Hiroshi Okuda president Toyota Motor Corp.　14　January　1997　Foreign Correspondents Club of Japan　　 This is a good time to take a look back on the past year and to take look ahead at the prospects for the new year. I get to talk with you separately about various subjects. But our interviews tend to focus on short-term events. I have been looking forward to this chance to discuss the long-range importance of our recent activities. As you might know, I had a great big target last year for market share in Jap-an. Toyota started out the year with forty percent of the makert, not counting mincars. And I had grand plans to put our marketing machine into high gear. Unfortunately, we put the machine into low gear. And we ended up with thirty- nine percent. Well, as they say in baseball, there is always next year. But seriously, I want you to see that Toyota is a company that will continue to grow － in Japan and worldwide. I want to show you that we understand the issues that we must address to keepgrowing. And I want to explain how we are moving to adress those issuses. Two issues are so very important that I want to concentrate on them in my remarks today. Those issues are the challenges of safeguarding the emvironment and globalizing our operations. 　The world retains plenty of potential for growth in demand for automobiles. Yes, growth is slowing in Japan, North America, and Europe. But markets will continue to expand gradually, even in those markets. And demand will contiune toexpand rapidly in newly emerging markets around the world. So automakers can continue to grow too. But to keep growing, we need to changethe ways that we design and make and sell our cars. I will start with the environment. People at Toyota and at other automakers used to talk about protecting the environment like a special option or like a value-added feature. Today, we have a better and more-urgent understanding of the environment. We understand that automakers who do the best job of protecting the environment will have the best chance of surviving and growing. We know that automakers who fall behind in developing and introducing environmental technologies will perish. I just mentioned that the world retains plenty of potential for growth in de- mand for automobiles. But making good on that potential will depend on providingcars and transport systems that people can live with. Developing nations are learning from our experience. And we are learning from our own experience. People in every nation are demanding transport that gets them where they want to go without congesting their cities and without pollutingtheir skies. If you follow our company, you have seen us introduce several new technologiesover the past year. Those introductions indicate how we plan to answer the de- mand for clean transport over the medium term and over the long term. Internal combustion engines remain a big part of the answer to that demand. And Toyota has led the industry in raising fuel economy and reducing emissions in those engines. For example, for several years, we have been making lean-burn engines, which combine high energy efficiency with low emissions. Recently, we extended our lean-burn technology with the Toyota D-4 direct-in- jection engine. That engine offers customers a new alternative for combining high output with high fuel efficiency and low emissions. It features a catalyticbreakthrough that permits extremely lean combustion with extremely clean emis- sions. At the same time, we have begun supplementing our gasoline and diesel vehicleswith electric vehicles. We believe that electric cars have an important role to play in reducing local pollution in congested urban areas. Electric Toyotas went on sale in Japan last year. And we also are supplying electric vehicles for pilot programs in North America and in Europe. The Chinese also are interested in alternative power sources for motor trans- port. And we recently demonstrated our electric vehicles in China at the invi- tation of local officials. This year, we will bring another kind of electric power to the marketplace. Wewill introduce hybrid electric vehicles that each carry a gasoline engine to generate electricity. Hybrid power overcomes the problem of limited range, which limits the useful- ness of battery-powered cars. And the energy efficiency is good even when the generator kicks in because the gasoline engine runs under optimal conditions. Another promising technology is fuel cell power. We demonstrated a car last year that runs on fuel cells. And we will continue to push ahead with research on fuel-cell power. I have been describing different kinds of power sources. I wanted you to see how we are positioning Toyota to remain an industry leader as the automobile evolves. But the leadership we seek and the growth we envision for Toyota in clean transport means more than power sources. It means taking the initiative in efforts to develop transport systems that route traffic efficiently and more safely. It also means wider efforts on behalf of protecting the global environ- ment, as in our work on behalfof reforestation. We can make a lot of progress in safeguarding the environment by managing traffic better. For example, the Toyota region has a new system for providing drivers with wireless information about routes and traffic conditions. And that system will spread to other Japanese urban areas over the next few years. According to engineers, that system has the potential to save fuel worth four-point-five billion dollars over the next twenty years. That is a lot of carbon dioxide that will not get generated and a lot of pollutants that will not get released. Economically, advanced traffic management will be even more valuable in terms of time saved in transport. Experts estimate that the time savings will be worthmore than seventy billion dollars over the coming two decades. Toyota participates actively in an organization for coordinating joint effortsby the private and public sectors to develop intelligent transport systems. Thatorganization shares ideas and findings with counterparts in North America and Europe. And we all are promoting intelligent transport systems in developing na-tions, as well as in our own nations. Of course, clean and safe transport costs money. Automakers need to find ways to make clean vehicles affordable. But governments also need to do their part. They need to eliminate regulations that stand in the way of morerational trans- port. And they need to offer tax incentives to promote cleaner transport. So cleaner transport is a pressing issue for people everywhere. And it is a condition for growth and survival for automakers everywhere. Now, I want to turn to a second condition for growth and survival in our in- dustry. That is the challenge of globalizing operations. A famous American said that "all politics is local." He meant that even na- tional elections are won and lost on the basis of local interests and local sensitivities in each city and state. In the same sense, all business is local. Global strategies get most of the attention in your newspapers and magazines. But our daily work is a matter of developing, making, and selling cars. And we work best when we work locally in the markets where customers buy and drive our cars. Personally, I never have been one of those people who views the world in termsof Japanese and non-Japanese. At Toyota, our business outside Japan is growing rapidly. And business outside Japan will account for the bulk of the growth that we envision for Toyota in the years and decades ahead. So our organization outside Japan is growing rapidly. Local plants will supplynearly all the growth in Toyota sales outside Japan. For example, our plants in North America will have a production capacity for one-point-two million cars andtrucks by the end of next year. That is more vehicles than we sold there last year. Likewise, local designers play a big and growing role in adapting our productsto different markets. We just introduced a completely new car in Thailand, the Soluna. And Thai designers provided a lot of input in our work on that car. Of course, our core models in North America and Europe also incorporate a lot of local design work. Internationalization is not something that we need to make a special effort toaccomplish. It is happening naturally as our business develops. In closing, let me repeat that continuing progress in safeguarding the en- vironment and globalizing operations are absolute conditions for survival in ourindustry. We are mobilizing all our resources to place Toyota on a solid footingto fulfill both those conditions. Our efforts center on four emphases: One, stepping up our capabilities product planning and technological develop- ment. Two, picking up the pace in building global management systems to support our globalization. Three, reasserting leadership in the Japanese market. And four, building a presence in diversified lines of business. Those emphases are transforming our corporate culture. They are occasioning changes in the ways we pay and promote people. We are putting more stress on performance and less on seniority. Change also is in store for the ways we sell our products. The Internet and other kinds of multimedia are becoming important tools for communicating with customers. Gradually, those tools and other developments could rework the tra- ditional pattern of our relationships with dealers. So change is the big story at Toyota in the markets we serve and inside our company. I welcome change. In fact, we seek change as we pursue continuing growth. At the same time, we are working to manage change. We are working to harmonizeour growth with the larger interests of the people we serve in each nation. We are doing that because we want to be the kind of company that people will wel- come in their communities. That is the central theme in the long-range management vision that we an- nounced last January. Toyota will continue to grow as long as we translate our growth into cleaner and safer transport and economic and industrial vitality in every nation. And that－in short－is where we have in mind for our company. ＊＊＊ Hiroshi Okuda President Toyota Motor Corporation 　 Hiroshi Okuda has hands-on management experience in nearly every major phase of Toyota's operations: domestic and international sales, accounting, finance, purchsing, public relations, and new business endeavors. Mr.Okuda jointed Toyota in 1955 upon earning a degree in business from Tokyo's Hitotsubashi University. After spending the first part of his career in the ac- counting division, Mr.Okuda was dispatched to Manila in 1973 to oversee Toyota'sPhilippine operations. He returned to Japan and became general manager of the Asia and Oceania division in 1979. Named a director of the company in 1982, Mr. Okuda supervised a full range of international operations, including prepara- tions for the construction of major plants in Taiwan and North America. Mr. Okuda became a managing director in 1987, a senior managing director in 1988,and an executive vice president in 1992. Mr.Okuda assumed duties as president in1995. As chief executive officer, he not only shapes corporate policy for Toyotabut serves as a spokesman for the automobile industry and for manufacturing in general. Books and movies are favorite pastimes these days for Mr.Okuda, who also holds ablack belt in judo. Born in Mie Prefecture in 1932, he now lives near Toyota headquarters in Aichi Prefecture with his wife, Kyoko. They have a son and a daughter.