity method .......................... | — | 800,635 |
Property, plant and equipment | ||
Land ........................................................... | — | 165,526 |
Buildings ....................................................... | — | 428,406 |
Machinery and equipment .......................................... | — | 698,884 |
Other property, plant and equipment ................................. | — | 16,154 |
Total property, plant and equipment, at cost ............................ | — | 1,308,970 |
Less - Accumulated depreciation and impairment losses .................. | — | (826,852) |
Total property, plant and equipment, net .............................. | — | 482,118 |
Other assets ......................................................... | — | 158,752 |
Total ...................................................... | — | 2,016,804 |
Liabilities directly associated with assets held for sale | ||
Trade accounts and other payables ....................................... | — | 227,966 |
Short-term and current portion of long-term debt ............................ | — | 142,256 |
Accrued expenses .................................................... | — | 86,007 |
Liabilities for quality assurance ......................................... | — | 104,227 |
Long-term debt ...................................................... | — | 21,317 |
Other liabilities ...................................................... | — | 112,774 |
Total ...................................................... | — | 694,547 |
Other comprehensive income associated with assets held for sale | ||
Other components of equity | ||
Net changes in revaluation of financial assets measured at fair value through | ||
other comprehensive income ...................................... | — | 148,535 |
Exchange differences on translating foreign operations ................... | — | 118,061 |
Total ...................................................... | — | 266,596 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-34
Equity in associates and joint ventures is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Associates .............................................................. |
4,887,674 |
4,218,009 |
Joint ventures ............................................................ |
910,377 |
1,124,539 |
Total .............................................................. |
5,798,051 |
5,342,548 |
The combined information of investments accounted for using the equity method (total value of TMC’s
interests) is as follows:
| Yen in millions |
|||
For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Net income |
|||
Associates .................................................. |
478,405 |
466,473 |
404,437 |
Joint ventures ............................................... |
284,732 |
124,747 |
148,305 |
Total .................................................. |
763,137 |
591,219 |
552,742 |
Other comprehensive income, net of tax |
|||
Associates .................................................. |
269,753 |
55,415 |
109,968 |
Joint ventures ............................................... |
52,361 |
2,712 |
73,812 |
Total .................................................. |
322,114 |
58,127 |
183,780 |
Comprehensive income |
|||
Associates .................................................. |
748,158 |
521,888 |
514,405 |
Joint ventures ............................................... |
337,093 |
127,459 |
222,117 |
Total .................................................. |
1,085,251 |
649,347 |
736,522 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-35
The changes in cost and accumulated depreciation and impairment losses are as follows:
(Cost)
| Yen in millions |
||||||
Vehicles and |
||||||
Machinery and |
equipment on |
Construction |
||||
Land |
Buildings |
equipment |
operating leases |
in progress |
Total |
|
Balance as of April 1, 2024 ....... |
1,441,811 5,884,749 |
16,469,032 |
7,523,911 |
1,040,188 32,359,692 |
||
Additions .................. |
7,622 |
74,469 |
295,719 |
3,866,922 |
1,501,327 |
5,746,060 |
Sales or disposal ............ |
(22,255) |
(60,228) |
(561,258) |
(3,185,673) |
(22,473) (3,851,888) |
|
Reclassification from |
||||||
construction in progress .... |
15,842 |
292,601 |
572,844 |
187 |
(881,473) |
— |
Foreign currency translation |
||||||
adjustments .............. |
41 |
(47,461) |
(154,892) |
(94,981) |
(19,444) |
(316,737) |
Other ..................... |
(14,940) |
25,932 |
(202) |
(58,420) |
(21,979) |
(69,609) |
Balance as of March 31, 2025 ..... |
1,428,122 6,170,063 |
16,621,243 |
8,051,945 |
1,596,145 33,867,518 |
||
Additions .................. |
5,806 |
122,961 |
468,039 |
3,657,892 |
1,503,710 |
5,758,408 |
Sales or disposal ............ |
(2,901) |
(69,841) |
(615,221) |
(2,620,534) |
(44,327) (3,352,824) |
|
Reclassification from |
||||||
construction in progress .... |
57,729 |
312,901 |
882,157 |
55 |
(1,252,842) |
— |
Foreign currency translation |
||||||
adjustments .............. |
27,751 |
184,418 |
865,647 |
677,356 |
89,663 |
1,844,836 |
Transfer to assets held for |
||||||
sale .................... |
(165,526) (428,406) |
(698,884) |
(652) |
(15,502) (1,308,970) |
||
Other ..................... |
644 |
(7,190) |
(13,603) |
(60,414) |
(157,040) |
(237,603) |
Balance as of March 31, 2026 ..... |
1,351,625 6,284,907 |
17,509,377 |
9,705,647 |
1,719,808 36,571,364 |
||
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-36
(Accumulated depreciation and impairment losses)
| Yen in millions | ||||||
Vehicles and | ||||||
Machinery and | equipment on | Construction | ||||
Land | Buildings | equipment | operating leases | in progress | Total | |
Balance as of April 1, 2024 ......... | (6,985) (3,753,786) (12,719,614) | (1,619,009) | (2,510) | (18,101,905) | ||
Depreciation ................. | — | (169,778) | (1,039,696) | (896,127) | — | (2,105,601) |
Impairment losses ............ | — | — | — | — | — | — |
Sales or disposal ............. | 1,244 | 52,062 | 516,767 | 983,818 | — | 1,553,891 |
Foreign currency translation | ||||||
adjustments ............... | (94) | 30,142 | 109,227 | 15,759 | 55 | 155,090 |
Other ...................... | (1,091) | (25,678) | (24,281) | 16,972 | (1,223) | (35,301) |
Balance as of March 31, 2025 ....... | (6,927) (3,867,037) (13,157,598) | (1,498,586) | (3,678) | (18,533,826) | ||
Depreciation ................. | — | (219,752) | (1,015,844) | (980,258) | — | (2,215,854) |
Impairment losses ............ | — | (3,981) | (4,844) | — | — | (8,825) |
Sales or disposal ............. | 494 | 59,041 | 540,537 | 745,050 | — | 1,345,122 |
Foreign currency translation | ||||||
adjustments ............... | (262) | (110,778) | (671,336) | (117,577) | (63) | (900,016) |
Transfer to assets held for sale .. | 424 | 260,039 | 566,214 | 4 | 172 | 826,852 |
Other ...................... | (794) | (2,135) | (16,190) | 1,273 | 393 | (17,453) |
Balance as of March 31, 2026 .. ..... | (7,065) (3,884,604) (13,759,061) | (1,850,094) | (3,175) | (19,504,000) | ||
Depreciation on “Property, plant and equipment” is included in “Cost of products sold” and “Selling,
general and administrative” in the consolidated statement of income.
Vehicles and equipment on operating leases consist of the following:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Vehicles .............................................................. | 7,996,894 | 9,644,572 |
Equipment ............................................................. | 55,051 | 61,076 |
8,051,945 | 9,705,647 | |
Less - Accumulated depreciation ........................................... | (1,498,586) | (1,850,094) |
Vehicles and equipment on operating leases, net ........................... | 6,553,359 | 7,855,554 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-37
The following table presents future lease payments to be received for vehicles and equipment on operating
leases:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Within 1 year ...................................................... |
1,200,378 |
1,403,807 |
Between 1 and 2 years ............................................... |
837,956 |
923,554 |
Between 2 and 3 years ............................................... |
374,459 |
407,306 |
Between 3 and 4 years ............................................... |
93,396 |
105,642 |
Between 4 and 5 years ............................................... |
35,953 |
40,106 |
Later than 5 years ................................................... |
17,235 |
20,762 |
Total future rentals .............................................. |
2,559,377 |
2,901,178 |
The future lease payments to be received as shown above should not be considered indicative of future cash
collections.
Right of use assets that are held as rental assets included within “Vehicles and equipment on operating
leases, net” are ¥4,664,376 million and ¥5,546,865 million, as of March 31, 2025 and 2026, respectively.
Furthermore, these right of use assets were fully paid in cash at the time of acquisition, and since the increase in
these right of use assets is equal to the cash outflow, no lease liabilities relating to these right of use assets are
recognized. The additions and total cash outflows for these right of use assets for the years ended March 31, 2025
and 2026, were ¥2,909,058 million and ¥2,654,403 million, respectively. Depreciation expenses for these right of
use assets for the years ended March 31, 2024, 2025 and 2026, were ¥612,569 million, ¥617,495 million and
¥658,046 million, respectively. Depreciation on these right of use assets is included in “Cost of financing
services” in the consolidated statement of income. Revenue from subleasing these right of use assets was
¥947,058 million, ¥1,008,634 million and ¥1,101,911 million for the years ended March 31, 2024, 2025 and
2026, respectively. Please see Note 14 about the status of lessee leases other than “Vehicles and equipment on
The breakdown of right of use assets is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Types of original assets |
||
Land ............................................................. |
73,694 |
73,425 |
Buildings .......................................................... |
355,489 |
460,788 |
Other ............................................................. |
153,885 |
367,019 |
Total ......................................................... |
583,068 |
901,232 |
The increase in the right of use assets for the years ended March 31, 2025 and 2026 were ¥164,348 million
and ¥549,798 million, respectively.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-38
The breakdown of main gains and losses on lessee’s leases is as follows:
| Yen in millions |
|||
| March 31, |
|||
2024 |
2025 |
2026 |
|
Depreciation of right of use assets |
|||
Land ................................................... |
9,699 |
5,094 |
7,796 |
Buildings ............................................... |
69,962 |
52,178 |
55,911 |
Other .................................................. |
42,038 |
43,566 |
158,164 |
Total .............................................. |
121,698 |
100,838 |
221,871 |
Interest expense on lease liabilities ............................... |
6,152 |
4,331 |
5,023 |
Short-term leases ............................................. |
103,544 |
117,834 |
124,636 |
231,394 |
223,003 |
351,531 |
|
For the years ended March 31, 2025 and 2026, total cash outflows for lessee leases were ¥208,414 million
and ¥484,931 million, respectively.
The following is the maturity analysis of the total future lease payments and the adjustment to present value:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Within 1 year .......................................................... |
102,412 |
194,791 |
Between 1 and 5 years ................................................... |
253,854 |
289,591 |
Later than 5 years ....................................................... |
273,747 |
361,683 |
Future lease payment, total ............................................ |
630,013 |
846,065 |
Less - Interest expense ............................................... |
(96,662) |
(135,052) |
Present value of lease payment, total ................................ |
533,351 |
711,013 |
Current liabilities ................................................... |
92,147 |
163,435 |
Non-current liabilities ................................................ |
441,204 |
547,578 |
Present value of lease payment, total ................................ |
533,351 |
711,013 |
The carrying value of intangible assets is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Capitalized development costs ............................................. |
582,606 |
523,437 |
Software and other ...................................................... |
780,660 |
869,318 |
Total ............................................................. |
1,363,266 |
1,392,755 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-39
Changes in cost and accumulated amortization of intangible assets are as follows:
(Cost)
| Yen in millions |
|||
Capitalized |
|||
development costs |
Software and other |
Total |
|
Balance as of April 1, 2024 ............................. |
1,058,334 |
1,139,895 |
2,198,228 |
Additions ....................................... |
— |
60,914 |
60,914 |
Internally developed ............................... |
111,546 |
189,229 |
300,775 |
Sales or disposal .................................. |
(98,495) |
(158,523) |
(257,018) |
Foreign currency translation adjustments .............. |
(564) |
(4,850) |
(5,414) |
Other ........................................... |
(3,839) |
(23,210) |
(27,050) |
Balance as of March 31, 2025 ........................... |
1,066,981 |
1,203,454 |
2,270,435 |
Additions ....................................... |
— |
102,039 |
102,039 |
Internally developed ............................... |
106,751 |
216,060 |
322,812 |
Sales or disposal .................................. |
(149,833) |
(148,545) |
(298,378) |
Foreign currency translation adjustments .............. |
3,093 |
32,538 |
35,631 |
Other ........................................... |
(40,490) |
(19,240) |
(59,730) |
Balance as of March 31, 2026 ........................... |
986,503 |
1,386,306 |
2,372,808 |
(Accumulated amortization)
| Yen in millions |
|||
Capitalized |
|||
development costs |
Software and other |
Total |
|
Balance as of April 1, 2024 ............................. |
(419,997) |
(422,905) |
(842,902) |
Amortization .................................... |
(162,068) |
(145,632) |
(307,700) |
Sales or disposal .................................. |
98,495 |
144,423 |
242,919 |
Foreign currency translation adjustments .............. |
— |
2,577 |
2,577 |
Other ........................................... |
805 |
(1,257) |
(2,062) |
Balance as of March 31, 2025 ........................... |
(484,375) |
(422,794) |
(907,169) |
Amortization .................................... |
(151,780) |
(177,862) |
(329,643) |
Sales or disposal .................................. |
149,833 |
99,267 |
249,100 |
Foreign currency translation adjustments .............. |
— |
(17,198) |
(17,198) |
Other ........................................... |
23,257 |
1,600 |
24,857 |
Balance as of March 31, 2026 ........................... |
(463,066) |
(516,987) |
(980,053) |
Amortization of intangible assets is included in “Cost of products sold” and “Selling, general and
administrative” in the consolidated statement of income. “Other” includes transfers to assets held for sale. There
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-40
Significant components of deferred tax assets and liabilities are as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Deferred tax assets |
||
Defined benefit plan liabilities ......................................... |
156,650 |
177,494 |
Accrued expenses and liabilities for quality assurance ...................... |
821,680 |
886,672 |
Other accrued employees’ compensation ................................. |
146,548 |
160,993 |
Operating loss carryforwards for tax purposes ............................. |
44,324 |
357,926 |
Allowance for doubtful accounts and credit losses ......................... |
115,209 |
130,858 |
Property, plant and equipment and other assets ............................ |
340,410 |
339,623 |
Other ............................................................. |
504,892 |
853,359 |
Total deferred tax assets .......................................... |
2,129,712 |
2,906,926 |
Deferred tax liabilities |
||
Changes in fair value of financial instruments measured in other comprehensive |
||
income ......................................................... |
(727,581) |
(751,808) |
Undistributed earnings of foreign subsidiaries ............................. |
(63,179) |
(48,979) |
Undistributed earnings of associates and joint ventures ...................... |
(1,223,489) |
(1,289,418) |
Basis difference of acquired assets ...................................... |
(71,386) |
(90,855) |
Capitalized development costs ......................................... |
(181,775) |
(171,315) |
Lease transactions ................................................... |
(860,487) |
(1,337,570) |
Other ............................................................. |
(143,379) |
(245,890) |
Total deferred tax liabilities ....................................... |
(3,271,276) |
(3,935,835) |
Net deferred tax assets and liabilities ................................ |
(1,141,564) |
(1,028,909) |
The “Other” category of deferred tax assets primarily comprises adjustments related to unrecognized tax
benefits adjustments (¥402,889 million in the year ended March 31, 2026).
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-41
Of the changes in deferred tax assets and deferred tax liabilities for the years ended March 31, 2024, 2025
and 2026, the amount recognized as income tax expense in the consolidated statement of income is as follows:
| Yen in millions | |||
For the years ended March 31, | |||
2024 | 2025 | 2026 | |
Defined benefit plan liabilities ............................... | (4,333) | 3,093 | 45,291 |
Accrued expenses and liabilities for quality assurance ............. | 40,626 | 108,554 | 29,633 |
Other accrued employees’ compensation ....................... | 6,925 | 8,930 | 11,769 |
Operating loss carryforwards for tax purposes ................... | (133,776) | (5,609) | 291,709 |
Allowance for doubtful accounts and credit losses ................ | (551) | 11,776 | 5,347 |
Property, plant and equipment and other assets .................. | 11,518 | 49,177 | 1,070 |
Undistributed earnings of foreign subsidiaries ................... | (2,869) | (20,814) | 14,200 |
Undistributed earnings of associates and joint ventures ............ | (43,526) | (54,492) | (30,316) |
Basis difference of acquired assets ............................ | 1,152 | 10,991 | (15,541) |
Capitalized development costs ............................... | 12,824 | 7,815 | 10,460 |
Lease transactions ......................................... | 186,196 | 18,780 | (398,554) |
Other ................................................... | 88,582 | (25,114) | 340,621 |
Total ................................................ | 162,768 | 113,087 | 305,691 |
The “Other” category primarily comprises adjustments related to unrecognized tax benefits adjustments
(¥279,486 million in the year ended March 31, 2026).
Deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset
are recognized in the statement of financial position:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Deductible temporary difference ......................................... | 1,944,948 | 1,598,404 |
Carryforwards of tax losses ............................................. | 841,136 | 978,821 |
Carryforwards of tax credit .............................................. | 61,687 | 86,395 |
Total ........................................................... | 2,847,770 | 2,663,620 |
The expected expiration date of the carryforwards of tax losses for which deferred tax assets are not
recognized are as follows:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Within 5 years ........................................................ | 4,323 | 53,099 |
Between 5 and 10 years ................................................ | 319,631 | 313,330 |
Later than 10 years .................................................... | 517,182 | 612,392 |
Total ........................................................... | 841,136 | 978,821 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-42
The expected expiration date of the carryforwards of tax credit for which deferred tax assets are not
recognized are as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Within 5 years ........................................................ |
3,778 |
6,202 |
Between 5 and 10 years ................................................ |
3,878 |
8,293 |
Later than 10 years .................................................... |
54,031 |
71,900 |
Total ........................................................... |
61,687 |
86,395 |
Of the temporary differences in investments in foreign subsidiaries, because management intends to reinvest
undistributed earnings of foreign subsidiaries in the foreseeable future, no deferred tax liability is recognized. As
of March 31, 2025 and 2026, temporary differences totaled ¥5,667,006 million and ¥5,237,041 million,
respectively, and Toyota estimates an additional deferred tax liability of ¥245,292 million and ¥328,627 million
(2) Income tax expenses
Income tax expense for the years ended March 31, 2024, 2025 and 2026 consists of the following:
| Yen in millions |
|||
For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Current income tax expense: |
|||
TMC and domestic subsidiaries ............................. |
1,432,299 |
965,512 |
1,053,788 |
Foreign subsidiaries ....................................... |
624,134 |
772,410 |
419,137 |
Total current ........................................ |
2,056,433 |
1,737,922 |
1,472,925 |
Deferred income tax expense (benefit): |
|||
TMC and domestic subsidiaries ............................. |
(42,906) |
(131,329) |
(376,104) |
Foreign subsidiaries ....................................... |
(119,862) |
18,242 |
70,413 |
Total deferred ....................................... |
(162,768) |
(113,087) |
(305,691) |
Total income tax expense .............................. |
1,893,665 |
1,624,835 |
1,167,234 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-43
Toyota is subject to a number of different income taxes which, in the aggregate, indicate a statutory rate in
Japan of approximately 30.9% for the years ended March 31, 2024, 2025 and 2026. 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 future years. Reconciliation of the differences between
the statutory tax rate and the average effective tax rate is as follows:
For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Statutory tax rate ........................................ |
30.9% |
30.9% |
30.9% |
Increase (reduction) in taxes resulting from: |
|||
Non-deductible expenses .............................. |
0.3 |
0.8 |
0.8 |
Tax-exempt income .................................. |
(0.2) |
(0.6) |
(0.3) |
Deferred tax liabilities on undistributed earnings of foreign |
|||
subsidiaries ...................................... |
0.6 |
1.0 |
1.0 |
Effects of investments accounted for using the equity |
|||
method .......................................... |
(3.4) |
(2.8) |
(3.3) |
Deferred tax liabilities on undistributed earnings of associates |
|||
and joint ventures ................................. |
2.1 |
1.9 |
2.1 |
Change in unrecognized deferred tax assets ............... |
0.4 |
2.1 |
3.8 |
Tax credits ......................................... |
(2.1) |
(4.2) |
(4.6) |
The difference between the statutory tax rate in Japan and that |
|||
of foreign subsidiaries .............................. |
(2.0) |
(3.1) |
(3.1) |
Unrecognized tax benefits adjustments ................... |
— |
(1.1) |
(5.4) |
Revision to deferred tax assets and liabilities at the fiscal |
|||
year-end due to changes in tax rates ................... |
— |
0.4 |
— |
Other ............................................. |
0.6 |
0.0 |
0.7 |
Average effective tax rate ................................. |
27.2% |
25.3% |
22.7% |
(3) Global Minimum Taxation
The Organization for Economic Co-operation and Development (OECD) has issued model rules for global
minimum taxation, commonly referred to as Pillar Two, which aim to ensure that multinational enterprises are
subject to a minimum corporate income tax rate of 15%.
Toyota operates in jurisdictions where legislation based on these model rules, including the Qualified
Domestic Minimum Top-up Tax (QDMTT), has been enacted or substantively enacted. Based on an assessment
of the financial information of the constituent entities subject to the regime, Toyota has evaluated the potential
impact of corporate income taxes arising from global minimum taxation and concluded that there is no material
impact.
Furthermore, Toyota applies the temporary exception under IAS 12 “Income Taxes” regarding the
recognition and disclosure of deferred tax assets and liabilities related to global minimum taxation. As a result,
Toyota does not recognize any deferred tax assets or deferred tax liabilities arising from global minimum
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-44
Trade accounts and other payables consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Accounts and notes payables ............................................ |
4,034,920 |
4,302,013 |
Other payables ....................................................... |
1,492,427 |
1,554,932 |
Total ........................................................... |
5,527,347 |
5,856,945 |
(1) Financial liabilities
Financial liabilities consist of the following:
| Yen in millions |
||||||||
| Non-cash changes |
||||||||
Changes |
||||||||
in foreign |
||||||||
currency |
||||||||
As of |
exchange |
Changes |
As of |
|||||
April 1, 2024 |
Cash flow |
Acquisitions |
Reclassification |
rates |
in fair value |
Other |
March 31, 2025 |
|
Current liabilities |
||||||||
Short-term debt ............. |
5,487,959 |
75,675 |
— |
— |
(99,165) |
— |
0 |
5,464,469 |
Current portion of long-term |
||||||||
debt .................... |
9,844,870 (10,786,012) |
— |
11,336,112 |
(141,748) |
— |
19,679 |
10,272,900 |
|
Current portion of long-term |
||||||||
lease liabilities ............ |
73,456 |
(86,249) |
— |
104,271 |
(599) |
— |
1,268 |
92,147 |
Current liabilities ........ |
15,406,284 (10,796,586) |
— |
11,440,383 |
(241,512) |
— |
20,947 |
15,829,516 |
|
Non-current liabilities |
||||||||
Long-term debt ............. |
20,766,384 |
13,381,581 |
— |
(11,336,112) |
(290,753) |
— |
1,059 |
22,522,158 |
Long-term lease liabilities ..... |
389,112 |
— |
164,348 |
(104,271) |
(3,280) |
— |
(4,705) |
441,204 |
Non-current liabilities .... |
21,155,496 |
13,381,581 |
164,348 |
(11,440,383) |
(294,033) |
— |
(3,646) |
22,963,363 |
Total .................. |
36,561,780 |
2,584,995 |
164,348 |
— |
(535,545) |
— |
17,301 |
38,792,879 |
Derivatives ..................... |
(40,578) |
(5,189) |
— |
— |
(478) |
84,074 |
— |
37,829 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-45
| Yen in millions |
||||||||
| Non-cash changes |
||||||||
Changes |
||||||||
in foreign |
||||||||
currency |
||||||||
As of |
exchange |
Changes |
As of |
|||||
April 1, 2025 |
Cash flow |
Acquisitions |
Reclassification |
rates |
in fair value |
Other |
March 31, 2026 |
|
Current liabilities |
||||||||
Short-term debt ............ |
5,464,469 |
(90,691) |
— |
— |
455,722 |
— |
(130,417) |
5,699,083 |
Current portion of long-term |
||||||||
debt ................... |
10,272,900 (11,601,270) |
— |
12,179,370 |
850,496 |
— |
17,089 |
11,718,586 |
|
Current portion of long-term |
||||||||
lease liabilities ........... |
92,147 |
(355,271) |
— |
439,532 |
2,991 |
— |
(15,964) |
163,435 |
Current liabilities ....... |
15,829,516 (12,047,232) |
— |
12,618,903 |
1,309,209 |
— |
(129,292) |
17,581,104 |
|
Non-current liabilities |
||||||||
Long-term debt ............ |
22,522,158 |
12,880,225 |
— |
(12,179,370) |
1,856,234 |
— |
(2,460) |
25,076,787 |
Long-term lease liabilities .... |
441,204 |
— |
549,798 |
(439,532) |
17,791 |
— |
(21,683) |
547,578 |
Non-current liabilities . . . |
22,963,363 |
12,880,225 |
549,798 |
(12,618,903) |
1,874,025 |
— |
(24,143) |
25,624,365 |
Total ................ |
38,792,879 |
832,992 |
549,798 |
— |
3,183,234 |
— |
(153,435) |
43,205,469 |
Derivatives ................... |
37,829 |
(40,982) |
— |
— |
(1,917) |
(24,507) |
— |
(29,578) |
Short-term and long-term debt are classified as financial liabilities measured at amortized cost.
“Other” for the year ended March 31, 2026 includes amounts reclassified to liabilities directly associated
with assets held for sale.
The breakdown of “Short-term debt” is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Short-term debt |
||
(Principally from bank) |
||
[Weighted average interest rate |
||
2025 2.26% |
||
2026 2.51%] ............................................... |
1,552,166 |
1,339,878 |
Commercial paper |
||
[Weighted average interest rate |
||
2025 3.82% |
||
2026 3.15%] ............................................... |
3,912,303 |
4,359,205 |
5,464,469 |
5,699,083 |
|
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-46
(3) Long-term debt
The breakdown of “Long-term debt” is as follows:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Unsecured loans | ||
(Principally from bank) | ||
[2025 | ||
Weighted average interest 3.56% | ||
Due 2025 to 2042 | ||
2026 | ||
Weighted average interest 3.50% | ||
Due 2026 to 2042] .......................................... | 7,360,937 | 8,854,912 |
Secured loans | ||
(Principally financial receivables securitization) | ||
[2025 | ||
Weighted average interest 4.23% | ||
Due 2025 to 2034 | ||
2026 | ||
Weighted average interest 3.91% | ||
Due 2026 to 2034] .......................................... | 7,556,089 | 8,737,773 |
Unsecured bonds of the parent | ||
[2025 | ||
Weighted average interest 1.93% | ||
Due2026 to 2037 | ||
2026 | ||
Weighted average interest 2.91% | ||
Due 2026 to 2037] .......................................... | 1,108,080 | 1,099,460 |
Unsecured bonds and medium-term notes of consolidated subsidiaries | ||
[2025 | ||
Weighted average interest 3.61% | ||
Due 2025 to 2048 | ||
2026 | ||
Weighted average interest 3.62% | ||
Due 2026 to 2048] .......................................... | 16,683,919 | 17,989,699 |
Secured bonds of consolidated subsidiaries | ||
[2025 | ||
Weighted average interest 8.12% | ||
Due 2025 to 2029 | ||
2026 | ||
Weighted average interest 7.86% | ||
Due 2026 to 2029] .......................................... | 86,033 | 113,529 |
32,795,058 | 36,795,373 | |
Less - Current portion due within one year ............................... | (10,272,900) | (11,718,586) |
22,522,158 | 25,076,787 | |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-47
As of March 31, 2025 and 2026, the currencies of long-term debt are 50% and 47% in US dollars, 12% and
12% in Japanese yen, 14% and 14% in Euros, 5% and 5% in Australian dollars, 4% and 4% in Canadian dollars,
The breakdown of assets pledged as collateral mainly for loans of consolidated subsidiaries is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Property, plant and equipment ....................................... |
1,616,300 |
1,926,713 |
Other assets ...................................................... |
7,936,375 |
9,072,756 |
Total ....................................................... |
9,552,674 |
10,999,469 |
Other assets principally consist of securitized finance receivables.
Standard agreements with certain banks 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
Interest
expenses
for
the
years
ended
March
31,
2025
and
2026
are
¥1,654,702
million
and
¥1,696,845 million, respectively. Interest expenses related to the financial business is included in “cost of
Other financial liabilities consist of the following:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Financial liabilities measured at amortized cost |
||
Deposits received ............................................. |
1,501,078 |
2,584,248 |
Other ....................................................... |
483,751 |
599,218 |
Financial liabilities measured at fair value through profit or loss |
||
Derivatives .................................................. |
319,881 |
357,955 |
Total ................................................... |
2,304,711 |
3,541,421 |
Current liabilities .................................................. |
1,869,117 |
2,384,008 |
Non-current liabilities .............................................. |
435,594 |
1,157,413 |
Total ................................................... |
2,304,711 |
3,541,421 |
(1) Financial risk management policy
Toyota is exposed to various risks such as credit risk, liquidity risk and, market risk (foreign currency risk,
interest rate risk, commodity price fluctuation risk and stock price fluctuation risk). To hedge market risk, Toyota
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-48
also uses derivative financial instruments including foreign exchange forward contracts, foreign currency
options, interest rate swaps, interest rate currency swap agreements, and interest rate options. With respect to the
execution and management of derivative transactions, Toyota follows company regulations that set out
transaction authority, and it is a policy not to conduct speculative transactions using derivative financial
instruments.
In addition, Toyota procures necessary funds (mainly bank borrowings and issuing corporate bonds) based
on capital expenditure plans, and temporary surplus funds are managed with highly safe financial assets and
short-term working capital is procured through bank borrowings and commercial paper. As for liquidity risk
concerning fund procurement, each company manages it by preparing a monthly cash flow plan, etc.
Receivables related to financial services are exposed to credit risk. The risk arises from the failure of
customers or dealers to meet the terms of their contracts with Toyota or otherwise fail to perform as agreed.
Toyota manages its credit risk by defining risk management methods and management systems for specific risks
in accordance with the regulations on risk management. Based on such regulations, Toyota mitigates credit risk
through periodic monitoring of customers’ credit status and undertaking the maturity control and account balance
control, while detecting promptly any doubtful accounts caused by deterioration in the financial conditions.
Please see Note 3 “Allowance for credit losses on finance receivables” about the measuring method of the
expected credit losses on receivables related to financial services.
The carrying amount after impairment of financial assets presented in the consolidated financial statements,
as well as guarantee obligations and loan commitments that are set forth in the notes to the consolidated financial
statements, are the maximum exposure to the credit risk of Toyota’s financial assets that do not take into account
the value of the acquired collateral. The allowance for credit exposures of loan commitments and financial
agreements is measured in the same way that the allowance for retail receivables is measured.
Retail receivables and financial lease receivables are secured by vehicles as collateral. Wholesale
receivables and other dealer loans are secured by placing appropriate property as collateral. During the reporting
period, there was no change in the policy regarding collateral.
Net changes in the allowance for credit losses relating to retail receivables are as follows:
| Yen in millions |
||||
| For the year ended March 31, 2025 |
||||
Lifetime expected credit loss |
||||
Expected credit |
Financial |
Credit-impaired |
||
loss for |
receivable not |
financial |
||
12 months |
credit-impaired |
receivable |
Total |
|
Allowance for credit loss at beginning of year .... |
111,044 |
147,790 |
77,318 |
336,152 |
Provision for credit loss, net of reversal ......... |
9,648 |
1,827 |
195,494 |
206,968 |
Charge-offs ................................ |
— |
— |
(189,044) |
(189,044) |
Other ..................................... |
(2,860) |
1,269 |
3,818 |
2,228 |
Allowance for credit loss at end of year ......... |
117,832 |
150,885 |
87,587 |
356,304 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-49
| Yen in millions | ||||
| For the year ended March 31, 2026 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Allowance for credit loss at beginning of year ... | 117,832 | 150,885 | 87,587 | 356,304 |
Provision for credit loss, net of reversal ........ | 1,888 | (6,575) | 194,754 | 190,067 |
Charge-offs ............................... | — | — | (197,813) | (197,813) |
Other .................................... | 8,019 | 13,582 | 11,991 | 33,593 |
Allowance for credit loss at end of year ........ | 127,739 | 157,892 | 96,520 | 382,152 |
“Other” primarily includes currency translation adjustments.
The table below shows retail receivables segregated into aging categories based on the numbers of days
outstanding:
| Yen in millions | ||||
| March 31, 2025 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Current .................................. | 25,114,478 | 1,335,387 | 12,067 | 26,461,932 |
Past due less than 90 days ................... | 306,022 | 658,638 | 20,028 | 984,689 |
Past due 90 days or more .................... | — | 16 | 191,385 | 191,401 |
Total ................................ | 25,420,500 | 1,994,041 | 223,481 | 27,638,021 |
| Yen in millions | ||||
| March 31, 2026 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Current .................................. | 29,357,833 | 1,211,218 | 13,898 | 30,582,949 |
Past due less than 90 days ................... | 325,527 | 717,109 | 22,634 | 1,065,270 |
Past due 90 days or more .................... | — | 2,944 | 186,760 | 189,703 |
Total ................................ | 29,683,360 | 1,931,271 | 223,291 | 31,837,922 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-50
Net changes in the allowance for credit losses relating to the finance lease receivables are as follows:
Yen in millions | ||
For the years ended March 31, | ||
2025 | 2026 | |
Allowance for credit loss at beginning of year .............................. | 46,909 | 56,721 |
Provision for credit loss, net of reversal ................................... | 21,140 | 19,169 |
Charge-offs ......................................................... | (10,311) | (12,017) |
Other .............................................................. | (1,017) | 3,688 |
Allowance for credit loss at end of year ................................... | 56,721 | 67,560 |
“Other” primarily includes currency translation adjustments.
The table below shows the finance lease receivables segregated into aging categories based on the numbers
of the days outstanding:
Yen in millions | ||
March 31, | ||
2025 | 2026 | |
Current ............................................................. | 3,340,414 | 4,033,662 |
Past due less than 90 days .............................................. | 67,627 | 86,346 |
Past due 90 days or more ............................................... | 29,928 | 34,643 |
Total .......................................................... | 3,437,970 | 4,154,650 |
The table below shows the net movement of the allowance for credit losses on wholesale receivables and
other dealer loans.
| Yen in millions | ||||
| For the year ended March 31, 2025 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Allowance for credit loss at beginning of year . . . | 17,481 | 5,931 | 7,801 | 31,213 |
Provision for credit loss, net of reversal ........ | 7,009 | 1,226 | (980) | 7,256 |
Charge-offs .............................. | — | — | (698) | (698) |
Other ................................... | 206 | (139) | (48) | 20 |
Allowance for credit loss at end of year ........ | 24,697 | 7,018 | 6,076 | 37,791 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-51
| Yen in millions | ||||
| For the year ended March 31, 2026 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Allowance for credit loss at beginning of year .... | 24,697 | 7,018 | 6,076 | 37,791 |
Provision for credit loss, net of reversal ......... | 2,930 | 2,204 | 5,900 | 11,033 |
Charge-offs ............................... | — | — | (482) | (482) |
Other .................................... | 2,869 | 996 | 824 | 4,688 |
Allowance for credit loss at end of year ......... | 30,495 | 10,219 | 12,317 | 53,031 |
“Other” primarily includes currency translation adjustments.
Toyota charges off the credit - impaired finance receivables when Toyota considers that all or part of it will
not be collected. The amount of receivables related to financial services which have been charged off but are
subject to ongoing collection activity was not significant for the years ended March 31, 2025 and 2026.
The balances of wholesale receivables and other dealer loan receivables portfolios by credit status, as well
as loan commitments and financial guarantee contracts, as of March 31, 2025 and 2026 are as follows.
The wholesale and other dealer loan receivables portfolio segment is segregated into the following 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, 2025 | ||||
Lifetime expected credit loss | ||||
Expected credit | Financial | Credit-impaired | ||
loss for | receivable not | financial | ||
12 months | credit-impaired | receivable | Total | |
Wholesale and other dealer loans | ||||
Performing ............................ | 4,478,021 | — | — | 4,478,021 |
Credit Watch .......................... | 213,400 | 143,979 | — | 357,379 |
At Risk ............................... | — | 54,774 | 2,003 | 56,776 |
Default ............................... | — | — | 10,360 | 10,360 |
Loan commitments ......................... | 10,288,422 | 188,448 | 1,024 | 10,477,894 |
Financial guarantee contracts ................. | 2,234,393 | 24,001 | — | 2,258,395 |
Total ............................. | 17,214,236 | 411,202 | 13,387 | 17,638,825 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-52
| Yen in millions |
||||
| March 31, 2026 |
||||
Lifetime expected credit loss |
||||
Expected credit |
Financial |
Credit-impaired |
||
loss for |
receivable not |
financial |
||
12 months |
credit-impaired |
receivable |
Total |
|
Wholesale and other dealer loans |
||||
Performing ............................ |
5,369,936 |
— |
— |
5,369,936 |
Credit Watch .......................... |
132,379 |
228,403 |
— |
360,782 |
At Risk ............................... |
— |
43,883 |
3,086 |
46,970 |
Default ............................... |
— |
— |
44,244 |
44,244 |
Loan commitments .......................... |
9,731,868 |
187,037 |
1,989 |
9,920,894 |
Financial guarantee contracts .................. |
1,464,251 |
14,008 |
— |
1,478,259 |
Total ............................. |
16,698,434 |
473,331 |
49,319 |
17,221,084 |
For the years ended March 31, 2025 and 2026, the amount of finance receivables where the terms were
modified due to deterioration in credit conditions was not significant for any portfolio of finance receivables, and
the amount of payment defaults on finance receivables so modified were not significant for any portfolio of such
To secure cash on hand necessary for carrying out operations, Toyota appropriately borrows from financial
institutions and issues corporate bonds and medium-term notes or commercial paper, and there is a risk of failing
to execute the payment on the due date because of deterioration of the fund procurement environment etc.
Toyota manages liquidity risk by monitoring the fund demand of each group company as appropriate,
preparing a monthly-based funding plan, and comparing it with daily cash flow. In addition to holding sufficient
cash and cash equivalents in order to secure liquidity and stability of funds, to prepare for emergency situations
such as sudden fund demand and market liquidity deterioration, a commitment line has been set up.
The amounts of non-derivative financial liabilities and derivative financial liabilities by remaining contract
maturity period are as follows. Note that, with respect to loan commitments and financial guarantee contracts, the
maximum exposure could be demanded to be guaranteed or executed within one year. Please see Note 20 “(2)
Credit risk” about the maximum exposure.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-53
As of March 31, 2025
| Yen in millions | ||||||
| Maturities | ||||||
Contractual | Between 1 and | Between 3 and | Later than | |||
Book value | cash flows | Within 1 year | 3 years | 5 years | 5 years | |
Non-derivative financial liabilities | ||||||
Short-term debt .................. | 1,552,166 | (1,565,387) | (1,565,387) | — | — | — |
Commercial paper ............... | 3,912,303 | (4,012,371) | (4,012,371) | — | — | — |
Long-term debt .................. | 32,795,058 (35,293,975) (11,209,068) | (15,485,265) | (6,190,498) | (2,409,143) | ||
Lease liabilities .................. | 533,351 | (630,013) | (102,412) | (159,500) | (94,354) | (273,747) |
Total .................. | 38,792,879 (41,501,746) (16,889,239) | (15,644,764) | (6,284,852) | (2,682,891) | ||
Derivative financial liabilities | ||||||
Interest derivatives ............... | 196,389 | (220,341) | (83,505) | (108,063) | (22,712) | (6,061) |
Currency derivatives | ||||||
In ......................... | — | 1,047,528 | 73,959 | 759,648 | 66,990 | 146,931 |
Out ....................... | 123,493 | (1,196,751) | (130,116) | (840,065) | (74,389) | (152,181) |
Total .................. | 319,881 | (369,564) | (139,663) | (188,480) | (30,111) | (11,311) |
Total .............. | 39,112,760 (41,871,310) (17,028,902) | (15,833,244) | (6,314,963) | (2,694,201) | ||
As of March 31, 2026
| Yen in millions | ||||||
| Maturities | ||||||
Contractual | Between 1 and | Between 3 and | Later than | |||
Book value | cash flows | Within 1 year | 3 years | 5 years | 5 years | |
Non-derivative financial liabilities | ||||||
Short-term debt .................. | 1,339,878 | (1,353,907) | (1,353,907) | — | — | — |
Commercial paper ............... | 4,359,205 | (4,453,267) | (4,453,267) | — | — | — |
Long-term debt .................. | 36,795,373 (39,522,887) (12,768,209) | (17,094,270) | (7,489,266) | (2,171,143) | ||
Lease liabilities .................. | 711,013 | (846,065) | (194,791) | (181,928) | (107,664) | (361,683) |
Total .................. | 43,205,469 (46,176,126) (18,770,173) | (17,276,198) | (7,596,929) | (2,532,826) | ||
Derivative financial liabilities | ||||||
Interest derivatives ............... | 255,068 | (339,292) | (138,388) | (148,377) | (40,179) | (12,348) |
Currency derivatives | ||||||
In ......................... | — | 836,049 | 240,393 | 391,484 | 43,039 | 161,134 |
Out ....................... | 102,887 | (949,605) | (323,462) | (414,493) | (47,022) | (164,627) |
Total .................. | 357,955 | (452,848) | (221,457) | (171,386) | (44,163) | (15,842) |
Total .............. | 43,563,423 (46,628,974) (18,991,630) | (17,447,584) | (7,641,092) | (2,548,667) | ||
As described above, Toyota raises funds through the issuance of corporate bonds and medium-term notes,
and commercial paper. These funding mechanisms comply with the regulations of each respective country, and
Toyota qualifies as an eligible issuer. Depending on the individual debt registration statement, this allows us to
issue medium-term notes without a predetermined issuance limit, or to raise funds within a specified issuance
limit.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-54
The unused amount of funding with established issuance limits is as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Corporate bonds and medium-term notes .................................. |
6,011,789 |
7,333,858 |
Commercial paper .................................................... |
1,241,283 |
1,328,779 |
Total .......................................................... |
7,253,072 |
8,662,638 |
As of March 31, 2025 and 2026, Toyota has unused amounts of commitment lines from financial
institutions of ¥5,485,781 million and ¥6,753,849 million, respectively. These amounts do not include the
amounts of overdraft contracts.
As of March 31, 2025 and 2026, the balance of credit limits other than commitment lines from financial
Toyota is subject to foreign currency exposure through transactions in foreign currencies related to
purchases, sales and financing activities associated with conducting business worldwide. Toyota is exposed to
fluctuation
risks
related
to
future
profitability
or
assets
and
liabilities
regarding
operating
cash
flows
denominated in foreign currencies and various financial instruments. The most significant foreign currency
exposure is primarily caused by the U.S. dollar and the euro.
Toyota uses derivative financial instruments including foreign exchange forward contracts, foreign currency
options, interest rate currency swap agreements, and others, to manage the exposure to foreign currency
exchange rate fluctuations.
Toyota uses Value-at-risk analysis measurement (“VaR”) to assess the risk of exchange rate fluctuation.
Potential impact of pre-tax cash flows on VaR-integrated foreign currency positions (including derivatives) for
the years ended March 31, 2025 and 2026 is as follows:
| Yen in millions |
||||
| VaR |
||||
Year-end |
Average |
Maximum |
Minimum |
|
For the year ended March 31, 2025 ............................ |
465,300 |
441,800 |
465,300 |
408,500 |
For the year ended March 31, 2026 ............................ |
497,100 |
486,275 |
505,100 |
462,700 |
The Monte Carlo simulation method is used for Toyota’s VaR measurement, and measurement is based on a
(5) Interest rate risk
In the course of conducting business activities, Toyota is exposed to interest rate risk due to fluctuation in
market interest rates as it procures and invests funds necessary for working capital and capital investment. To
maintain a desirable level of exposure related to interest rate fluctuation risk and minimize interest expense,
Toyota conducts various financial instruments transactions.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-55
Sensitivity analysis of Toyota’s interest rate risk associated with holding financial instruments if the interest
rate increases by 1% is as follows. In this analysis, all other variables are assumed to be constant.
Yen in millions |
||
For the years ended March 31, |
||
2025 |
2026 |
|
Impact on income before income taxes .................................... |
(104,706) |
(109,880) |
Impact on other comprehensive income, before tax effect ..................... |
(235,959) |
(225,875) |
Toyota is exposed to risks arising from increased costs due to commodity price fluctuations, such as iron
and steel, precious metals and non-ferrous alloys used in the manufacturing of automobiles. Toyota controls price
risk associated with the purchase of those commodities by maintaining inventory at the minimum level.
Toyota is exposed to stock price fluctuation risk because it owns shares of companies that have business
relationships mainly for promoting smooth business activities. Toyota periodically reviews the fair values and
financial situations of the business partner companies and, taking into consideration the relationship with them,
continually reviews the holding status. The impact on other comprehensive income, before tax effect, when the
declared price of equity financial assets (shares) in active markets changes by 10% for the years ended March 31,
(1) Definition of fair value hierarchy
In accordance with IFRS Accounting Standards, Toyota classifies fair value measurement into the following
three levels based on the observability and significance of the inputs used.
Level 1:
Quoted prices in active markets for identical assets or liabilities
Level 2:
Fair value measurement based on inputs other than quoted prices included within Level 1 that
are observable for the assets or liabilities, either directly or indirectly
Level 3:
Fair value measurement based on models using significant unobservable inputs for the assets or
liabilities
(2) Method of fair value measurement
The fair value of assets and liabilities is determined using relevant market information and appropriate
valuation methods.
The methods and assumptions for measuring the fair value of assets and liabilities are as follows:
(i) Cash and cash equivalents -
Cash equivalents include money market funds and other investments with original maturities of three
months or less. 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 their short duration.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-56
(ii) Trade accounts and other receivables and Trade accounts and other payables -
These receivables and payables are carried at amounts which approximate fair value due to their short
duration.
(iii) Receivables related to financial services -
The fair value of receivables related to financial services is estimated by discounting expected cash flows to
present value using internal assumptions, including prepayment speeds, expected credit losses and collateral
value.
As unobservable inputs are utilized, the fair value of receivables related to financial services is classified as
Level 3.
(iv) Other financial assets -
(Public and corporate bonds)
Public and corporate bonds include government bonds. Japanese bonds and foreign bonds, including U.S.,
European and other bonds, represent 32% and 68% (as of March 31, 2025) and 41% and 59% (as of March 31,
2026) of public and corporate bonds, respectively. Toyota primarily uses quoted market prices for identical assets
or valuation techniques using observable input to measure the fair value of these securities.
(Stocks)
Listed stocks on the Japanese stock markets represent 79% (as of March 31, 2025) and 78% (as of
March 31, 2026) of stocks that Toyota holds. Toyota primarily uses quoted market prices for identical assets to
measure fair value of these securities. Therefore, stocks with an active market are classified as Level 1.
Fair value of stocks with no active market is measured by using the market approach or other appropriate
methods. Therefore, stocks with no active market are classified as Level 3.
Price book-value ratios (“PBR”) of comparable companies, discount ratios of the discounted cash flow
valuation method and others are the significant unobservable inputs relating to the fair value measurement of
stocks classified as Level 3. The fair value increases (decreases) as PBR of a comparable company rises
(declines) or the discount rate declines (rises). The estimated increase or decrease in the fair value of stocks if the
unobservable inputs were to be replaced by other reasonable alternative assumptions is not significant.
These estimates are based on valuation methods that are considered appropriate in each case. The significant
assumptions involved in the estimations include the financial condition and future prospects and trends of the
investees and the outcome of the referenced transactions. Due to the uncertain nature of these assumptions or by
using different assumptions and estimates, fair value may be materially impacted.
Shares classified as Level 3 are measured using quarterly available information in accordance with Toyota’s
consolidated financial accounting policies and reported to the supervisors along with the basis of the change in
fair value.
(Investment trusts)
Marketable investment trusts are measured using market prices. Therefore, marketable investment trusts are
classified as Level 1. Other investment trusts are calculated based on the quoted price obtained from the financial
institutions with which Toyota transact. Therefore, other investment trusts are classified as Level 2.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-57
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 primarily to
manage its exposures to fluctuations in interest rates and foreign currency exchange rates. Toyota primarily
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 as Level 2. In other certain cases when market data are 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 as
Level 3. Toyota’s derivative fair value measurements consider assumptions about counterparty and Toyota’s own
(vi) Short-term and long-term debt -
The fair values of short-term and long-term debt including the current portion, except for certain secured
loans provided by securitization transactions using special-purpose entities (“Loans Based on Securitization”),
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, the fair value of these debts is classified as Level 2.
The fair values of certain Loans Based on Securitization are primarily 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. In cases where these valuations utilize unobservable inputs, fair value of Loans Based on Securitization is
classified as Level 3.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-58
The following table summarizes the fair values of the assets and liabilities measured at fair value on a
recurring basis. Transfers between levels of fair value are recognized at the date of the event or change in
circumstances that caused the transfer:
| Yen in millions |
||||
| March 31, 2025 |
||||
Level 1 |
Level 2 |
Level 3 |
Total |
|
Other financial assets: |
||||
Financial assets measured at fair value through profit or loss |
||||
Public and corporate bonds ............................... |
110,516 |
110,488 |
10,710 |
231,713 |
Stocks ............................................... |
— |
— |
46,215 |
46,215 |
Investment trusts ....................................... |
286,799 |
331,429 |
— |
618,228 |
Interest rate and currency swap ........................... |
— |
395,588 |
— |
395,588 |
Foreign exchange forward, option and other contracts .......... |
— |
62,991 |
24,800 |
87,790 |
Total ............................................ |
397,315 |
900,495 |
81,724 |
1,379,534 |
Financial assets measured at fair value through other comprehensive |
||||
income |
||||
Public and corporate bonds ............................... |
4,487,174 |
4,571,862 |
19,401 |
9,078,437 |
Stocks ............................................... |
3,054,754 |
— |
192,131 |
3,246,885 |
Other ................................................ |
10,947 |
— |
— |
10,947 |
Total ............................................ |
7,552,875 |
4,571,862 |
211,532 |
12,336,269 |
Other financial liabilities: |
||||
Financial liabilities measured at fair value through profit or loss |
||||
Interest rate and currency swap ........................... |
— |
(303,670) |
— |
(303,670) |
Foreign exchange forward, option and other contracts .......... |
— |
(16,211) |
— |
(16,211) |
Total ............................................ |
— |
(319,881) |
— |
(319,881) |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-59
| Yen in millions |
||||
| March 31, 2026 |
||||
Level 1 |
Level 2 |
Level 3 |
Total |
|
Other financial assets: |
||||
Financial assets measured at fair value through profit or loss |
||||
Public and corporate bonds ............................... |
123,344 |
132,079 |
12,200 |
267,623 |
Stocks ............................................... |
— |
— |
884,667 |
884,667 |
Investment trusts ....................................... |
352,452 |
295,737 |
— |
648,189 |
Interest rate and currency swap ........................... |
— |
414,706 |
— |
414,706 |
Foreign exchange forward, option and other contracts .......... |
— |
12,947 |
51,795 |
64,741 |
Total ............................................ |
475,796 |
855,468 |
948,661 |
2,279,925 |
Financial assets measured at fair value through other comprehensive |
||||
income |
||||
Public and corporate bonds (Note 1) ....................... |
4,449,366 |
3,084,093 |
19,447 |
7,552,906 |
Stocks (Note 2) ........................................ |
3,311,613 |
— |
263,565 |
3,575,178 |
Other ................................................ |
9,855 |
— |
— |
9,855 |
Total ............................................ |
7,770,835 |
3,084,093 |
283,011 |
11,137,940 |
Other financial liabilities: |
||||
Financial liabilities measured at fair value through profit or loss |
||||
Interest rate and currency swap ........................... |
— |
(300,486) |
— |
(300,486) |
Foreign exchange forward, option and other contracts .......... |
— |
(57,469) |
— |
(57,469) |
Total ............................................ |
— |
(357,955) |
— |
(357,955) |
(Note 1) Includes 19,447 million yen of “Assets held for sale” recorded on the consolidated statement of
financial position.
(Note 2) Includes 20,799 million yen of “Assets held for sale” recorded on the consolidated statement of
financial position.
The gain (loss) on derivative transactions as of March 2024, 2025 and 2026 were ¥(267,190) million,
¥(80,831) million and ¥37,445 million, respectively. The amounts are included in cost of financial services,
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-60
(4) Changes in financial instruments classified as Level 3 and measured at fair value on a recurring
basis
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a
recurring basis for the years ended March 31, 2025 and 2026:
| Yen in millions | ||||
| For the year ended March 31, 2025 | ||||
Foreign exchange | ||||
Public and | forward, option | |||
corporate | and other | |||
bonds | Stocks | contracts | Total | |
Balance at beginning of year ........................ | 31,170 | 401,089 | — | 432,259 |
Total gains (losses) | ||||
Net income (loss) ............................. | (8) | (87,665) | 24,800 | (62,873) |
Other comprehensive income (loss) ............... | — | (40,717) | — | (40,717) |
Purchases and issuances ............................ | 9,572 | 36,330 | — | 45,902 |
Sales and settlements .............................. | (9,210) | (1,035) | — | (10,245) |
Transfer to (from) Level 3 .......................... | (3,125) | (77,884) | — | (81,009) |
Others .......................................... | 1,711 | 8,228 | — | 9,939 |
Balance at end of year ............................. | 30,111 | 238,346 | 24,800 | 293,257 |
Unrealized gains or losses included in profit or loss on | ||||
assets held at March 31 ........................... | (76) | (87,665) | — | (87,741) |
Total ................................... | (76) | (87,665) | — | (87,741) |
| Yen in millions | ||||
| For the year ended March 31, 2026 | ||||
Foreign exchange | ||||
Public and | forward, option | |||
corporate | and other | |||
bonds | Stocks | contracts | Total | |
Balance at beginning of year ........................ | 30,111 | 238,346 | 24,800 | 293,257 |
Total gains (losses) | ||||
Net income (loss) ............................. | 35 | 8,074 | 25,277 | 33,386 |
Other comprehensive income (loss) ............... | — | 17,978 | — | 17,978 |
Purchases and issuances ............................ | 9,692 | 857,263 | — | 866,955 |
Sales and settlements .............................. | (7,399) | (4,801) | — | (12,200) |
Transfer to (from) Level 3 .......................... | (1,452) | — | — | (1,452) |
Others .......................................... | 659 | 31,371 | 1,718 | 33,749 |
Balance at end of year (Note) ........................ | 31,646 | 1,148,232 | 51,795 | 1,231,673 |
Unrealized gains or losses included in profit or loss on | ||||
assets held at March 31 ........................... | 25 | 8,074 | 25,277 | 33,376 |
Total ................................... | 25 | 8,074 | 25,277 | 33,376 |
(Note) Includes 21,322 million yen of “Assets held for sale” recorded on the consolidated statement of
financial position.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-61
Net income (loss) in public and corporate bonds, stocks and derivative financial instruments, other than
transactions related to financial services, are each included in “Other finance income” and “Other finance costs”
in the accompanying consolidated statement of income. Transactions related to financial services are included in
each of “Sales revenues - Financial services” and “Cost of financial services” in the consolidated statement of
income.
In the reconciliation table above, derivative financial instruments are presented net of assets and liabilities.
“Others” includes foreign currency translation adjustments for the years ended March 31, 2025 and 2026.
Transfer from Level 3 of stocks recognized in the year ended March 31, 2025 is due to the listing of
investees.
(5) Financial assets and liabilities measured at amortized cost
The following table summarizes the carrying amount and the fair value of financial assets and liabilities
measured on an amortized cost basis:
| Yen in millions |
|||||
| March 31, 2025 |
|||||
Carrying |
Fair value |
||||
amount |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Receivables related to financial services .... |
33,625,035 |
— |
— |
34,004,152 |
34,004,152 |
Interest-bearing liabilities ............... |
|||||
Long-term debt (Including current |
|||||
portion) ....................... |
32,795,058 |
— |
25,706,416 |
6,972,698 |
32,679,114 |
| Yen in millions |
|||||
| March 31, 2026 |
|||||
Carrying |
Fair value |
||||
amount |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Receivables related to financial services .... |
38,966,655 |
— |
— |
39,407,482 |
39,407,482 |
Interest-bearing liabilities ............... |
|||||
Long-term debt (Including current |
|||||
portion) ....................... |
36,795,373 |
— |
29,046,698 |
7,653,684 |
36,700,382 |
Of financial assets and liabilities that are measured on an amortized cost basis, those with carrying values
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-62
The following table summarizes the amounts of financial assets and financial liabilities that are subject to an
enforceable master netting agreement or similar agreement but not set off because they do not meet some or all
of the offsetting criteria for financial assets and financial liabilities. With respect to financial instruments that
may be offset in the future based on set-off rights associated with master netting agreements or similar
agreements, as well as the associated collateral, the set-off will be enforceable only when certain circumstances,
such as when the counterparty cannot perform on its obligations due to bankruptcy or other reasons, arise.
| Yen in millions |
||||
| March 31, 2025 |
||||
Gross amounts of |
||||
recognized |
Amounts not offset |
|||
financial assets |
Collateral of |
|||
and financial |
Financial |
financial |
||
liabilities |
instruments |
instruments |
Net amount |
|
Other financial assets Derivatives ............... |
483,378 |
(131,836) |
(67,495) |
284,046 |
Other financial liabilities Derivatives ............ |
319,881 |
(131,836) |
(73,689) |
114,356 |
| Yen in millions |
||||
| March 31, 2026 |
||||
Gross amounts of |
||||
recognized |
Amounts not offset |
|||
financial assets |
Collateral of |
|||
and financial |
Financial |
financial |
||
liabilities |
instruments |
instruments |
Net amount |
|
Other financial assets Derivatives ............... |
479,447 |
(138,762) |
(63,177) |
277,508 |
Other financial liabilities Derivatives ............ |
357,955 |
(138,762) |
(23,138) |
196,055 |
The amounts offset, as presented in the consolidated statement of financial position, in accordance with the
(1) Overview of post-employment benefit Plans
Upon terminations of employment, employees of TMC 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 length 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. In cases of involuntary
termination, including retirement upon reaching the mandatory retirement age, employees are granted an
additional allowance.
Effective October 1, 2004, TMC 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
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-63
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, TMC 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.
TMC and most subsidiaries in Japan have contributory funded defined benefit pension plans, which are
pursuant to the Corporate Defined Benefit Pension Plan Law (CDBPPL). 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.
Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of their
employees under which the cost of benefits is currently invested or accrued. The benefits for these plans are
based primarily on lengths of service and current rates of pay.
These post-employment benefit plans are exposed to general investment risk, interest rate risk and inflation
risk.
Pension costs and defined benefit obligations are dependent on assumptions used in calculating such
amounts. These assumptions include discount rates, retirement rate, salary increase rate, mortality rates and other
factors. 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 most critical assumption impacting the calculation of pension costs and defined benefit obligations is
the discount rates. Toyota determines discount rates mainly based on the rates of high quality fixed income bonds
currently available and expected to be available during the period to maturity of the defined benefit pension
plans.
Toyota uses a March 31 measurement date for its post-employment benefit plans.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-64
(2) Defined benefit obligations and plan assets
Changes in present value of defined benefit obligations and fair value of plan assets are as follows:
| Yen in millions | ||||
| For the years ended March 31, | ||||
2025 | 2026 | |||
Japanese plans | Foreign plans | Japanese plans | Foreign plans | |
Present value of defined benefit obligations: | ||||
Benefit obligations at beginning of year ........ | 1,898,339 | 1,651,016 | 1,729,554 | 1,622,053 |
Current service cost ....................... | 76,758 | 49,225 | 62,259 | 50,747 |
Interest cost .............................. | 26,290 | 81,411 | 37,798 | 81,582 |
Remeasurements: | ||||
Changes in demographic assumptions ..... | (3,635) | 68 | (2,153) | 1,944 |
Changes in financial assumptions ......... | (181,128) | (48,712) | (181,466) | (33,796) |
Other ............................... | (385) | (15,579) | 4,347 | 44,858 |
Past service cost .......................... | (184) | (3,027) | (409) | (591) |
Plan participants’ contributions .............. | 1,065 | 4,355 | 1,027 | 4,657 |
Benefits paid ............................. | (86,871) | (76,204) | (86,522) | (84,889) |
Effect of changes in exchange rates and other . . . | (696) | (20,499) | (86,937) | 114,563 |
Benefit obligations at end of year ............. | 1,729,554 | 1,622,053 | 1,477,496 | 1,801,130 |
Fair value of plan assets: | ||||
Plan assets at beginning of year .............. | 2,128,476 | 1,284,918 | 2,081,009 | 1,271,236 |
Interest income ........................... | 29,462 | 57,149 | 48,763 | 63,712 |
Remeasurement | ||||
Actual return on plan assets, excluding | ||||
interest income ..................... | (66,135) | (33,874) | 106,715 | 892 |
Employer contributions .................... | 35,669 | 19,016 | 48,385 | 19,099 |
Plan participants’ contributions .............. | 1,065 | 4,355 | 1,027 | 4,657 |
Benefits paid ............................. | (47,528) | (42,023) | (46,738) | (47,090) |
Effect of changes in exchange rates and other . . . | — | (18,305) | (286,583) | 97,536 |
Plan assets at end of year ................... | 2,081,009 | 1,271,236 | 1,952,578 | 1,410,042 |
The impact of minimum funding requirement and | ||||
asset ceiling ................................ | 572,107 | — | 718,851 | — |
Net defined benefit liability (asset) ............... | 220,652 | 350,817 | 243,769 | 391,088 |
“Effect of changes in exchange rates and other” for the year ended March 31, 2026 includes a partial return
from retirement benefit trusts and amounts reclassified to assets held for sale and liabilities directly associated
with assets held for sale.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-65
The funded defined benefit obligations and the unfunded defined benefit obligations are as follows:
| Yen in millions | ||||
| March 31, | ||||
2025 | 2026 | |||
Japanese plans | Foreign plans | Japanese plans | Foreign plans | |
Funded defined benefit obligations ............... | 1,265,948 | 1,225,195 | 1,076,271 | 1,342,118 |
Plan assets ................................... | (2,081,009) | (1,271,236) | (1,952,578) | (1,410,042) |
The impact of minimum funding requirement and | ||||
asset ceiling ................................ | 572,107 | — | 718,851 | — |
Subtotal ..................................... | (242,954) | (46,040) | (157,457) | (67,924) |
Unfunded defined benefit obligations ............. | ||||
463,606 | 396,857 | 401,226 | 459,012 | |
Total ................................... | 220,652 | 350,817 | 243,769 | 391,088 |
The net defined benefit liability (asset) recognized in the consolidated statement of financial position are
comprised of the following:
| Yen in millions | ||||
| March 31, | ||||
2025 | 2026 | |||
Japanese plans | Foreign plans | Japanese plans | Foreign plans | |
Retirement benefit liabilities .................... | 562,375 | 457,193 | 505,624 | 516,859 |
Other non-current assets (Retirement benefit | ||||
assets) .................................... | (341,723) | (106,376) | (261,855) | (125,771) |
Net amount recognized ..................... | 220,652 | 350,817 | 243,769 | 391,088 |
The weighted average duration of defined benefit obligations are as follows:
| March 31, | ||||
2025 | 2026 | |||
Japanese plans | Foreign plans | Japanese plans | Foreign plans | |
Weighted average duration of defined benefit | ||||
obligations ................................. | 16.9 years | 13.1 years | 16.8 years | 12.0 years |
(3) The major items of actuarial assumption
The weighted-average discount rates used to determine the present value of defined benefit obligations are
as follows:
| March 31, | ||||
2025 | 2026 | |||
Japanese plans | Foreign plans | Japanese plans | Foreign plans | |
Discount rate ................................. | 2.2% | 5.4% | 3.1% | 5.5% |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-66
(4) Fair value of plan assets
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 long-term overall plan asset management.
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 benchmark return rates for each
individual investment, combines these individual benchmark 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.
| Yen in millions | ||||||
| March 31, 2025 | ||||||
| Japanese plans | Foreign plans | |||||
Quoted prices in active | Quoted prices in active | |||||
markets | markets | |||||
Available | Not available | Total | Available | Not available | Total | |
Stocks ......................... | 375,443 | — | 375,443 | 128,908 | — | 128,908 |
Government bonds ............... | 239,849 | — | 239,849 | 301,955 | — | 301,955 |
Bonds (other) ................... | 2,177 | 77,768 | 79,944 | — | 246,851 | 246,851 |
Commingled funds ............... | — | 500,917 | 500,917 | — | 398,380 | 398,380 |
Insurance contracts ............... | — | 224,694 | 224,694 | — | — | — |
Other .......................... | 400,852 | 259,310 | 660,162 | 44,066 | 151,076 | 195,142 |
Total ...................... | 1,018,321 | 1,062,688 | 2,081,009 | 474,929 | 796,306 | 1,271,236 |
| Yen in millions | ||||||
| March 31, 2026 | ||||||
| Japanese plans | Foreign plans | |||||
Quoted prices in active | Quoted prices in active | |||||
markets | markets | |||||
Available | Not available | Total | Available | Not available | Total | |
Stocks ......................... | 357,318 | — | 357,318 | 161,268 | — | 161,268 |
Government bonds ............... | 391,927 | — | 391,927 | 307,740 | 29,380 | 337,120 |
Bonds (other) ................... | 314 | 76,390 | 76,705 | — | 261,867 | 261,867 |
Commingled funds ............... | — | 522,785 | 522,785 | — | 470,609 | 470,609 |
Insurance contracts ............... | — | 154,224 | 154,224 | — | — | — |
Other .......................... | 219,996 | 229,623 | 449,619 | 36,022 | 143,157 | 179,179 |
Total ...................... | 969,555 | 983,023 | 1,952,578 | 505,029 | 905,013 | 1,410,042 |
“Other” consists of cash equivalents, other private placement investment funds and other assets.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-67
(5) The impact of minimum funding requirements and asset ceilings
The impact of minimum funding requirements and asset ceilings is as follows:
| Yen in millions | ||||
| For the years ended March 31, | ||||
2025 | 2026 | |||
Japanese | Foreign | Japanese | Foreign | |
plans | plans | plans | plans | |
Beginning balance of the fiscal year ........................... | 268,228 | — | 572,107 | — |
Interest income ....................................... | 4,694 | — | 13,542 | — |
Remeasurements: | ||||
Change in asset ceiling excluding interest income ............ | 299,185 | — | 133,201 | — |
Translation adjustments ................................ | — | — | — | — |
Ending balance of the fiscal year ............................. | 572,107 | — | 718,851 | — |
(6) The sensitivity analysis
The following table illustrates the effects on defined benefit obligations of the change in weighted-average
discount rates, assuming all other assumptions are consistent.
| Yen in millions | ||||
| March 31, | ||||
2025 | 2026 | |||
Japanese | Foreign | Japanese | Foreign | |
plans | plans | plans | plans | |
0.5% decrease ........................................... | 119,138 | 113,268 | 88,346 | 120,176 |
0.5% increase ........................................... | (103,296) | (110,060) | (80,862) | (118,461) |
(7) Impact on future cash flow
Contributions to plan assets by TMC and some of its consolidated subsidiaries are determined by various
factors such as employee salary levels and years of service, funded status of plan assets, and actuarial
calculations. In addition, according to the rules of the defined benefit corporate pension law, the corporate
pension fund system recalculates the amount of the balance every five years with the end date of the reporting
period as the base date so that financial balance can be maintained in the future. TMC and some of its
consolidated subsidiaries may make a necessary contribution if the reserve amount is below the minimum reserve
amount.
In the following year (the year ending March 31, 2027), Toyota expects to contribute ¥34,336 million for
Japanese plans and ¥18,488 million for foreign plans to the post-employment benefit plans.
(8) Benefit obligations for non-retirement pension for retirees and benefit obligations for absentee
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.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-68
(9) Payroll expenses
Payroll expenses included in “Cost of products sold” and “Selling, general and administrative” in the
consolidated statement of income (including expenses for post-employment benefit plans) for the years ended
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 based on the amount estimated from historical experience.
Liabilities for product warranties and liabilities for recalls and other safety measures have been combined
into “Liabilities for quality assurance” in the consolidated statement of financial position 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.
The net change in liabilities for quality assurance for the year ended March 31, 2026 consists of the
following:
Yen in millions |
|
For the year ended |
|
March 31, |
|
2026 |
|
Liabilities for quality assurance at beginning of year .................................. |
1,965,748 |
Additional provisions .......................................................... |
1,008,635 |
Utilization ................................................................... |
(782,028) |
Reversals .................................................................... |
(84,448) |
Unwinding of discount and effect of change in discount rate ............................ |
38,722 |
Other ....................................................................... |
(48,686) |
Liabilities for quality assurance at end of year ....................................... |
2,097,943 |
“Other” primarily includes the impact of currency translation adjustments, the impact of consolidation and
deconsolidation of certain entities due to changes in ownership interest, and the impact of reclassifications to
liabilities directly associated with assets held for sale.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-69
The table below shows the net changes in liabilities for recalls and other safety measures which are included
in liabilities for quality assurance above for the year ended March 31, 2026.
Yen in millions | |
For the year ended | |
March 31, | |
2026 | |
Liabilities for recalls and other safety measures at beginning of year ..................... | 1,236,465 |
Additional provisions .......................................................... | 844,899 |
Utilization ................................................................... | (611,331) |
Reversals .................................................................... | (8,562) |
Unwinding of discount and effect of change in discount rate ............................ | 38,722 |
Other ....................................................................... | (69,081) |
Liabilities for recalls and other safety measures at end of year .......................... | 1,431,112 |
The net change in provisions for the year ended March 31, 2026 consists of the following:
Yen in millions | |
For the year ended | |
March 31, | |
2026 | |
Provisions at beginning of year ................................................... | 714,455 |
Additional provisions .......................................................... | 337,665 |
Utilization ................................................................... | (131,548) |
Reversals .................................................................... | (2,082) |
Other ....................................................................... | 11,165 |
Provisions at end of year ........................................................ | 929,654 |
“Other”
primarily
includes
the
impact
of
currency
translation
adjustments,
consolidation
and
deconsolidation of certain entities due to changes in ownership interests, and reclassifications to liabilities
directly associated with assets held for sale.
Provisions consist of the following:
Yen in millions | ||
For the years ended | ||
March 31, | ||
2025 | 2026 | |
Current liabilities ............................................................ | 413,352 | 431,191 |
Non-current liabilities ........................................................ | 301,103 | 498,463 |
Total ................................................................. | 714,455 | 929,654 |
Provisions include those related to compensation obligations arising from long-term contracts with suppliers
when purchases of parts do not meet fixed or minimum quantities, as well as provisions related to the logistics
and dismantling of end-of-life batteries and other provisions. See Note 32 for contractual commitments and
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-70
(1) Equity management
Toyota will invest efficiently in the maintenance and replacement of conventional manufacturing facilities
and the introduction of new products, while focusing its capital investments and research and development on
areas that contribute to strengthening competitiveness and future growth. Through these activities, Toyota aims
to improve corporate value and maintain sustainable growth to realize a new mobility society. These activities
are generally financed by Toyota Motor Corporation’s shareholders’ equity, supplemented by short-term and
long-term debt as necessary.
The amounts of Toyota Motor Corporation shareholders’ equity and short-term and long-term debt are as
follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Toyota Motor Corporation Shareholders’ equity .............................. |
35,924,826 |
39,918,854 |
Short-term and long-term debt ............................................ |
38,792,879 |
43,205,469 |
(2) Number of shares
As of March 31, 2024, 2025 and 2026, the total number of authorized shares of TMC’s common stock was
50,000,000,000.
Changes in the shares of common stock issued are as follows:
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Common stock issued: |
|||
Balance at beginning of year .................... |
16,314,987,460 |
16,314,987,460 |
15,794,987,460 |
Changes during the year ........................ |
— |
(520,000,000) |
— |
Balance at end of year ......................... |
16,314,987,460 |
15,794,987,460 |
15,794,987,460 |
The common stock issued by TMC is no-par value stock with no restrictions on shareholder rights, and is
fully paid.
The total number of treasury stock (including the common stock issued by TMC held by the stock grant
ESOP) was 2,840,815,433, 2,746,057,686 and 2,761,602,986 as of March 31, 2024, 2025 and 2026, respectively.
(3) Capital surplus and retained earnings
Capital surplus consists of capital reserves and other capital surplus. Retained earnings consist of a retained
earnings reserve and other retained earnings. The Companies Act of Japan provides that an amount equal to 10%
of distributions from surplus paid by TMC and its Japanese subsidiaries be appropriated to a capital reserve or a
retained earnings reserve. No further appropriations are required when the total amount of the capital reserves
and the retained earnings reserve reaches 25% of capital stock. The Companies Act provides that the retained
earnings reserve of TMC and its Japanese subsidiaries is restricted and cannot be used for dividend payments,
and is excluded from the calculation of profits available for dividends.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-71
The amounts of statutory retained earnings of TMC available for dividend payments to shareholders were
¥18,333,862 million and ¥20,449,105 million as of March 31, 2025 and 2026, 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, 2026 includes ¥3,898,125 million relating to equity in undistributed earnings
of associates and joint ventures.
The repurchase, reissuance and retirement of treasury stock are as follows:
For the year ended March 31, 2024
Repurchase of treasury stock
1) Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 10, 2023
Reason for repurchasing treasury stock -
The repurchase was made to promote capital efficiency through more flexible measures than before while
comprehensively considering factors such as the price level of its common stock.
Details of matters relating to repurchase -
Number of common shares repurchased ......................... |
64,590,700 shares |
Total purchase price for repurchase of shares ..................... |
¥150,000 million |
2) Repurchasing of treasury stock resolved at the Board of Directors meeting held on November 1, 2023
Reason for repurchasing treasury stock -
The repurchase was made to promote capital efficiency through more flexible measures than before while
comprehensively considering factors such as the price level of its common stock.
Details of matters relating to repurchase -
Number of common shares repurchased ......................... |
26,880,600 shares |
Total purchase price for repurchase of shares ..................... |
¥81,037 million |
For the year ended March 31, 2025
Repurchase of treasury stock
1) Repurchasing of treasury stock resolved at the Board of Directors meeting held on November 1, 2023
Reason for repurchasing treasury stock -
The repurchase was made to promote capital efficiency through more flexible measures than before while
comprehensively considering factors such as the price level of its common stock.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-72
Details of matters relating to repurchase -
Number of common shares repurchased ................... |
5,216,600 shares |
Total purchase price for repurchase of shares ............... |
¥18,962 million |
2) Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 8, 2024 and
September 24, 2024
Reason for repurchasing treasury stock -
The repurchase was made to promote capital efficiency through more flexible measures than before while
comprehensively considering factors such as the price level of its common stock.
Details of matters relating to repurchase -
Number of common shares repurchased ................... |
420,633,175 shares |
Total purchase price for repurchase of shares ............... |
¥1,160,051 million |
Retirement of treasury stock
Retiring of treasury stock resolved at the Board of Directors meeting held on May 8, 2024
Reason for retiring treasury stock -
The retirement was made to relieve concerns regarding the dilution of TMC’s share value due to disposition
of treasury stock in the future.
Details of matters relating to retirement -
Number of common shares retired ........................ |
520,000,000 shares |
For the year ended March 31, 2026
Repurchase of treasury stock
Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 8, 2024 and
September 24, 2024
Reason for repurchasing treasury stock -
The repurchase was made to promote capital efficiency through more flexible measures than before while
comprehensively considering factors such as the price level of its common stock.
Details of matters relating to repurchase -
Number of common shares repurchased ................... |
16,226,100 shares |
Total purchase price for repurchase of shares ............... |
¥39,949 million |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-73
(5) Other components of equity
Other components of equity are as follows:
| Yen in millions | ||||
Net changes in | ||||
revaluation of | ||||
financial assets | ||||
measured at fair | Exchange | |||
value through other | Remeasurements of | differences on | ||
comprehensive | defined benefit | translating foreign | ||
income | plans | operations | Total | |
Balance at April 1, 2023 ................. | 933,702 | — | 1,902,493 | 2,836,195 |
Other comprehensive income, net of | ||||
tax ............................ | 716,048 | 56,434 | 1,344,621 | 2,117,103 |
Reclassification to retained earnings ... | (341,709) | (45,625) | — | (387,334) |
Other comprehensive income for the | ||||
period attributable to non-controlling | ||||
interests ........................ | (7,186) | (10,809) | (44,213) | (62,208) |
Balance at March 31, 2024 ............... | 1,300,855 | — | 3,202,901 | 4,503,756 |
Other comprehensive income, net of | ||||
tax ............................ | 44,731 | (85,084) | (705,678) | (746,031) |
Reclassification to retained earnings ... | (234,994) | 94,635 | — | (140,359) |
Other comprehensive income for the | ||||
period attributable to non-controlling | ||||
interests ........................ | (1,153) | (9,551) | 3,470 | (7,233) |
Balance at March 31, 2025 ............... | 1,109,439 | — | 2,500,693 | 3,610,133 |
Other comprehensive income, net of | ||||
tax ............................ | 334,394 | 91,099 | 1,104,451 | 1,529,944 |
Reclassification to retained earnings ... | (180,113) | (79,403) | — | (259,516) |
Other comprehensive income for the | ||||
period attributable to non-controlling | ||||
interests ........................ | (6,178) | (11,696) | (52,073) | (69,946) |
Transfer to other comprehensive income | ||||
associated with assets held for sale . . . | (148,535) | — | (118,061) | (266,596) |
Balance at March 31, 2026 ............... | 1,109,007 | — | 3,435,012 | 4,544,019 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-74
(6) Other comprehensive income
The
breakdown
of
other
comprehensive
income
and
the
corresponding
tax
benefits
(including
non-controlling interests) are as follows:
| Yen in millions | |||
| For the year ended | |||
| March 31, 2024 | |||
Before | Tax | After | |
tax | effect | tax | |
Items that will not be reclassified to profit (loss) | |||
Net changes in revaluation of financial assets measured at fair | |||
value through other comprehensive income | |||
Amount incurred during the year ...................... | 806,365 | (248,826) | 557,539 |
Net changes ....................................... | 806,365 | (248,826) | 557,539 |
Remeasurements of defined benefit plans | |||
Amount incurred during the year ...................... | 57,616 | (11,289) | 46,328 |
Net changes ....................................... | 57,616 | (11,289) | 46,328 |
Shares of other comprehensive income of equity method | |||
investees | |||
Amount incurred during the year ...................... | 156,118 | — | 156,118 |
Net changes ....................................... | 156,118 | — | 156,118 |
Items that may be reclassified subsequently to profit (loss) | |||
Exchange differences on translating foreign operations | |||
Amount incurred during the year ...................... | 1,178,875 | — | 1,178,875 |
Reclassification to profit (loss) ........................ | — | — | — |
Net changes ....................................... | 1,178,875 | — | 1,178,875 |
Net changes in revaluation of financial assets measured at fair | |||
value through other comprehensive income | |||
Amount incurred during the year ...................... | 33,256 | (10,459) | 22,797 |
Reclassification to profit (loss) ........................ | (15,267) | 4,717 | (10,550) |
Net changes ....................................... | 17,989 | (5,742) | 12,247 |
Shares of other comprehensive income of equity method | |||
investees | |||
Amount incurred during the year ...................... | 182,576 | — | 182,576 |
Reclassification to profit (loss) ........................ | (16,579) | — | (16,579) |
Net changes ....................................... | 165,996 | — | 165,996 |
Total other comprehensive income ............................. | 2,382,959 | (265,856) | 2,117,103 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-75
| Yen in millions | |||
| For the year ended | |||
| March 31, 2025 | |||
Before | Tax | After | |
tax | effect | tax | |
Items that will not be reclassified to profit (loss) | |||
Net changes in revaluation of financial assets measured at fair value | |||
through other comprehensive income | |||
Amount incurred during the year ........................ | 153,164 | (51,035) | 102,129 |
Net changes ........................................ | 153,164 | (51,035) | 102,129 |
Remeasurements of defined benefit plans | |||
Amount incurred during the year ........................ | (154,517) | 44,919 | (109,598) |
Net changes ........................................ | (154,517) | 44,919 | (109,598) |
Shares of other comprehensive income of equity method investees | |||
Amount incurred during the year ........................ | (63,213) | — | (63,213) |
Net changes ........................................ | (63,213) | — | (63,213) |
Items that may be reclassified subsequently to profit (loss) | |||
Exchange differences on translating foreign operations | |||
Amount incurred during the year ........................ | (40,479) | — | (40,479) |
Reclassification to profit (loss) ......................... | (787,369) | — | (787,369) |
Net changes ........................................ | (827,848) | — | (827,848) |
Net changes in revaluation of financial assets measured at fair value | |||
through other comprehensive income | |||
Amount incurred during the year ........................ | 40,503 | (9,485) | 31,018 |
Reclassification to profit (loss) ......................... | 189 | (49) | 140 |
Net changes ........................................ | 40,693 | (9,534) | 31,158 |
Shares of other comprehensive income of equity method investees | |||
Amount incurred during the year ........................ | 127,022 | — | 127,022 |
Reclassification to profit (loss) ......................... | (5,682) | — | (5,682) |
Net changes ........................................ | 121,340 | — | 121,340 |
Total other comprehensive income .............................. | (730,381) | (15,650) | (746,031) |
The gain on the disposal of certain consolidated subsidiaries was reclassified from “Exchange differences on
translating foreign operations” to “Foreign exchange gain (loss), net” in the consolidated statement of income for
fiscal 2025.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-76
| Yen in millions | |||
| For the year ended | |||
| March 31, 2026 | |||
Before | Tax | After | |
tax | effect | tax | |
Items that will not be reclassified to profit (loss) | |||
Net changes in revaluation of financial assets measured at fair value | |||
through other comprehensive income ....................... | |||
Amount incurred during the year ........................ | 513,231 | (161,547) | 351,684 |
Net changes ......................................... | 513,231 | (161,547) | 351,684 |
Remeasurements of defined benefit plans | |||
Amount incurred during the year ........................ | 127,129 | (25,777) | 101,352 |
Net changes ......................................... | 127,129 | (25,777) | 101,352 |
Shares of other comprehensive income of equity method investees | |||
Amount incurred during the year ........................ | 22,331 | — | 22,331 |
Net changes ......................................... | 22,331 | — | 22,331 |
Items that may be reclassified subsequently to profit (loss) | |||
Exchange differences on translating foreign operations | |||
Amount incurred during the year ........................ | 946,309 | — | 946,309 |
Reclassification to profit (loss) .......................... | — | — | — |
Net changes ......................................... | 946,309 | — | 946,309 |
Net changes in revaluation of financial assets measured at fair value | |||
through other comprehensive income | |||
Amount incurred during the year ........................ | (78,919) | 25,603 | (53,316) |
Reclassification to profit (loss) .......................... | 185 | (51) | 135 |
Net changes ......................................... | (78,733) | 25,552 | (53,181) |
Shares of other comprehensive income of equity method | |||
investees ............................................. | |||
Amount incurred during the year ........................ | 173,617 | — | 173,617 |
Reclassification to profit (loss) .......................... | (12,167) | — | (12,167) |
Net changes ......................................... | 161,450 | — | 161,450 |
Total other comprehensive income ............................... | 1,691,717 | (161,773) | 1,529,944 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-77
Paid dividend amounts are as follows:
For the year ended March 31, 2024
Total amount |
|||||
of dividends |
Dividend per share |
||||
Resolution |
Type of shares |
(yen in millions) |
(yen) |
Record date |
Effective date |
The Board of |
|||||
Directors Meeting |
|||||
on May 10, |
|||||
2023 .......... |
Common shares |
474,781 |
35.00 |
March 31, 2023 |
May 26, 2023 |
The Board of |
|||||
Directors Meeting |
|||||
on November 1, |
|||||
2023 .......... |
Common shares |
405,416 |
30.00 |
September 30, 2023 November 22, 2023 |
|
For the year ended March 31, 2025
Total amount |
|||||
of dividends |
Dividend per share |
||||
Resolution |
Type of shares |
(yen in millions) |
(yen) |
Record date |
Effective date |
The Board of |
|||||
Directors Meeting |
|||||
on May 8, |
|||||
2024 .......... |
Common shares |
606,338 |
45.00 |
March 31, 2024 |
May 24, 2024 |
The Board of |
|||||
Directors Meeting |
|||||
on November 6, |
|||||
2024 .......... |
Common shares |
525,991 |
40.00 |
September 30, 2024 November 26, 2024 |
|
For the year ended March 31, 2026
Total amount |
|||||
of dividends |
Dividend per share |
||||
Resolution |
Type of shares |
(yen in millions) |
(yen) |
Record date |
Effective date |
The Board of |
|||||
Directors Meeting |
|||||
on May 8, |
|||||
2025 .......... |
Common shares |
652,446 |
50.00 |
March 31, 2025 |
May 26, 2025 |
The Board of |
|||||
Directors Meeting |
|||||
on November 5, |
|||||
2025 .......... |
Common shares |
586,527 |
45.00 |
September 30, 2025 November 26, 2025 |
|
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-78
Dividends with a record date within the year ended March 31, but with an effective date after the end of that
year are as follows:
For the year ended March 31, 2026
Total amount |
|||||
of dividends |
Dividend per share |
||||
Resolution |
Type of shares |
(yen in millions) |
(yen) |
Record date |
Effective date |
The Board of |
|||||
Directors Meeting |
|||||
on May 8, |
|||||
2026 .......... |
Common shares |
651,697 |
50.00 |
March 31, 2026 |
May 26, 2026 |
(1) Summary by business segments and products
The table below shows Toyota’s sales revenues from external customers by business and by product
category.
| Yen in millions |
|||
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Sales of products |
|||
Automotive |
|||
Vehicles ........................................... |
35,249,865 |
36,892,232 |
38,847,899 |
Parts and components for production .................... |
1,596,111 |
1,606,173 |
1,509,449 |
Parts and components for after service ................... |
3,166,586 |
3,423,389 |
3,608,666 |
Other ............................................. |
1,068,169 |
1,074,505 |
1,235,909 |
Total automotive ................................ |
41,080,731 |
42,996,299 |
45,201,924 |
All other ............................................... |
567,399 |
602,578 |
664,026 |
Total sales of products ............................ |
41,648,130 |
43,598,877 |
45,865,949 |
Financial services ........................................... |
3,447,195 |
4,437,827 |
4,819,003 |
Total sales revenues ......................... |
45,095,325 |
48,036,704 |
50,684,952 |
The majority of sales of products are recognized as revenue from contracts with customers under IFRS 15
“Revenue from Contracts with Customers” (“IFRS 15”), and receivables related to such revenue are recognized
as “Trade accounts and other receivables”.
The breakdown of income from leases included in financial service revenues is as follows:
| Yen in millions |
|||
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Finance leases |
|||
Financial income related to net lease investment ............... |
208,257 |
258,835 |
288,732 |
Operating leases ............................................ |
1,207,719 |
1,350,051 |
1,518,824 |
Total ............................................. |
1,415,975 |
1,608,886 |
1,807,556 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-79
Financial service revenues other than income from leases mainly consist of interest income recognized using
the effective interest method. The amount of such interest income is not significant.
For
the
years
ended
March
31,
2024,
2025
and
2026,
¥187,035
million,
¥207,154
million
and
¥216,456 million of financial service revenues were accounted for under IFRS 15.
(2) Contract liabilities
Contract liabilities consist of the following:
| Yen in millions |
|||
| March 31, |
|||
April 1, 2024 |
2025 |
2026 |
|
Contract liabilities ........................................ |
1,392,390 |
1,417,919 |
1,664,633 |
Contract liabilities are primarily related to advances received from customers. Contract liabilities are
included in “Other current liabilities” and “Other non-current liabilities” in the consolidated statement of
financial position. For the years ended March 31, 2025 and 2026, the amounts transferred from contract liabilities
at the beginning of the fiscal year to sales revenue were ¥748,193 million and ¥729,698 million, respectively.
(3) Performance obligations
The aggregate amounts of transaction prices allocated to unsatisfied performance obligations related to
contracts that have original expected durations in excess of one year were ¥1,156,410 million and ¥1,350,018
million as of March 31, 2025 and 2026, respectively. The main types of unsatisfied performance obligations are
insurance revenues and maintenance revenues.
For insurance revenues, Toyota receives payments as agreed in the contract at the inception of the contract,
and revenue is recognized over the term of the contract, which ranges from three to 120 months. As of March 31,
2025, the unsatisfied performance obligations related to insurance revenues were ¥463,707 million, and Toyota
expects to recognize as revenue ¥135,282 million in fiscal 2026, and ¥328,425 million thereafter. As of
March 31, 2026, the unsatisfied performance obligations related to insurance revenues were ¥542,409 million,
and Toyota expects to recognize as revenue ¥156,443 million in fiscal 2027, and ¥385,966 million thereafter.
For maintenance revenues, Toyota receives payments as agreed in the contract at the inception of the
contract, and revenue is recognized over the term of the contract, which ranges from 18 to 84 months.
Unsatisfied performance obligations related to sales of products for contracts that have an original expected
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-80
Research and development costs consist of the following:
| Yen in millions |
|||
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Research and development expenditures incurred during the year . . . |
1,202,373 |
1,326,496 |
1,522,881 |
Amount capitalized ....................................... |
(124,788) |
(111,546) |
(106,751) |
Amortization of capitalized development costs ................. |
160,686 |
162,068 |
151,780 |
Total .......................................... |
1,238,271 |
1,377,018 |
1,567,910 |
Other finance income and costs consist of the following:
| Yen in millions |
|||
For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Other finance income |
|||
Interest income |
|||
Financial assets measured at amortized cost ............ |
289,035 |
256,034 |
203,976 |
Financial assets measured at fair value through other |
|||
comprehensive income .......................... |
165,653 |
108,594 |
107,543 |
Dividend income |
|||
Financial assets measured at fair value through other |
|||
comprehensive income .......................... |
127,178 |
120,435 |
126,085 |
Other .............................................. |
165,370 |
71,637 |
156,639 |
Total .......................................... |
747,236 |
556,700 |
594,243 |
Other finance costs |
|||
Interest expense |
|||
Financial liabilities measured at amortized cost ......... |
(64,733) |
(84,106) |
(60,293) |
Other .............................................. |
(38,975) |
(106,605) |
(26,453) |
Total .......................................... |
(103,709) |
(190,711) |
(86,746) |
“Other finance income—Other” primarily includes profit on sales of securities.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-81
Reconciliation of the difference between basic and diluted earnings per share attributable to Toyota Motor
Corporation are as follows:
Thousands |
|||
Yen in millions |
of shares |
Yen |
|
Net income |
Earnings per share |
||
attributable to Toyota |
Weighted-average |
attributable to Toyota |
|
Motor Corporation |
common shares |
Motor Corporation |
|
For the year ended March 31, 2024 |
|||
Net income attributable to Toyota Motor |
|||
Corporation ............................ |
4,944,933 |
||
Basic and Diluted earnings per share |
|||
attributable to Toyota Motor |
|||
Corporation ........................ |
4,944,933 |
13,512,848 |
365.94 |
For the year ended March 31, 2025 |
|||
Net income attributable to Toyota Motor |
|||
Corporation ............................ |
4,765,086 |
||
Basic and Diluted earnings per share |
|||
attributable to Toyota Motor |
|||
Corporation ........................ |
4,765,086 |
13,252,456 |
359.56 |
For the year ended March 31, 2026 |
|||
Net income attributable to Toyota Motor |
|||
Corporation ............................ |
3,848,098 |
||
Basic and Diluted earnings per share |
|||
attributable to Toyota Motor |
|||
Corporation ........................ |
3,848,098 |
13,033,274 |
295.25 |
The following table shows Toyota Motor Corporation shareholders’ equity per share. Shareholders’ equity
per share is calculated by dividing Toyota Motor Corporation shareholders’ equity in the consolidated statement
of financial position by the number of common shares issued and outstanding at the end of the year (excluding
treasury stock).
Thousands |
|||
Yen in millions |
of shares |
Yen |
|
Common shares issued |
|||
and outstanding at the |
Toyota Motor |
||
Toyota Motor |
end of the year |
Corporation |
|
Corporation |
(excluding treasury |
shareholders’ equity |
|
shareholders’ equity |
stock) |
per share |
|
As of March 31, 2025 ....................... |
35,924,826 |
13,048,930 |
2,753.09 |
As of March 31, 2026 ....................... |
39,918,854 |
13,033,384 |
3,062.82 |
“Diluted earnings per share attributable to Toyota Motor Corporation” are the same as “Basic earnings per
share attributable to Toyota Motor Corporation” for the years ended March 31, 2024, 2025 and 2026.
For the year ended March 31, 2026, in calculating basic and diluted earnings per share attributable to Toyota
Motor Corporation, shares of Toyota Motor Corporation held by the stock grant ESOP trust have been excluded
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-82
(1) Restricted stock plan
(i)
Overview of the system
To encourage initiatives that enhance corporate value over the medium to long term, and to foster a stronger
sense of responsibility in each director as a manager while promoting management aligned with shareholders’
interests, TMC has adopted a restricted share-based compensation plan. TMC has established an annual stock-
based compensation limit of up to ¥4 billion for its members of the Board of Directors (excluding outside
members of the Board of Directors and those who are Audit & Supervisory Committee members), and the total
number of restricted shares that may be allocated is limited to 4 million shares per year.
This is a plan in which, in order to grant the restricted shares, TMC provides monetary claims as
compensation to the recipients, the recipients then contribute the full amount of those claims as payment in kind,
and TMC issues or transfers common shares to the recipients. TMC enters into a restricted share allocation
agreement (the “Allocation Agreement”) with each recipient. Under the Allocation Agreement, the recipient’s
allocated common shares are subject to transfer restrictions (prohibiting transfer, creation of security interests,
and other dispositions) for a period pre-determined by TMC’s Board of Directors to be between three and fifty
years from the allocation date (the “Restriction Period”). The transfer restrictions are lifted upon expiration of the
Restriction Period; however, they are also lifted if the director leaves office due to expiration of term, death, or
other justifiable reasons. In addition, if the director engages in conduct that violates laws or meets other
conditions specified by TMC’s Board of Directors during the Restriction Period, TMC may acquire all allocated
shares without compensation.
(ii)
Number of shares granted during the period and their fair value
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Grant date ........................................... |
June 30, 2023 |
June 28, 2024 |
June 30, 2025 |
Number of shares granted (shares) ........................ |
475,600 |
617,500 |
689,400 |
Fair value per share on the grant date (Yen) ................ |
1,916.5 |
3,599 |
2,706 |
(Note 1)
The fair value on the grant date is calculated based on the market price of TMC’s shares.
(Note 2)
Expected dividends are not incorporated into the measurement of fair value.
(2) Restricted stock unit plan
(i)
Overview of the system
If a relevant director (“Relevant Director”) or any other covered person who is eligible to receive an
allocation of restricted shares is a non-resident of Japan at the time of allocation, TMC may, for the purpose of
complying with laws and avoiding tax disadvantages in the person’s country of residence, apply restricted stock
units (RSUs) in place of the restricted shares described above. Except for (i) delivering common shares upon the
expiration of the period equivalent to the transfer restriction period and (ii) paying cash to the heirs of the
Relevant Director or other covered person in the event of their death instead of delivering common shares, the
terms and conditions will be the same as those of our restricted share awards. TMC’s restricted share awards and
restricted stock units will be administered together within the overall stock-based compensation pool.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-83
In addition, stock-based awards to Relevant Directors or other covered persons who are retiring may be
granted without transfer restrictions. TMC may also pay retiring Relevant Directors or other covered persons, or
Relevant Directors or other covered persons who are non-residents of Japan, in cash.
(ii)
Number of shares granted during the period and fair value
The per-share fair value of this plan on the grant date was ¥3,599 for the year ended March 31, 2025 and
¥2,706 for the year ended March 31, 2026. With respect to the number of shares, TMC will deliver the
predetermined number of its common shares after the rights calculation period ends.
(Note 1) The fair value on the grant date is calculated based on the market price of TMC’s shares.
(Note 2) Expected dividends are not incorporated into the measurement of fair value.
(3) ESOP trust
(i)
Overview of the system
Amid a once-in-a-century transformation in the automotive industry, TMC is undertaking a transformation
into a mobility company. TMC expects senior leaders who lead on-site execution to drive future-facing initiatives
with the mission of “mass-producing happiness”. To accelerate these efforts and contribute to medium- to long-
term increases in corporate value by working together with management, TMC has introduced a share-based
compensation plan (the “Plan”) starting with the year ended March 31, 2026, for certain executives who meet
specified requirements (hereinafter, the “Eligible Employees”).
The Plan uses an equity-settled stock grant ESOP (Employee Stock Ownership Plan) trust. Under the share
delivery rules established in advance, Eligible Employees will, in principle after retirement, receive deliveries
and payments consisting of TMC shares, cash equivalent to the proceeds from disposing of TMC shares, and
dividends from TMC shares.
(ii)
Number of points granted during the period and the fair value per point
The fair value of TMC’s shares granted during the period was calculated based on the following
assumptions.
For the years ended March 31, | |||
2024 | 2025 | 2026 | |
Number of points granted during the period ................................ | — | — | 220,100 |
Fair value per share on the grant date (Yen) (Note 1) ......................... | — | — | 2,940 |
Vesting conditions .................................................... | — | — | (Note 2) |
(Note 1)
With respect to the granting of points, their fair value is measured based on observable market prices.
Expected dividends are not incorporated into the fair value measurement.
(Note 2)
As a rule, continuous employment through the vesting date is a vesting condition.
(4) Expenses related to stock-based compensation
Expenses related to stock-based compensation amounted to ¥971 million in the year ended March 31, 2024,
¥2,833 million in the year ended March 31, 2025 and ¥2,578 million in the year ended March 31, 2026, and are
included in “Selling, General and Administrative Expenses” on the consolidated statement of income.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-84
(5) Liabilities arising from stock-based compensation
Liabilities arising from stock-based compensation amounted to ¥142 million in the year ended March 31,
2025 and ¥195 million in the year ended March 31, 2026, and are included in “Accrued Expenses” in the
(1) Contractual commitments
Contractual commitments relating to the purchase of property, plant and equipment, other assets, and
services were ¥3,807,743 million and ¥2,570,912 million as of March 31, 2025 and 2026.
In the normal course of business, Toyota enters into long-term arrangements with suppliers for purchases of
certain raw materials, components and services. These arrangements may contain fixed or minimum quantity
purchase requirements. If the purchase quantity does not meet the fixed or minimum quantity purchase
requirements, Toyota may be obligated to compensate the supplier for the shortfall in the amount determined by
the contract. Toyota enters into such arrangements to facilitate an adequate supply of these materials and
services.
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, when requested by Toyota
dealers. Guarantee periods are set to match the maturities of installment payments, and as of March 31, 2026,
range from 1 month to 8 years; however, they are generally shorter than the useful lives of products sold. Toyota
is required to fulfill its guarantee primarily when customers are unable to make the required payment.
The maximum potential amounts of future payments are ¥2,314,927 million and ¥1,553,327 million as of
March 31, 2025 and 2026, respectively. Liabilities for guarantees totaling ¥8,917 million and ¥5,390 million
have been provided as of March 31, 2025 and 2026. Under these guarantee contracts, Toyota is entitled to
(3) Market treatment such as recalls, damages and lawsuits
Toyota and other automakers have been named in various class actions relating to Takata airbag issues.
Cases against Toyota in Brazil and Argentina are currently being litigated.
Toyota is named as a defendant in an economic loss class action lawsuit in Australia in which damages are
claimed on the basis that diesel particulate filters in certain vehicle models are defective. Toyota received
unfavorable judgments at first instance on April 7, 2022, on appeal on March 27, 2023, and by the High Court on
November 6, 2024. The judgments included a finding that there was a perceived reduction in vehicle value of
certain vehicle models. The High Court ordered that the case be remitted to the court of first instance for a
re-assessment of reduction in vehicle value damages. Other claims of economic loss in this class action lawsuit
continue to be litigated at the court of first instance. In estimating the provision Toyota should record in the
consolidated financial statements as a result of the aforementioned judgments, Toyota has considered various
factors including the legal and factual circumstances of the case, the contents of the judgments of the court of
first instance, the Federal Court of Australia, and the High Court of Australia, and the advice of legal counsel.
The currently estimated probable outflow of resources related to the class action is immaterial to Toyota’s
consolidated financial position, results of operations and cash flows. At this stage, however, the final outcome
and the ultimate financial liability for Toyota relating to this matter cannot be reasonably estimated.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-85
In April 2020, Toyota reported possible anti-bribery violations related to a Thai subsidiary to the SEC and
the Department of Justice (“DOJ”) and has cooperated with these investigations. In June 2025, the DOJ and the
SEC informed Toyota that each agency has closed its investigation into the matter.
Toyota also has various other pending legal actions and claims, including personal injury and wrongful
death lawsuits and claims in the United States, as well as intellectual property litigation, and is subject to
government investigations from time to time.
Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a
range of reasonably possible loss, if any, for the pending legal matters because (i) many of the proceedings are in
the discovery stage, (ii) significant factual issues need to be resolved, (iii) the legal theories 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. Therefore,
for all of the aforementioned matters, for which Toyota is in discussions to resolve, any losses that are beyond
the amounts accrued could have an adverse effect on Toyota’s financial position, results of operations or cash
flows.
TMC has a concentration of employees working under collective bargaining agreements, and a substantial
Toyota primarily conducts business in the automotive industry. Toyota also conducts business in finance
and other industries.
Toyota’s major subsidiaries are as follows:
Automobiles are mainly manufactured by TMC, Hino Motors Ltd. and Daihatsu Motor Co., Ltd., but some
of them are outsourced in Japan. Toyota Motor Manufacturing Kentucky, Inc. and others manufacture overseas.
Auto parts are manufactured by TMC and others. These products are sold through dealers such as TOYOTA
Mobility Tokyo Inc. in Japan, and through dealers such as Toyota Motor Sales, U.S.A., Inc. overseas.
In the financing business, Toyota Finance Corporation and others provide sales finance services in Japan
and Toyota Motor Credit Corporation and others overseas.
(2) Structured entities
(i)
Consolidated structured entities
Toyota periodically securitizes receivables related to financial services and vehicles on leases for liquidity
and funding purposes and transfers them to special purpose entities. Toyota is deemed to have the power to direct
the activities of these entities that most significantly impact the entities’ economic performances. Therefore,
Toyota has consolidated them.
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-86
The creditors of these entities do not have recourse to Toyota’s general credit with the exception of debts
guaranteed by Toyota. 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.
Toyota has equity in investment trusts and other special purpose entities. With respect to some of the
investment trusts, Toyota has both the obligation to absorb losses of or the right to receive benefits from the
investment trusts that could potentially be significant to the investment trusts and the power to direct the
activities of the investment trusts that most significantly impact the investment trusts’ economic performance
through the asset manager. Therefore, Toyota has consolidated them.
Related to securitization transactions, ¥7,280,835 million and ¥8,267,069 million receivables related to
financial
services,
¥7,486,241
million
and
¥8,664,183
million
secured
debt
were
included
in
Toyota’s
consolidated financial statements as of March 31, 2025 and 2026, respectively.
(ii)
Unconsolidated structured entities
With regards to other investment trusts and other special purpose entities, those that are structured based on
contractual arrangements and are designed so that voting or similar rights are not the dominant factor in deciding
who controls the entities are classified as structured entities. However, Toyota lacks the power to direct the
activities of such structured entities, and therefore, Toyota does not consolidate the investment trusts and the
special purpose entities. Investments in the investment trusts and the special purpose entities that qualify as
structured entities are held at fair value and are included in “Other financial assets” in the consolidated statement
of financial position. The maximum exposure to loss is limited to the carrying value of its investment. The
carrying value of the trusts totaled ¥167,038 million and ¥113,204 million as of March 31, 2025 and 2026,
respectively. The carrying value of the special purpose entities totaled ¥2,517,967 million and ¥1,049,995 million
as of March 31, 2025 and 2026, respectively. Toyota does not provide support that is not contractually required
(1) Transactions with associates and joint ventures
The balances and turnover of receivables and payables with associates and joint ventures accounted for
under the equity method are as follows:
Yen in millions |
||
March 31, |
||
2025 |
2026 |
|
Trade accounts and other receivables |
||
Associates ...................................................... |
466,420 |
599,558 |
Joint ventures .................................................... |
79,251 |
106,776 |
Total ...................................................... |
545,671 |
706,334 |
Trade accounts and other payables |
||
Associates ...................................................... |
1,576,129 |
1,844,886 |
Joint ventures .................................................... |
8,573 |
20,180 |
Total ...................................................... |
1,584,702 |
1,865,066 |
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-87
| Yen in millions |
|||
| For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Sales revenues |
|||
Associates ......................................... |
3,137,067 |
3,420,576 |
2,933,464 |
Joint ventures ....................................... |
662,202 |
622,056 |
1,161,865 |
Total ......................................... |
3,799,268 |
4,042,632 |
4,095,328 |
Cost of products sold (purchases) |
|||
Associates ......................................... |
12,426,770 |
12,889,776 |
14,090,055 |
Joint ventures ....................................... |
75,042 |
82,963 |
149,488 |
Total ......................................... |
12,501,811 |
12,972,740 |
14,239,543 |
Dividends from associates and joint ventures accounted for under the equity method are ¥502,793 million
and ¥304,211 million for the years ended March 31, 2025 and 2026, respectively. In addition, Toyota does not
engage in transactions with associates and joint ventures outside of the normal course of business.
The compensation of key management personnel of TMC is as follows:
| Yen in millions |
|||
For the years ended March 31, |
|||
2024 |
2025 |
2026 |
|
Base compensation ....................................... |
1,107 |
1,425 |
1,206 |
Bonus ................................................. |
1,054 |
1,607 |
1,206 |
Share compensation ...................................... |
1,862 |
1,940 |
1,993 |
Total .............................................. |
4,024 |
4,972 |
4,405 |
“Other,
net”
in
cash
flows
from
investing
activities
includes
a
net
increase
in
time
deposits
of
¥666,401 million and a net decrease in time deposits of ¥1,292,045 million for the year ended March 31, 2025
Consolidation of shares and Delisting of Toyota Industries -
As part of the transactions implemented to take Toyota Industries Corporation (“Toyota Industries”) private
by Toyota Asset Preparatory Company, Ltd., which was established by Toyota Fudosan Co., Ltd. (“Toyota
Fudosan”), an equity-method affiliated company of TMC, a share consolidation of the common stock of Toyota
Industries
(the
“Toyota
Industries
Shares”)
at
a
ratio
of
74,100,604
shares
to
one
share
(the
“Share
Consolidation”) was approved at the extraordinary general meeting of shareholders of Toyota Industries held on
May 12, 2026. As a result, the Toyota Industries Shares were delisted on June 1, 2026, and the Share
Consolidation became effective on June 3, 2026. Following the effectiveness of the Share Consolidation, TMC
holds one share of Toyota Industries.
The business integration of MFTBC and Hino -
On June 10, 2025, TMC, Daimler Truck AG, MFTBC and Hino concluded a definitive agreement for the
business integration of MFTBC and Hino.
Hino is no longer a consolidated subsidiary of TMC as of the effective date of this business integration
(April 1, 2026). Immediately prior to the business integration that became effective during the year ending
March 31, 2027, Hino’s Hamura Plant became a consolidated subsidiary of TMC as Toyota Motor Hamura, Inc.
Management is currently evaluating the impact of this business integration on Toyota’s consolidated
financial statements.
Discontinuation of Development of LF-ZC -
TMC has decided in late May 2026, in light of the surrounding environment, to discontinue the development
of LF-ZC, which had been planned for production in Japan and for sale in North America, Europe, and Japan.
The know-how and technologies acquired through the development of this vehicle will be actively utilized and
applied to other vehicle development projects. There will be no changes to the development of other key BEVs.
With respect to the impact on Toyota’s financial position and results of operations for the fiscal year ending
March 31, 2027, and subsequent periods, it is not possible at this time to reasonably estimate such impact. While
Toyota will utilize the results of development to date to the maximum extent possible, the amount, including
potential costs such as compensation to business partners, will be determined through ongoing investigations and
F-88
ITEM 19. EXHIBITS
Index to Exhibit
1.1
Amended
and
Restated
Articles
of
Incorporation
of
the
Registrant
(English
translation)
(incorporated by reference to Exhibit 1.1 to Toyota’s Annual Report on Form 20-F for the fiscal
year ended March 31, 2025, filed with the SEC on June 18, 2025 (file no. 001-14948))
1.2
Amended and Restated
Regulations of the Board of Directors
of the Registrant
(English
translation) (incorporated by reference to Exhibit 1.2 to Toyota’s Annual Report on Form 20-F for
the fiscal year ended March 31, 2025, filed with the SEC on June 18, 2025 (file no. 001-14948))
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, 2021, filed with the SEC on June 24, 2021 (file no. 001-14948))
2.2
Form of Amended and Restated Deposit Agreement among the Registrant, The Bank of New York
Mellon, as depositary, and all owners and holders from time to time of American Depositary
Shares issued thereunder, 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
September 21, 2021 (file no. 333-259683))
2.3
Form of American Depositary Receipt (included in Exhibit 2.2)
2.4
Description of Toyota’s Common Stock (incorporated by reference to “Item 10.B. Memorandum
and Articles of Incorporation” of this annual report)
2.5
Description of Toyota’s American Depositary Shares (incorporated by reference to Exhibit 2.5 to
Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2022, filed with the
SEC on June 23, 2022 (file no. 001-14948))
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 members of the Board of Directors and operating
officers, including its principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions (English translation)
12.1
Certifications of the Registrant’s President and Member of the Board, as well as Member of the
Board, pursuant to Section 302 of the Sarbanes-Oxley Act
13.1
Certifications of the Registrant’s President and Member of the Board, as well as Member of the
Board, pursuant to Section 906 of the Sarbanes-Oxley Act
15.1
Consent of Independent Registered Public Accounting Firm
19.1
Insider Trading Policy of the Registrant
97.1
Clawback Policy of the Registrant (incorporated by reference to Exhibit 97.1 to Toyota’s Annual
Report on Form 20-F for the fiscal year ended March 31, 2024, filed with the SEC on June 25,
2024 (file no. 001-14948))
101.INS
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
The cover page for the registrant’s Annual Report on Form 20-F for the year ended March 31,
2026, has been formatted in Inline XBRL
154
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/ Takanori Azuma
Name: Takanori Azuma
Title:
Chief Officer, Accounting Group
Date: June 10, 2026
Exhibit 11.1
The Code of Ethics for Directors and Operating Officers
Article 1. (Purpose)
This document comprises a code of ethics (the “Code”) for members of the board of Directors and
Operating Officers (including the Presidents, Executive Vice Presidents, and Fellows appointed in accordance
with Article 2 of the Regulations concerning Operating Officers) (the “Officers”) of Toyota Motor Corporation
(the “Company”) that sets forth the basic rules that, in addition to those outlined in “Guiding Principles at
Toyota,” “Toyota Code of Conduct” and other guidelines and internal regulations of the Company, each Officer
shall comply with in the performance of their professional management duties.
Article 2. (Objective)
This Code seeks to ensure honest and ethical conduct by all Officers, as well as their compliance with
applicable laws and regulations.
Article 3. (Scope of Application)
This Code shall be applicable to all Officers.
Article 4. (Disclosure of this Code of Ethics)
This Code shall be appropriately disclosed in accordance with applicable laws and regulations.
Article 5. (Honest and Ethical Conduct)
1.
Each Officer shall act honestly and ethically in the course of any business activity of the Company.
2.
No Officer may engage in or otherwise enter into any act or transaction that gives rise to an actual or
potential conflict of interest between such Officer and the Company without first reporting such matter
to the Board of Directors and obtaining prior approval therefrom in accordance with the applicable
provisions of the Companies Act of Japan and the internal regulations of the Company. Such Officer
may not participate in the determination of the Board of Directors resolution relating to the granting of
such approval.
Article 6. (Ensuring Fairness and Accuracy of Financial Disclosure; Appropriate Disclosure)
1.
The chairman of the board of directors, president, member of the board of directors, accounting and
financial officers and persons performing similar functions shall be responsible for ensuring that
documents submitted to applicable governmental authorities and other
information made public by the Company with respect to the Company’s financial position and
financial statements are fair and readily comprehensible in content and the method of presentation, and
that such documents and information are timely disclosed.
2.
The chairman of the board of directors, president, member of the board of directors, accounting and
financial officers and persons performing similar functions shall be responsible for establishing and
maintaining disclosure controls and internal controls for documents and information specified in the
previous paragraph.
3.
In connection with the preparation of the Company’s financial statements, an Officer may not act in a
way that may cause a material misunderstanding to or otherwise materially mislead any employee or
independent public accountant involved in the preparation of such financial statements.
Article 7. (Compliance with Laws and Regulations)
The Officers shall comply with all applicable laws, rules and regulations, including those related to the
prohibition of insider trading, in each of the countries and regions in which the Company operates.
Article 8. (Reporting of Unlawful Acts and Unethical Conduct)
1.
Each Officer shall promptly report to the Board of Directors, Representative Director, Disclosure
Committee, Sustainability Meeting, or other responsible division or person appointed by these
committees, in the event that such Officer or other Officers have acted in violation of the applicable
laws or ethics.
2.
Officers may contact the “SPEAK-UP” set up by the Company at an outside law firm with any legal or
ethical inquiries or to report any breach of applicable laws or ethics. Upon receiving such report or
other such inquiry, the designated law firm shall conduct necessary investigations and provide a report
or recommendation to the Company while ensuring the anonymity of the person making such a contact.
The Company shall then take appropriate measures based on such report or recommendation.
Article 9. (Accountability for Adherence to the Code)
1.
Each Officer recognizes that legal compliance and ethical conduct form the basis for all corporate
activities, and is obligated to comply with this Code.
2.
The Company shall take appropriate disciplinary action in accordance with applicable laws and internal
regulations of the Company against any Officer who acts in violation of the Code.
3.
Officers who are subject to disciplinary action pursuant to the previous paragraph may not participate
in any meeting, relating to the determination of such disciplinary action, of the Board of Directors,
Disclosure Committee, Sustainability Meeting, or other investigative committees appointed thereby.
Article 10. (Exemption)
An exemption from the Code shall only be granted pursuant to a resolution of the Board of Directors, and
any such exemption shall be appropriately disclosed in accordance with applicable laws.
Article 11. (Amendment Procedure)
1.
Any amendments to this Code shall be made pursuant to the Rules on the Management of Regulations.
2.
The department in charge of this Code shall periodically review the appropriateness of this Code, and
may present amendments of the Code to the Board of Directors as required.
Supplementary Provision
Article 1. (Effective Date)
This Code shall become effective on November 1, 2025.
Exhibit 12.1
CERTIFICATIONS
I, Kenta Kon, certify that:
1.
I have reviewed this annual report on Form 20-F of Toyota Motor Corporation (the “Company”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this
report fairly present in all material respects the financial condition, results of operations and cash flows
of the Company as of, and for, the periods presented in this report;
4.
The Company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the Company and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c)
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5.
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Company’s auditors and the Audit & Supervisory
Committee of the Company’s Board of Directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
Date: June 10, 2026
/s/
Kenta Kon
Kenta Kon
Chief Executive Officer
Toyota Motor Corporation
CERTIFICATIONS
I, Yoichi Miyazaki, certify that:
1.
I have reviewed this annual report on Form 20-F of Toyota Motor Corporation (the “Company”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this
report fairly present in all material respects the financial condition, results of operations and cash flows
of the Company as of, and for, the periods presented in this report;
4.
The Company’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the Company and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
(c)
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5.
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Company’s auditors and the Audit & Supervisory
Committee of the Company’s Board of Directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
Date: June 10, 2026
/s/
Yoichi Miyazaki
Yoichi Miyazaki
Chief Financial Officer, Member of the Board of Directors
Toyota Motor Corporation
Exhibit 13.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
each of the undersigned officers of Toyota Motor Corporation, a Japanese corporation (the “
Company
”), does
hereby certify that, to such officer’s knowledge:
1. The accompanying Annual Report of the Company on Form 20-F for the period ended March 31, 2026
(the “
Report
”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
2. Information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
By:
/s/
Kenta Kon
Name: Kenta Kon
Title:
Chief Executive Officer
Date: June 10, 2026
By:
/s/
Yoichi Miyazaki
Name: Yoichi Miyazaki
Title:
Chief Financial Officer, Member of the Board of Directors
Date: June 10, 2026
(A signed original of this written statement required by Section 906 has been provided to Toyota Motor
Corporation and will be retained by Toyota Motor Corporation and furnished to the U.S. Securities and Exchange
Commission or its staff upon request.)
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby
consent
to
the
incorporation
by
reference
in
the
Registration
Statement
on
Form
F-3
(No. 333-288168) of Toyota Motor Corporation of our report dated June 10, 2026 relating to the financial
statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Japan LLC
Nagoya, Japan
June 10, 2026
Exhibit 19.1
Internal Rules Relating to
Insider Trading Regulations
<< Please keep the following points in mind when purchasing or selling shares or other securities >>
(1)
Please consult with the Secretarial Division before purchasing or selling shares or other securities
of Toyota Motor Corporation (the “Company”) or its listed subsidiaries.
(2)
Please inform the securities company where you purchase or sell shares or other securities that
you are an “officer of Toyota Motor Corporation.”
Amended January 2026
Secretarial Division
Disclosure Committee
Introduction – Background to Insider Trading Regulations
•
Insider trading
is the act of a company insider or any other related party to
trade shares or other
securities
using knowledge of non-public material facts etc. known only to company insiders (i.e.,
facts that are likely to have an impact on the stock price of the company if the facts are made public),
that is, by
taking advantage of the information gap between the company insider and general
investors
(for the definitions and description related to insider trading, see the following pages and
beyond).
•
The 2013 amendments to the Financial Instruments and Exchange Act (the “FIEA”), which took effect
in April 2014, introduced new regulations that prohibit any company insider from disclosing
non-public material facts etc. of the company (communicating information) or recommending the
purchase and sale of shares and other securities of the company (recommending trades) to a third party
for such purposes as having the third party gain profits, even if the company insiders themselves do not
engage in insider trading, as those acts would encourage insider trading.
•
Insider trading is strictly regulated by law in many countries around the world as an extremely
malicious act (i.e., crime) (and of course in Japan, the U.S. and the United Kingdom, where Toyota’s
stock is listed). Moreover, insider trading
results in not only criminal and administrative penalties
for
the trader and the company to which the trader belongs,
but also various social and moral
sanctions
(the name of the company may be spoken of for years in a disgraceful manner, as in the
“Company XX case”). Similarly, even a mere “suspicion” of insider trading can cause significant
damage to the trader and the company to which the trader belongs.
•
The primary reason for prohibiting insider trading is to
“ensure transparency and fairness in the
securities markets.”
Since the securities market is a place to collect funds widely from the public and
conduct open and fair transactions, transparency and fairness are strongly required. In order to ensure
market transparency, fairness, and confidence in the market, it is essential to strictly regulate insider
trading, which is an act of deception against general investors.
•
Therefore, we ask that you read these “Internal Rules” carefully, understand the purpose and outline of
the insider trading regulations accurately, and when trading shares or other securities, comply with
laws and regulations and follow appropriate procedures.
1.
Insider Trading
Insider trading is the act of a “company insider etc.” to “purchase or sell etc.” “shares or other securities”
of a listed company etc. with knowledge of “material facts etc.” relating to the listed company etc.’s
business etc. before such material facts etc. are “made public” (insider trading is prohibited because if a
company insider uses “material facts etc.,” the company insider may do so at advantage over general
investors, which is unfair and inequitable).
2.
Company Insiders etc.
Under the FIEA, insider trading regulations apply if a person who falls under the category of “company
insiders etc.” becomes aware of prescribed “material facts etc.” in relation to his or her duties. In other
words, only the persons who have a certain relationship with the company are subject to insider trading
regulations.
For “company insiders etc.,” please see the table below.
Company insider
1
An officer or employee of a listed company (including its parent and
subsidiaries; hereinafter the same)
2
A shareholder or similar right holder owning 3% or more of the
issued shares of a listed company
3
A person who has statutory authority over a listed company
(e.g.,
public
official
who
has
authority
to
grant
licenses
and
approvals to the listed company)
4
A person who has concluded, or is in negotiations to conclude, a
contract with a listed company
(including an officer or employee of such a person, if such a person
is a corporation)
5
[If
2
or
4
is a corporation]
Another officer or employee who belongs to the same corporation
Former company
insider
A person who has ceased to be a company insider within one year (only
with respect to the information that the person came to know while the
person was a company insider)
Information
recipient
A person who has received information directly from a company insider or
a former company insider [If the information recipient has received
information in the course of his or her duty and belongs to a corporation]
Another officer or employee who belongs to the same corporation
Furthermore, the following persons are also subject to the insider trading regulations.
1
A person who is affiliated with a tender offeror etc. (including officers and employees of the target
company and a person who was affiliated with a tender offeror etc. (i.e., who has ceased to be a
person who is affiliated with a tender offeror etc. within the past six months)
2
An officer or employee of a listed investment corporation (J-REIT) that has issued investment
securities and its asset management company and an investor investing in those investment
securities and a person who has ceased to be such officer, employee or investor within the past
year
3
A person who has received information from a person set forth in
1
and
2
above
3.
Material Facts etc.
Under the FIEA, the act of purchasing or selling etc. shares or other securities with knowledge of
non-public ‘material facts’ or ‘facts of a tender offer etc.’ (collectively, “material facts etc.”) constitutes a
violation of the insider trading regulations. “Material facts” include the following (note that the following
is not an exhaustive list; see also the “Criteria for information that should be treated as a material fact by
the Disclosure Committee” established by the Disclosure Committee).
Item
Numeric criterion
(1) Damage
resulting from
disasters or
business
operations
•
If the amount of damage is expected to account for 3% or more of net
assets as of the end of the most recent fiscal year
(2) Business
alliance (or
dissolution of
business
alliance)
(e.g., establishing a new joint venture)
1
If, within three years, the Company’s sales are expected to increase by
10% or more per year from the most recently ended fiscal year
2
If, within three years, the new joint venture’s sales multiplied by the
Company’s investment ratio are expected to account for 10% or more
of the Company’s sales for the most recently ended fiscal year
3
If, within three years, the new joint venture’s total assets multiplied by
the Company’s investment ratio are expected to account for 30% or
more of the Company’s net assets as of the end of the most recently
ended fiscal year
Item
Numeric criterion
(3) Issuance of
shares, stock
acquisition
rights, and bonds
with stock
acquisition rights
•
If the total issue amount is expected to be 100 million yen or more
(4) Information on
financial results
(earnings
forecasts)
(e.g., compared to the most recently disclosed earnings forecast)
(a) Sales:increase or decrease by 10% or more
(b) Ordinary income:increase or decrease by 30% or more with an
increase or decrease in net assets as of the end of the previous period
by 5% or more
(c) Net income:increase or decrease by 30% or more with an increase or
decrease in net assets as of the end of the previous period by 2.5% or
more
(5) Increase or
decrease of
dividends
•
The amount of the dividend increases or decreases by 20% or more
from the previous period (both full year and interim).
(6) Merger,
company split,
and transfer/
acquisition of
business
1
If sales for the current or following fiscal year are expected to
increase or decrease by 10% or more from the most recently ended
fiscal year
2
If total assets are expected to increase or decrease by 30% or more of
net assets as of the end of the most recently ended fiscal year
(excluding mergers with a wholly owned subsidiary and acquisitions
of a business from a wholly owned subsidiary)
(7) Share split
•
If the increase in the number of shares resulting from a stock split is
10% or more
(8) Dissolution of a
subsidiary
1
If total assets presented in the consolidated financial statements are
expected to decrease by 30% or more of net assets as of the end of the
most recently ended fiscal year
2
If sales presented in the consolidated financial statements for the
current and following fiscal years are expected to decrease by 10% or
more from the most recently ended fiscal year
*
Please note that, in addition to the facts listed above and in the Appendix, the material facts
concerning the operations, business, or assets of the listed company, and which would naturally
encourage or discourage an ordinary investor to purchase or sell shares or other securities of the
company if the ordinary investor becomes aware of such facts, are widely considered to be
“material facts” (the so-called basket clause).
(Note) The Company will in principle determine whether a fact constitutes or does not constitute a
“material facts etc.” in accordance with the FIEA as described above. However, under U.S. and
UK law, there are no clear criteria for this, and determination is made on a case-by-case basis
according to the abstract criteria of whether the fact has a material impact on investors’
investment decisions or whether the fact has a material impact on the price of the company’s
securities in the market.
*
It also constitutes insider trading if a person who is affiliated with a tender offeror etc. (including a
person who was formerly affiliated with a tender offeror etc. and an information recipient)
purchases or sells shares of a (listed) target company with knowledge of
1
the fact that the target
company will be subject to a tender offer and/or
2
the fact that a tender offer to purchase the
shares of that listed target company which are equivalent to 5% or more of the total voting rights
of that company will be made (
1
and
2
are collectively referred to as the “fact of a tender offer
etc.”) before the publication of such facts.
4.
Publication
The Company deems “material facts etc.” to have been made public when 24 hours* have elapsed from
any of the following times.
1
When a representative director or a person who has been delegated by a representative director
(e.g., general manager of the Public Affairs Division) officially announces material facts etc. to
at least two media outlets (e.g., general newspaper publishers and Japan Broadcasting
Corporation (NHK))
2
When the Company notifies material facts etc. to the financial instruments exchanges on which
it is listed (e.g., Tokyo Stock Exchange (“TSE”)), and the material facts are made public on the
websites of the financial instruments exchanges via TDnet (timely disclosure network system
operated by TSE)
3
When annual securities reports, semiannual securities reports, extraordinary reports and other
similar reports containing the matters related to material facts etc. are submitted to the Prime
Minister and made public on EDINET (electronic corporate disclosure system operated by the
Financial Services Agency).
*
As the Company’s stock is also listed on the stock exchanges in New York and London,
we place importance on ensuring that material information is fully disseminated in the
overseas markets, and in consideration of the time difference between the Japan market
and the London and New York markets, the time of lifting the trading restrictions is set at
“24 hours after each publication/announcement,” which is stricter than the rules under the
FIEA*.
However, when either the London Stock Exchange or the New York Stock Exchange is
closed for business (e.g., holiday or trading halt), we may ask you to refrain from trading
even after 24 hours have elapsed.
*
<Reference>
Under the FIEA, information is deemed to have been made public at any of the
following times.
1
When the period of 12 hours, which is for the disclosed material facts to be made
known, has elapsed since a representative director or another officer or a person
who has been delegated by a representative director or another officer officially
announced material facts to at least two media outlets (e.g., general newspaper
publishers and Japan Broadcasting Corporation (NHK))
2
When the Company notifies material facts to the financial instruments exchanges
on which it is listed (e.g., Tokyo Stock Exchange (“TSE”)), and subsequently the
material facts are made public by the financial instruments exchanges using
electronic or magnetic means (e.g., via TDnet) pursuant to the provisions of the
Cabinet Office Order
3
When annual securities reports, semiannual securities reports, extraordinary
reports and other similar reports containing the matters related to material facts
are made available for public inspection (including via EDINET)
5.
Shares and Other Securities
“Shares and other securities” mainly include the following securities.
a.
Shares, stock acquisition rights, bonds with stock acquisition rights, and other similar securities
listed in Japan
b.
Bonds with stock acquisition rights and other similar securities issued overseas by companies listed
in Japan
c.
Unlisted stock options, bonds, and other similar securities issued by companies listed in Japan
d.
Shares, ADSs*, bonds with stock acquisition rights, and other similar securities listed overseas
*
ADSs, or American depositary shares, are a type of shares traded primarily on the U.S.
securities market. In Toyota’s case, one ADS is equivalent to 10 shares of common stock of the
Company, and a purchaser of ADSs is issued ADRs, or American depositary receipts
(indicating that they are the beneficial owner of shares).
The securities subject to insider trading regulations also include depository receipts (DRs) that represent
rights in listed shares and other securities, securities that represent options on listed shares and other
securities (covered warrants), exchangeable bonds with an option to exchange the bonds for the stock of a
listed company other than the issuer (EB bonds), beneficiary certificates of investment trusts that invest
only in shares and other securities, and investment securities of investment corporations.
6.
Purchase and Sale etc.
“Purchase and sale etc.” mean a purchase, sale, or other transfer or acquisition for value (whether in or
out of a financial instruments exchange market). “Purchase and sale etc.” include not only a purchase and
sale but also transactions such as exchange, payment in lieu, and contribution in kind, as long as
ownership is transferred for value. In addition, securities index futures, securities options, foreign market
securities futures, and securities over-the-counter derivatives transactions are also subject to insider
trading regulations.
7.
Acts of Communicating Information and Recommending Trades to Third Parties
The following acts are prohibited as the acts of communicating information and recommending trades to
a third party, which encourage insider trading.
1
A “company insider etc.”
2
who is in possession of non-public “material facts etc.” of a listed company,
3
for purposes of having a third party gain profits or avoid losses,
4
provides “material facts etc.” (communicating information) or recommends purchase or sale of
securities to a third party (recommending trades).
*
Any acts that are conducted for legitimate business purposes are basically exempt from
insider trading regulations as they are typically not conducted for the purpose of having a
third party gain profits or avoid losses. Such exempted acts include information exchange
and sharing within the company that is necessary in the course of business, investor
relations (IR) activities for investors to provide information on the company’s operating
and financial condition, and general recommendations to invest in the company as part of
such IR activities.
Note that even if information is communicated in the course of legitimate business and the
act is not subject to insider trading regulations, you should act carefully by, for instance,
limiting the scope of communicating and sharing material facts etc. and the scope of
information recipients to the minimum necessary.
< Internal Rules Applicable to Officers >
▼
These rules apply to the Company’s directors, operating officers, executive fellows, senior fellows, and
those who are equivalent to these members (“officers”).
(1)
Black-out period
You must not conduct “purchase and sale etc.” of any “shares or other securities” of the Company
during the period between the end of each annual/quarterly accounting period of the Company and the
“publication” of the financial results (approximately five weeks from the 1st of April, July, October
and January of each year, respectively).
(2)
Prior consultation with the Secretarial Division
If you intend to “purchase or sell etc.” “shares or other securities” of the Company or its (listed)
subsidiary during the period other than the period set out in (1) above, you must consult with the
Secretarial Division in advance and obtain confirmation that there are no problems before conducting
such “purchase or sale etc.” (The Secretarial Division that has received such consultation will ask the
Disclosure Committee Secretariat whether there are “material facts etc.”, and the Disclosure
Committee Secretariat will record the history of such inquiry and maintain record for five years from
the response to such inquiry.)
If there are “material facts etc.” of the Company, even officers who are not in the possession of the
“material facts etc.” must refrain from the “purchase and sale etc.” of “shares and other securities” of
the Company. (However, with respect to “material facts etc.” concerning information on daily
purchases during the share repurchase period, such policy of refraining from trading will not apply to
the officers other than the CFO and the officer in charge of accounting.)
*
Please also consult with the Secretarial Division if there are any concerns with respect to the
“purchase or sale etc.” of “shares or other securities” of a group company, affiliated company,
business partner, or any other relevant company (e.g., you have come to know material
information about such company).
(3)
Duty to report trading (directors only)
If you have “purchased or sold etc.” “shares or other securities” of the Company, you must submit a
report on such purchase or sale to the Prime Minister by the 15th day of the following month. If such
“purchase or sale etc.” is conducted through a securities company, you will submit the report through
such securities company.
*
Even if you conducted trading outside of Japan (e.g., you purchased ADSs of the Company in the
U.S.), you must report it to the Prime Minister.
(4)
Policy of refraining from short-term purchases and sales
You will refrain from selling “shares or other securities” of the Company within six months after
purchasing them or from purchasing such “shares or other securities” within six months after selling
them, as you may be subject to a claim for return of profits by the Company or shareholders.
(5)
Prohibition of insider trading of “shares and other securities” of another company
If you have come to know a “material facts etc.” about another (listed) company, you must not
“purchase or sell etc.” “shares or other securities” of that company until the “material facts etc.” is
made public.
(6)
Prohibition of insider trading by co-habiting family members
If you have come to know a “material facts etc.” about the Company, its subsidiary, or another (listed)
company, you must not allow your co-habiting family members to “purchase or sell etc.” “shares or
other securities” of that company until the “material facts etc.” is “made public.”
(7)
Rules for double hatting
If you also serve as an officer of another (listed) company and intend to “purchase or sell etc.” “shares
or other securities” of that company, you will do so in accordance with the rules of that company.
(8)
Trading after resignation as officer
If you have resigned as officer of the Company (or another (listed) company), you must not “purchase
or sell etc.” “shares or other securities” of that company until the “material facts etc.” of that company
that you came to know during your term of office is “made public”; provided, however, that this will
not apply if one year has elapsed since your resignation.
(9)
Registration as insider
If you have come to know a “material facts etc.” that needs to be “made public,” you will be informed
that you fall under the category of insiders and the date and time of the information to be made public
at the responsibility of the department in charge. You will also be registered as an insider
*1
handling
such “material facts etc.”
*2
.
The insider list will list your title, name, and registration date by type of “material facts etc.” The
insider list must be retained by the Disclosure Committee Secretariat for at least five years from the
date on which it was prepared or last updated and must be submitted promptly upon request by the
relevant UK authority.
*1
Officers and employees of the Company and its subsidiaries who obtains the material fact in
the course of their duties, as well as those who provide services under an employment or
other contract with the Company and have obtained material internal information.
*2
§2 of the Disclosure Rules and Transparency Rules (hereinafter in this Note 2, the “Rules”)
of the Financial Conduct Authority (the “FCA”) requires the companies whose shares are
listed on a stock exchange in the U.K. (the Company is listed on the London Stock
Exchange) to prepare, retain, submit, and otherwise maintain the insider list.
[Overview of the requirements]
1
An issuer must ensure that it prepares a list of insiders containing the identity of
each person having access to inside information (including service providers), the
reason why such person is on the insider list, and the date on which the insider list
was created and updated. (Rules § 2.8.1 R and Rules § 2.8.3 R)
2
An insider list must be promptly updated when there is a change in the reason
why a person is already on the list, and when any person who falls under the
category of insiders is added to, registered in or deleted from the insider list.
(Rules § 2.8.4 R)
3
An issuer must keep the insider list (for at least five years from the date on which
it is drawn up or updated, whichever is the latest). (Rules § 2.8.5 R)
4
If so requested, an issuer must provide to the FCA as soon as possible an insider
list. (Rules § 2.8.2 R)
5
An issuer must take the necessary measures to ensure that its employees with
access to inside information and any persons who fall under the category of
insiders acknowledge the legal and regulatory duties entailed and are aware of the
sanctions attaching to the misuse or improper circulation of such information.
(Rules § 2.8.9 R and Rules § 2.8.10 R)
*
Penalties: Knowingly committed violations may be subject to sanctions or publication
of the violation. (Rules § 1.5.3)
(Note)
The above rules will not apply to the acquisition of shares through the exercise of stock acquisition
rights under a
stock option
agreement; provided, however, that the above rules will apply to the sale of
shares actually acquired through the exercise of stock acquisition rights.
< Internal Rules Applicable to Employees etc. >
▼
Employees and other workers of the Company and its subsidiaries (meaning those who are engaged in the
business of the Company and its subsidiaries, regardless of whether they have any employment or
contractual relationship with the Company or its subsidiaries, or regardless of their position or title.
Therefore,
these
terms
include
part
time
employees,
temporary
employees,
secondees
and
loaned
employees, in addition to employees. These employees and other workers are hereinafter referred to as
“employees etc.”) are also subject to insider trading regulations. Therefore, the Company has established
rules for employees etc. concerning the following matters and ensures that they are fully aware of them.
Please note that if a supervisor/manager who is aware of a subordinate engaging in insider trading fails to
take appropriate action, the supervisor/manager may be subject to the same penalties as the violator under
U.S. law.
▼
The Company has also required its overseas affiliated entities to have similar internal rules in accordance
with the laws of the countries where they are located.
(1)
If you have come to know a “material facts etc.” about the Company, its subsidiary or another (listed
company), you must not “purchase or sell etc.” “shares or other securities” of that company until
such “material facts etc.” are “made public.”
(2)
If you have come to know a “material facts etc.” about the Company, its subsidiary or another (listed
company), you must not share it with third parties unless that is necessary in the course of business.
(3)
If a department is to handle a “material facts etc.” of the Company, its subsidiary or another (listed)
company, the head (general manager) of the department will register the persons handling the
“material facts etc.*” and submit an insider list to the Disclosure Committee Secretariat and will also
ensure information management and the matters set out in (1) and (2) above.
*
Persons handling a material fact etc.: officers and employees etc. of the Company or its
subsidiaries (companies stated as belonging to the corporate group of the Company in the most
recent annual securities report etc. of the Company) (meaning those who are engaged in the
business of the Company or its subsidiaries, regardless of whether they have any employment
or contractual relationship with the Company or its subsidiaries, or regardless of their position
or title. Therefore, these terms include part time employees, temporary employees, secondees
and loaned employees, in addition to employees.) who have come to know a material facts etc.
in the course of their duties, as well as the persons who have concluded, or are in negotiations
to conclude, a contract with the Company, and who have come to know a material facts etc. in
the course of concluding or negotiating the contract (e.g., business partners, business alliance
partners,
attorneys,
certified
public
accountants,
certified
public
tax
accountants,
and
consultants)
(Note) Please be aware that if an employee etc. who is subject to the Company’s Rules of Employment violates
(1) or (2) above, it also constitutes a violation of the Company’s Rules of Employment.
*
Rules of Employment § 11, item (xx) (Matters to Comply with)
“You must not use a secret learned in the course of business to purchase or sell shares or other
securities directly or indirectly during your employment or after leaving the Company, before the
secret is made public.”
*
Rules of Employment § 75, item (xvi) (Disciplinary Dismissal)
“If you use a secret learned in the course of business to purchase or sell shares or other securities
directly or indirectly before the secret is made public.”
(Note) The Company’s Confidentiality Management Regulation also contain a provision prohibiting insider
trading.
*
Confidentiality Management Regulation § 28 (2) Prohibition of Insider Trading Set Forth in the
Financial Instruments and Exchange Act
“Employees etc. who have come to know a confidential matter must not engage in insider trading set
forth in the Financial Instruments and Exchange Act. The information quality control manager in the
departments involved in the material facts set forth in the Financial Instruments and Exchange Act
which have not been made public must take measures such as registering and managing those involved
in such material fact.”