Annual Report

Producing Happiness for All
Using our technology, we work towards a future of convenience and happiness, available to all

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

We unite our three strengths (Software, Hardware and Partnerships) to create new and unique value that comes from the Toyota Way

As filed with the U.S. Securities and Exchange Commission on June 18

, 202

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

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

For the fiscal year ended: March 31, 2025

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

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

Commission file number:

001-14948

TOYOTA JIDOSHA KABUSHIKI KAISHA

(Exact name of registrant as specified in its charter)

TOYOTA MOTOR CORPORATION

(Translation of registrant’s name into English)

Japan

(Jurisdiction of incorporation or organization)

Toyota-cho

Toyota City

Aichi Prefecture

471-8571

Japan

+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

71-857

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:

13,048,929,774

shares of common stock (including

335,787,795

shares of common stock in the form of American Depositary Shares) as of March 31, 2025

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:Yes ☒ 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 ☒

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 ☒ 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 ☒ 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 ☒	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. ☒

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 ☒ 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 ☒

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, 2025, “Toyota Group” refers to Toyota Motor Corporation, Toyota Industries Corporation, 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., Daihatsu Motor Co., Ltd., Toyota Housing Corporation, Toyota Motor Kyushu, Inc. and Woven by Toyota, Inc, collectively.

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, 2023, 2024 and 2025 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;

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.

Reviewing the world economy for fiscal 2025, the U.S. economy remained resilient, supported by stable employment and income conditions. In China, although the real estate downturn continued to weigh on the economy, fiscal policy measures 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, the pace of growth rate

moderated as the pent-up demand that followed the easing of semiconductor supply constraints was largely absorbed. 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 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 may not be able to ensure that it or its suppliers do so in all cases. For instance, at the consolidated subsidiary level, Hino Motors, Ltd. (“Hino”) and Daihatsu Motor Co., Ltd. (“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. 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 — Selected Initiatives” 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 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, regulatory and political 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 and tornadoes, as well as longer-term weather patterns and related effects, such as sustained higher temperatures, sea level rise, drought and increased wildfires. Despite Toyota’s contingency planning, 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. For a further discussion of risks associated with climate change, see “Item 4. Information on the Company — 4B. Business Overview — Climate Change-related Disclosures.”

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 annual 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, 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 annual report, could adversely impact its reputation, financial condition, results of operations, cash flows and prospects.

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 — Operating Results — 5.A Operating Results — Overview — Currency Fluctuations,” “Item 11. Quantitative and Qualitative Disclosures About Market Risk,” and notes 19 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, 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 together with other changes to U.S. trade policy, and other nations have announced retaliatory tariffs and trade policy changes in response to them. 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 governmental regulations and 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 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 — 4B. Business Overview — Governmental Regulation, Environmental and Safety Standards” and for legal proceedings, please see “Item 4. Information on the Company — 4B. 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 limited liability, joint-stock company 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 Corporation (formerly Toyoda Automatic Loom Works, Ltd., “Toyota Industries”). Toyota became a separate company in August 1937. In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation of today. As of March 31, 2025, Toyota operated through 585 consolidated subsidiaries (including structured entities) and 165 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, 2022 and March 31, 2025 and information concerning Toyota’s principal capital expenditures and divestitures currently in progress.

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

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.

Recent Developments

Toyota Industries

On June 3, 2025, TMC, Toyota Industries and TOYOTA FUDOSAN CO., LTD. (“Toyota Fudosan”) announced the intention to conduct a series of transactions are aimed to result in, among other things, Toyota Industries being taken private. Toyota Industries is an equity method associate of TMC; it also owns 9.16% of the outstanding shares of our common stock as of March 31, 2025.

Background

TMC is taking measures to “transform into a mobility company” and aiming to contribute to the development of the mobility industry in Japan and the world through these measures. Mobility involves four perspectives, namely, the movement of people, goods, information, and energy. Among these, TMC is working on the evolution of cars from the perspective of movement of people and is aiming to contribute to the realization of a “mobility society” full of smiles. On the other hand, TMC believes that in order for the Toyota Group to “transform into a mobility company,” it is necessary to focus not only on movement of people but also on movement of goods. TMC believes that Toyota Industries, which engages in the materials handling equipment business within the Toyota Group for development, manufacture, and sale of products and services of wide-ranging domains, from lift trucks to logistics equipment and systems, and which is a leading company regarding the movement of goods, is indispensable for these transformations, and that it is important to further strengthen its competitiveness. In addition, Toyota Group companies have been working to improve capital efficiency by selling shares mutually held among Toyota Group companies and effectively leveraging the funds obtained through the sale, while maintaining the capital ties that have sustained a strong relationship among the group companies. As a result, TMC came to consider that Toyota Industries’ utilizing the Toyota Group’s platforms (such as network, business, technology, human resources) to the utmost extent, deepening business collaboration and cooperation with Toyota Group companies, and achieving growth from a long-term perspective as a leading company regarding movement of goods, while maintaining and strengthening its current revenue business base, without preconceiving concerns over short-term deterioration of business performance, will contribute to improvement of the corporate value of Toyota Industries and ultimately the entire Toyota Group, which is advancing initiatives for the transformation into a mobility company. Based on the above background, the parties agreed that Toyota Industries should go private in order for Toyota Industries to lead within the Toyota Group the business domain centered on movement of goods, such as materials handling equipment and logistics solutions, while the Toyota Group transforms into a corporate group that leads the mobility industry supporting the movement of people, goods, information, and energy, and to strengthen the competitiveness of Toyota Industries’ automotive business through further deepening of collaboration with the Toyota Group.

Item 4. A.

4. The important events in the development of the company’s business, e.g. information concerning the nature and results of any material reclassification, merger or consolidation of the company or any of its significant subsidiaries; acquisitions or dispositions of material assets other than in the ordinary course of business; any material changes in the mode of conducting the business; material changes in the types of products produced or services rendered; name changes; or the nature and results of any bankruptcy, receivership or similar proceedings with respect to the company or significant subsidiaries.

In addition, TMC considered that, in terms of Toyota Industries going private, if TMC engaging in the automobile business or its subsidiaries were to take Toyota Industries private, there would be a risk that Toyota Industries would be constrained by the perspective of automotive OEMs, which operate businesses with a focus on responding to technological innovations and market changes in the automotive industry. Therefore, TMC believed that in order for Toyota Industries, which has been operating the materials handling equipment business, a non-automotive business, to realize growth in the new mobility domain, it is necessary to pursue an approach to realize growth in the next-generation mobility domain that allows for the active incorporation of innovative ideas and diverse perspectives, transcending industry boundaries, by having acquirers other than TMC or its

subsidiaries. In addition, based on the history of collaborations between Toyota Industries, which is the origin of the Toyota Group, and other Toyota Group companies, TMC concluded that instead of TMC or its subsidiaries taking Toyota Industries private, (a) from the viewpoint of deepening business collaboration and cooperation with Toyota Group companies, Toyota Fudosan, whose shares are held by Toyota Group companies, and (b) from the viewpoint of committing to the transactions, Akio Toyoda, our Chairman as well as the Chairman of Toyota Fudosan, becoming shareholders that directly or indirectly hold voting rights in Toyota Industries would be the best way for the entire Toyota Group to grow.

Contemplated Transactions

The contemplated transactions announced include the following:

(i)

a tender offer (the “Tender Offer for Toyota Industries”) for all of the shares of common stock of Toyota Industries, excluding those held by TMC, by a company to be established by Toyota Fudosan (“Toyota Industries’ Offeror”) that will be a wholly owned subsidiary of another company to be established by Toyota Fudosan (the “Parent Company of Toyota Industries’ Offeror”). TMC understands that Toyota Industries’ Offeror aims to commence the Tender Offer for Toyota Industries around early December 2025. However, the commencement of the Tender Offer for Toyota Industries requires among other things procedures and steps under domestic and foreign competition laws, the EU Foreign Subsidies Regulation, foreign investment control laws and regulations, and financial regulatory laws;

(ii)

TMC investing 706 billion yen in shares of non-voting preferred stock of the Parent Company of Toyota Industries’ Offeror with a preferred dividend rate of 8.6% (compounded) (the “Contribution”), to partially fund the settlement of the Tender Offer for Toyota Industries. TMC understands that the Tender Offer for Toyota Industries will also be funded through bank financing, as well as capital contributions by Toyota Fudosan and Mr. Toyoda in the form of shares of common stock of the Parent Company of Toyota Industries’ Offeror, with Toyota Fudosan owning immediately after such investment substantially all of such shares of common stock;

(iii)

TMC conducting a tender offer for shares of its common stock (the “Tender Offer for Own Shares”). It intends to offer to purchase a maximum of 1,192,331,020 shares, which is calculated by adding one unit (100 shares) to the number of shares Toyota Industries has agreed with Toyota Fudosan to tender. The tender offer price is expected to be a 10% discount from the lower of (a) the closing price of TMC common stock on the Tokyo Stock Exchange Prime Market on the business day prior to the determination of the tender offer price and (b) the simple average closing price of the TMC common stock on the Tokyo Stock Exchange for the one month leading up to such date, provided that the tender offer price shall not exceed 2,691 yen. TMC intends to conduct the Tender Offer for Own Shares as soon as practicable subject to the resolution for the Tender Offer for Own Shares by TMC’s Board of Directors following the successful completion of the Tender Offer for Toyota Industries and completion of the settlement thereof. While TMC currently plans to commence the Tender Offer for Own Shares around mid-January 2026, the Tender Offer for Own Shares is subject to the completion of the Tender Offer for Toyota Industries and completion of the settlement thereof. The Tender Offer for Own Shares will not be conducted, directly or indirectly, in or targeted at the United States, nor through the postal service in the United States or other interstate or international commercial methods or means (including, but not limited to, telephone, telex, facsimile, e-mail, and internet communication), nor through any stock exchange in the United States. No tender of shares in the Tender offer for Own Shares may be made through the above-mentioned methods or means, through such stock exchange, or from the United States. No tender that directly or indirectly violates the above-mentioned restrictions will be accepted in the Tender Offer for Own Shares.

(iv)

TMC retiring 1,200,000,000 shares of its treasury stock. The retirement is scheduled to be conducted on the last day of the quarter during which the settlement of the Tender Offer for Own Shares will be completed (if such last day is not a bank business day, the immediately preceding bank business day).

(v)

after a squeezeout of all shareholders of Toyota Industries other than Toyota Industries’ Offeror and TMC (the “Toyota Industries Squeeze-out Procedures”), Toyota Industries repurchasing all of the shares of Toyota Industries that TMC owns (the “Toyota Industries Share Repurchase”).

In connection with the above, TMC has agreed with Toyota Fudosan that (1) TMC will not tender any of the Toyota Industries shares held by TMC in the Tender Offer for Toyota Industries; (2) TMC will conduct the Contribution subject to the successful completion of the Tender Offer for Toyota Industries; (3) TMC will conduct the Tender Offer for Own Shares, subject to the condition that the implementation of the Tender Offer for Own Shares is resolved at a meeting of TMC’s Board of Directors; and (4) TMC will sell all of the Toyota Industries shares held by TMC in the Toyota Industries Share Repurchase after the completion of the Toyota Industries Squeeze-Out Procedures.

The transactions above are subject to regulatory approvals and other customary conditions.

Hino

On June 10, 2025, TMC, Hino, Mitsubishi Fuso Truck and Bus Corporation (“MFTBC”) and Daimler Truck AG (“Daimler Truck”), which is MFTBC’s parent company, executed an agreement concerning a business integration between of Hino and MFTBC.

The business integration will be conducted, subject to among other conditions approval of Hino’s shareholders and obtaining permits or approvals from relevant authorities, through, among others, the following steps:

(i)

Hino establishing a corporation (the “Integrated Company”) as its wholly owned subsidiary;

(ii)

implementing a share exchange (the “Share Exchange”) so that (a) the Integrated Company will become a wholly owning parent company and (b) Hino will become a wholly owned subsidiary. Upon the Share Exchange, Hino will become a wholly owned subsidiary of the Integrated Company, and the shareholders of Hino will acquire shares of the Integrated Company; and

(iii)

implementing a share delivery (the “Share Delivery”) so that the Integrated Company will acquire all the shares of MFTBC held by all the shareholders of MFTBC. Upon the Share Delivery, it is intended that MFTBC will become a wholly owned subsidiary of the Integrated Company, and the shareholders of MFTBC will acquire shares of the Integrated Company.

The business integration is currently scheduled to become effective on April 1, 2026. As a result of the series of transactions, Hino is expected to cease to be a consolidated subsidiary of TMC.

4.B BUSINESS OVERVIEW

Toyota primarily conducts business in the automotive industry. Toyota also conducts business in finance and other industries. Toyota sold 9,362 thousand vehicles in fiscal 2025 on a consolidated basis. Toyota had sales revenues of ¥48,036.7 billion and net income attributable to Toyota Motor Corporation of ¥4,765.0 billion in fiscal 2025.

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,
	2023		2024		2025
Automotive		33,776,870		41,080,731		42,996,299
Financial Services		2,786,679		3,447,195		4,437,827
All Other		590,749		567,399		602,578

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,
	2023		2024		2025
Japan		9,122,282		10,193,556		10,719,120
North America		13,509,027		17,624,268		18,930,253
Europe		4,097,537		5,503,738		6,110,052
Asia		7,076,922		7,604,269		7,903,360
Other*		3,348,530		4,169,494		4,373,919

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

During fiscal 2025, 21.3% of Toyota’s automobile unit sales on a consolidated basis were in Japan, 28.9% were in North America, 12.5% were in Europe and 19.6% were in Asia. The remaining 17.7% of consolidated unit sales were in other markets.

The Worldwide Automotive Market

Toyota estimates that annual worldwide vehicle sales totaled approximately 89 million units in 2024.

Automobile sales are affected by a number of factors including:

•

social, political and economic conditions;

•

introduction of new vehicles and technologies; and

•

vehicle prices, costs incurred by customers to purchase and operate automobiles.

These factors can cause consumer demand to vary substantially from year to year in different geographic markets and in individual categories of automobiles. Looking at the global economy in fiscal 2025, the U.S. economy remained resilient, supported by stable employment and income conditions. In China, although the real estate downturn continued to weigh on the economy, fiscal policy measures 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, the pace of growth rate moderated as the pent-up demand that followed the easing of semiconductor supply constraints was largely absorbed.

Looking at the economies of major countries, in the United States, the employment and income environment remained stable, which supported steady economic performance. The Chinese economy remained stable, supported by fiscal policy measures and economic stimulus measures, including infrastructure investment, despite the impact of the real estate downturn. In Europe, the economy was sluggish due to inflation and high

interest rates. In Japan, the high inflation rate led to deteriorating consumer sentiment, resulting in consumption recovering slowly. Emerging economies also struggled due to factors such as the impact of inflation, with economies in ASEAN countries such as Thailand and Indonesia experiencing a downturn.

Amid this environment, the global automotive market growth slowed in 2024, with a year-on-year increase of 3%.

In North America, new vehicle sales were approximately 19.50 million units, an increase from the previous year. In Europe, new vehicle sales remained flat compared to the previous year with approximately 17.50 million units. In Asia (excluding Japan, China, and India), new vehicle unit sales significantly decreased from the previous year to approximately 3.30 million units, impacted by weak economic recovery and worsening auto loan conditions.

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 30% for China, 22% for North America (including Mexico and Puerto Rico), 20% for Europe, 4% for Asia, and 10% for India and the Middle East. In China, new vehicle sales were 107% compared to the previous year at approximately 26.40 million units.

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.

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.

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 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.

Selected Initiatives

We made a New Management Policy & Direction Announcement on April 7, 2023. Our new management structure’s theme is “inheritance and evolution.” The most important value we have cultivated is “Let’s make

ever-better cars!” While talking about cars on the front lines and striving hard to bring smiles to customers’ faces, we continue to pursue ever-better cars. Together with the 370,000 employees of Toyota around the world, our suppliers, and our dealers, we all make cars together. Car-making is a team effort. We will accelerate the taking on of challenges for the future, with a new management style of “simultaneously and organically working as a team.”

Aiming for the Future

We aim to transform into a mobility company. Toyota’s mission is “Producing happiness for all.” For cars to continue being a necessary part of society, we need to change the future of the car. For that, there are two major themes, “carbon neutrality” and “expanding the value of mobility.”

Carbon Neutrality

We are fully committed to achieving carbon neutrality in 2050 over the entire life cycle of our vehicles. Energy enables our daily lives. To change the future of cars, we must face the issue of energy’s future. With the spread of renewable energy, we believe electricity and hydrogen are likely to become the main forms of energy upon which society relies. However, the pace of transition will differ in each country and region due to their particular energy situations.

With these differences in mind, we have adopted a multi-pathway strategy, which allows transitions that align with actual energy situations. In the short term, we will provide a range of options that can be used to reflect actual situations and meet diverse customer needs. In conjunction with these efforts, we will take steps that anticipate the medium- to long-term trend toward electricity and hydrogen. We are making steady progress in clarifying our multi-pathway strategy by using our array of hybrid vehicles, which contribute to practical CO₂ reduction, as the basis for a menu of concrete options.

We are developing new compact internal combustion engines with high levels of efficiency and advanced environmental performance by refining combustion technology developed over many years, such as hydrogen engine technologies honed through motorsports. We are also utilizing the small electric units of next-generation battery electric vehicles (“BEVs”) with the aim of creating electric-rich hybrid electric vehicles (“HEVs”) and plug-in hybrid electric vehicles (“PHEVs”).

In developing the structures and designs of next-generation BEVs and streamlining their manufacture, we are returning to first principles. As well as reconsidering designs, we are focusing on optimizing aerodynamics and other aspects of BEV performance. We will also utilize technologies we have honed, such as compact electric power units, to advance the evolution of other powertrains.

As for fuel cell electric vehicles (“FCEVs”), which run on hydrogen, we are building business and market foundations by first concentrating on commercial vehicles. Setting our sights on promoting the spread of e-fuel made from hydrogen, we are working with energy companies and other entities to establish an entire value chain that extends from the production and transportation of hydrogen through to its use.

We will work to promote electrified vehicles and reduce CO₂ emissions while leaving no one behind, including in emerging markets. Through this all-direction approach, we aim to reduce average greenhouse gas (“GHG”) emissions for vehicles we sell worldwide by 33% or greater by 2030 and by 50% or greater by 2035 compared to 2019. We will continue to promote decarbonization globally and steadily toward 2050.

Expanding the Value of Mobility

The cars of the future will become more connected to society as they become more electrified, intelligent, and diversified. In addition to moving people’s hearts and emotions and moving people and goods, we will gather

the movements of energy and information and link them together as one through data. By doing so, we will be able to provide seamless mobility experiences that are connected with other mobilities, as well as provide new value for cars as part of the social infrastructure. Cars connected to society will also be closely connected to various services that support people’s daily lives, such as telecommunications and finance, expanding the circle of new value-added services centered on mobility.

Toyota Mobility Concept

We have developed “Toyota Mobility Concept” as our vision of the mobility society that we are aiming for. Evolving the car to be more useful to society based on its essential values that have been cultivated over time, such as safety, security, and being fun to drive—to strive toward such a future, we will continue our transformation into a mobility company in the following three domains.

Mobility 1.0 — SDVs Unique to Toyota

In addition to providing mobility that contributes to energy diversification, we aim to cater to an array of mobility needs. To this end, at the Mobility 1.0 stage, “Transitioning Cars to Mobility,” we will create new value by connecting cars with society. The key to these efforts will lie in increasing the potential uses of data and energy through the implementation of the Arene software platform.

In building this platform, the leading role will be played by ambitious initiatives to create Software-Defined Vehicles (“SDVs”), which form part of our efforts to develop next-generation BEVs. We believe that safety and reliability are the most important types of value provided by SDVs. Together with Nippon Telegraph and Telephone Corporation and other partners, we intend to build seamless communication and AI infrastructures that enable us to enhance the value provided by cars, particularly in relation to safety and reliability. For example, we will advance the development of automated driving, thereby helping eliminate traffic accidents. Further, by providing connections to a wide variety of services and apps and extending the scope of AI utilization, we will create mobility value that matches customer needs.

Mobility 2.0 — Diverse Mobility

Transitioning Cars to Mobility will in turn enable initiatives aimed at “Expanding Mobility Access” through the provision of mobility in new fields—the goal of the Mobility 2.0 stage. Toyota is working on many different types of mobility, from personal mobility and wheelchair mobility to commercial mobility such as e-Palette, boats, and flying mobility. Together with many partners, we will go beyond the scope of our current business domain to support the mobility of customers worldwide.

Mobility 3.0 — Synergy of Mobility & Infrastructure

At the Mobility 3.0 stage, where we aim for the “Synergy of Mobility & Infrastructure,” we will create value by integrating mobility with social systems. The advancement of automated driving, which we are pursuing as part of the development of SDVs, is also an initiative aimed at establishing social systems that provide safety and reliability by integrating the trinity of people, cars, and infrastructure. We are advancing regional projects in various countries. For example, in Thailand we are working with partners on a project tasked with the social implementation of a system for the integration of data, energy, and mobility. In China, meanwhile, we are working toward the realization of automated driving and a hydrogen-powered society.

Our energy storage business aims to build sustainable social systems that help spread renewable energy. In evolving mobility, we plan to focus on the creation of battery ecosystems and other initiatives for the establishment of a circular economy based on an approach of using less resources in manufacturing, using products longer, and producing no waste when collecting products.

To realize mobility that enhances safety and reliability, reduces traffic congestion, increases logistics efficiency, improves the environment, and contributes to energy management, our efforts aimed at integrating cars and infrastructure will adopt a society-wide viewpoint.

The most important message we want to convey through our mobility concept is that mobility lies beyond the evolution of the car. Cars lie at the center of our transformation into a mobility company. In order to expand the possibilities of cars, it is necessary to evolve based on the concepts of “Best-in-Town” and “ever-better cars,” which we have long cultivated. We will change the future of cars based on our products and regions.

Product-centered Management

Toyota Mobility Concept is centered on enhancing the value of cars, expanding new mobility and freedom of movement, and providing new services and energy solutions as part of social systems. The three approaches that hold the key to realizing this vision are electrification, intelligence, and diversification.

Electrification will be based on a multi-pathway approach. We will continue to tailor electrification to the needs of customers and individual regions by drawing on the strengths and characteristics of each vehicle type. We have plans to release next-generation BEVs entirely different from those of today—BEVs created by automobile manufacturers. This new generation of BEVs will double driving range by compared to that of the current bZ4X using batteries with far greater efficiency while also offering design and driving performance to set hearts racing.

In addition, by drawing on the strengths of TPS, we will change the way we work to reduce the number of processes for the BEV production line by half. This will entail a shift to more efficient lines, including autonomous inspections and unmanned transport powered by connected technology, which is expected to significantly transform the landscape of our production plants. We also aim to achieve carbon neutrality at all of our global plants by 2035. At the same time, we will overhaul existing supply chains by working with suppliers to procure superior quality parts at lower prices.

To realize these transformations, we created a new specialized unit in May 2023 to develop BEVs. Working under a single leader entrusted with full authority, this all-in-one team handles every function, from development to production and business operation. Supporting these efforts is our competitiveness in such areas as per-unit development cost and investment in in-house production, both of which have been halved by the Toyota New Global Architecture (“TNGA”) as compared to those before the adoption of TNGA. We will provide the team with comprehensive support through the power of our 10-million-unit-strong sales and revenue base.

For PHEVs, by increasing battery efficiency to extend the EV-mode driving range beyond 200 km, we will reposition PHEVs as “practical BEVs” and put focus on developing PHEVs.

For FCEVs, we will pursue mass production centered on commercial vehicles. One feature of FCEVs is that the energy source, hydrogen, is lightweight. As such, even when designed for greater driving ranges, vehicles are not as heavy as a comparable BEVs, and less space is required. Refueling is also much quicker. Taking advantage of these strengths, we will work with business operators to promote FCEVs by starting with commercial vehicles, such as medium- to heavy-duty trucks. Additionally, we started basic research on hydrogen engines for heavy-duty commercial vehicles in 2022.

The second approach is intelligence—specifically, the role of intelligence in the cars themselves, the underlying services, and the expansion of our connection to society. The shift to intelligent cars will involve expanding advanced safety technology, multimedia, and other constantly evolving feature updates to all of our vehicles. At the same time, alongside advances in the onboard operating system, our next-generation BEVs will enable users to customize “ride feel” according to their preferences for how the vehicle accelerates, turns, and stops. By also honing the vehicles’ essential attributes, we will create cars that are more fun to drive in terms of both hardware and software.

Intelligent services will include new services that connect cars to cities and infrastructure. In 2023, we began the public rollout of such services, including logistics systems that use real-time traffic information to boost transport efficiency, and systems that provide optimal energy management. Partnering with cities and public facilities, we will also expand our BEV charging network, while providing a variety of services that support the energy grid and daily living. These efforts are already underway at Lexus.

With respect to intelligence in society, Woven City, our “mobility test course” located at the former site of Toyota Motor East Japan’s Higashi-Fuji Plant in Susono City, Shizuoka Prefecture, Japan (“Woven City”), will serve as a living laboratory for trialing various ways of connecting people, cars, and society. For example, in the area of connected logistics services, we will use Woven City to address issues that come to light through real-world trials before implementing these services on public roads. By repeating this process, we will accelerate the realization of an intelligent society.

Finally, we come to diversification. Our approach to diversification goes beyond cars to mobility itself, and even the energy sector. The diversification of cars will involve expanding our product lineup, bolstering services that utilize connected technology, and growing parts and accessories businesses in collaboration with new partners.

With respect to diversification of mobility, we have developed a one-touch system for securing wheelchairs in vehicles that utilizes the know-how we have accumulated over many years of developing assisted mobility vehicles. Sales of the system commenced in 2023. We also plan to expand our efforts to new mobility businesses, as seen in our partnership with Joby Aviation, Inc., which includes initiatives related to electric, vertical take-off and landing aircrafts (eVTOL), commonly referred to as “flying taxis.”

As for energy diversification, we have already begun verification tests using hydrogen extracted from water as well as unused food and other waste, in addition to carbon-neutral fuels made from biomass and other resources, in Japan and Thailand. We will hone these energy-use technologies through motorsports, aiming to promote their widespread adoption in society.

Region-centered Management

We have refined the performance and cost of HEVs with each successive generation. As a result, we have been able to greatly enhance our earning power while investing in the future, growing with stakeholders, and reducing CO₂ emissions. This truly is an achievement of our region-centered management based on efforts to make ever-better cars. We will continue to evolve our region-centered management to further solidify our business foundation.

To do so, what we must first consider is how to achieve carbon neutrality. Carbon emissions are not bound by borders, and finding ways to reduce CO₂ emissions is an issue that cannot wait to be addressed. We need to immediately start with what we can do now. To spread the use of electrified vehicles as quickly as possible and with as many vehicles as possible, we need to be very attentive to the specific needs of our customers, taking into account local electrification progress and the diverse ways that cars are used. Accordingly, alongside the enhancement of our BEV lineup, we will continue to enhance the attractiveness and competitiveness of all powertrains, including HEVs and PHEVs.

In developed countries, as we move forward with the preparation of next-generation BEVs, we will greatly expand our product lineup, focusing primarily on models in the bZ series with further refined performance. In the U.S., we will start the local production of three-seat-row SUVs in 2026. These SUVs will be equipped with batteries made in North Carolina, where we are bolstering production capacity. In China, we debuted the bZ3C and the bZ3X, new BEV models locally developed and fit to the local needs at the Beijing International Automotive Exhibition in April 2024, and launched the bZ3X in China in March 2025. We plan to continue to increase the number of models in subsequent years. In Asia and other emerging markets, we will diligently work

to meet rising demand for BEVs. Specifically, we have commenced local production of BEV pickup trucks launched in 2023, and plan to introduce smaller BEV models in the future. In developed countries, the switch to BEVs is expected to advance as markets mature. Meanwhile, in emerging countries, markets are anticipated to expand due to new automobile launches as well as increases in the number of existing models on the market.

With a full lineup of profitable HEVs and PHEVs and a growing selection of diverse BEV options, Toyota will steadily meet wide-ranging global demand and pursue further growth.

In addressing the growth in emerging markets, increasingly more profitable HEVs will be positioned as a source of income for us. With a value chain supporting the sale of approximately 10 million units per year, we will also work to capture a wide range of business opportunities. In addition, we will make the most of cost reductions achieved by leveraging the strengths of TPS and the benefits of kaizen (continuous improvement). We thereby expect to be able to generate greater future investment capacity for the expansion of BEVs and the mobility domain, and we will seek to build a strong business foundation whereby carbon neutrality and growth can both be achieved.

With technological innovations in electrification, intelligence and diversification progressing, we will ambitiously work toward contributing to local communities and the greater good through industry from a broader perspective. For example, in the United States, the automotive industry is facing major challenges, with people moving away from the manufacturing sector and structural costs increasing. By combining worksite-honed craftsman skills with intelligence to propose new manufacturing and “automation” processes, we believe we can give back to the United States by keeping manufacturing in the country while helping solve the ’labor shortage problem. In Thailand, we started collaboration ventures with the Charoen Pokphand Group and the Siam Cement Group. Such collaboration is the start of the implementation of electrification and connected technologies to link vehicles, people, commodities, and information and to utilize mobility as if it were part of social infrastructure. Through these initiatives, we will take on the challenge of solving such local problems as heavy traffic congestion, air pollution, and frequent road accidents.

Let’s Change the Future of Cars!

We encapsulated our ideas regarding automobile manufacturing, a core activity for our transformation into a mobility company, in our shared motto “Let’s change the future of cars!” We want to ensure that automobiles continue to serve as a form of mobility that benefits society and brings smiles to people around the world well into the future. To that end, we will work to minimize the detrimental effects that cars have on society—including traffic accidents, pollution, and congestion—while maximizing the emotional value of cars—including convenience, comfort, and the enjoyment of driving—and boosting their positive impact.

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. We will live up to our convictions and challenge ourselves to change the future of cars.

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 President Koji Sato to employees,

*	Toyota Industries Corporation, Toyota Motor Corporation, Toyota Auto Body Co., Ltd., Toyota Motor East Japan, Inc., Hino Motors, Ltd., Daihatsu Motor Co., Ltd.

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In particular, we strengthened coordination with Daihatsu, Hino, and Toyota Industries, which are working to prevent the recurrence of certification issues. We have continued to engage in frequent discussions with members of top management from Daihatsu. and Toyota Industries regarding the difficulties and management issues that each of us faces, including progress on recurrence prevention measures and better business coordination. Regarding Hino, we are supporting preparations for its business integration announced on June 10 with MFTBC, in collaboration with Daimler Truck Holding AG. We will continue to deepen coordination of these companies among both the members of top management as well as operational staff prioritizing recurrence prevention.

In terms of our structures, we have been working to improve the effectiveness of the Board of Directors and steering our initiatives in the right direction by incorporating the knowledge of outside directors. The “Governance Risk Compliance Meeting” established in June 2024 addresses important management issues at hand, including the certification issues and business continuity plan to prepare for major disasters. In addition, the “Sustainability Meeting” evaluates the five key themes of sustainability management, including our “Factories for the Future” project and the participation and advancement of diverse human resources.

In terms of our systems, to strengthen internal controls, we have conducted internal audits of 17 key subsidiaries of the Toyota Group from multiple perspectives, devoting over twice as much time than the conventional process. We also conduct internal control training for officers of subsidiaries and provide these officers with information on case studies at other companies as part of our practical and concrete training programs. Our commitment to accepting responsibility for the certification issues has been reflected in the evaluations of the Chairman, Vice Chairman, and President, and their compensation has been reduced.

For more information, see “Item 6 Directors, Senior Management and Employees — Item 6.B Compensation.”

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 2023, Toyota launched the all-new Crown. While inheriting the Crown’s DNA of innovation and limit-pushing, it has been renewed as a flagship for a new era with four variations to meet the diverse values and lifestyles of customers. In addition to the “Crossover type,” a new style that combines a sedan and an SUV, the “Sport” offers a sporty driving experience with an enticing atmosphere and an easy-to-drive package. The “Sedan” is a new formal design that meets the needs of chauffeurs, whereas the “Estate” is a functional SUV with a mature atmosphere and ample driving space. The new series will be rolled out in about 40 countries and regions. Launched in 1997 as the world’s first mass-produced hybrid car, the Prius has driven uptake of HEVs as a new-generation eco-car with outstanding fuel efficiency; under the “Hybrid Reborn” concept, the Prius was renewed as an exhilarating package that adds a design inspiring love at first sight and captivating driving performance to its core strength as an environmentally friendly car. For sportscars, the development of the GR Corolla, including a hydrogen engine-equipped GR Corolla designed to participate in the Super Taikyu endurance race series, has carried forth the torch of making ever-better motorsports-bred cars. In addition, the Lexus brand announced its first globally-available pure BEV model, the all-new RZ. The new RZ marks Lexus’ transition into a BEV-centered brand, and embodies the unique Lexus vehicle design and driving experience brought on by advanced electrification technology.

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 PHEVs 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 a representative chauffeur-driven vehicle of Japan. It is a next-generation chauffeur-driven vehicle that inherits Japanese aesthetics, quietness and 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.

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,
	2023					2024					2025
	Units		%			Units		%			Units		%
Japan		2,069		23.5	%		1,993		21.1	%		1,991		21.3	%
North America		2,407		27.3			2,816		29.8			2,703		28.9
Europe		1,030		11.7			1,192		12.6			1,172		12.5
Asia		1,751		19.8			1,804		19.1			1,838		19.6
Other*		1,565		17.7			1,638		17.4			1,659		17.7

Total		8,822		100.0	%		9,443		100.0	%		9,362		100.0	%

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

The following table sets forth Toyota’s vehicle unit sales and market share in Japan, North America, Europe and Asia on a retail basis for the periods shown. Each market’s total sales and Toyota’s sales represent new vehicle registrations in the relevant year (except for the Asia market where vehicle registration does not necessarily apply). All information on Japan excludes mini-vehicles. The sales information contained below excludes unit sales by Daihatsu and Hino, each a consolidated subsidiary of Toyota. Vehicle unit sales in 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,
	2023			2024			2025
Japan:
Total market sales (excluding mini-vehicles)		2,696			2,906			2,951
Toyota sales (retail basis, excluding mini-vehicles)		1,377			1,506			1,487
Toyota market share		51.1	%		51.8	%		50.4	%

	Thousands of Units
	Year Ended December 31,
	2023			2024			2025
North America:
Total market sales		15,380			17,306			17,827
Toyota sales (retail basis)		2,308			2,475			2,572
Toyota market share		15.0	%		14.3	%		14.4	%
Europe:
Total market sales		14,847			17,439			17,807
Toyota sales (retail basis)		1,081			1,174			1,217
Toyota market share		7.3	%		6.7	%		6.8	%
Asia (excluding China):
Total market sales		10,796			11,024			10,928
Toyota sales (retail basis)		1,382			1,407			1,434
Toyota market share		12.8	%		12.8	%		13.1	%

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, FCEVs, 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 51.1% in fiscal 2023, 51.8% in fiscal 2024 and 50.4% in fiscal 2025.

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).

Toyota’s North American production capacities include the production of vehicle models such as the RAV4, Camry, Tacoma and Highlander through 13 manufacturing entities.

In November 2021, Toyota created Toyota Battery Manufacturing, North Carolina (“TBMNC”) as the first plant to produce automotive batteries for Toyota in North America. TBMNC started operations in February 2025. It will have 14 production lines, four which support battery production for HEVs and ten which support battery production for BEVs and PHEVs.

In June 2023, Toyota decided to assemble an all-new, three-row battery electric SUV at Toyota Motor Manufacturing Kentucky, Inc. (“TMMK”) starting in 2026. The BEV will be powered by batteries from TBMNC. Further, in October 2023, Toyota decided to additionally invest in TBMNC and announced its plan to further strengthen production capability of BEV batteries and production of PHEV batteries. Toyota plans to sequentially add eight new battery production lines, with the aim of creating a total of ten BEV/PHEV battery lines, enabling the production of a total of more than 30GWh annually.

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 to meet domestic demand but also to 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, Levin, Highlander and bZ4X.

Total vehicle unit sales in the Chinese market reached 26.28 million vehicles in 2024, representing 101.1% of that of 2023, and 25.99 million vehicles in 2023, representing 105.6% of that of 2022. In this market, Toyota’s new vehicle sales were 1.77 million vehicles in 2024, accounting for 93.1% of that of 2023, and 1.90 million vehicles in 2023, accounting for 98.3% of that of 2022. In the domestically produced passenger vehicle market in mainland China (23.30 million vehicles), Toyota had a 7.5% 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, 2025, 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 — 4D. 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.

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,
	2023		2024		2025
Japan		3,789		4,042		4,000
North America		1,768		1,976		1,958
Europe		771		846		811
Asia.		1,859		1,876		1,790
Other*		507		523		491

Total		8,694		9,263		9,049

*	“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 — 4B. 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, 2025, this network consisted of 231 dealers employing approximately 100 thousand personnel and operating approximately 4.3 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 190 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, 2025.


	Dealers
Channel	Toyota Owned	Independent	Outlets
Toyota brand	1 company	230 companies	4,285 outlets
Lexus brand	23 outlets	167 outlets	190 outlets

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, 2025 by country and region:


Country/Region	Number of Countries		Number of Distributors
North America		3		5
Europe		53		29
China		1		4
Asia (excluding China)		19		13
Oceania		17		15
Middle East		16		14
Africa		56		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

On December 14, 2021, Toyota held a briefing on its BEV strategy where it announced that it would be boosting its annual BEV sales baseline in 2030 from 2 million to 3.5 million units.

In August 2022, Toyota announced that it will invest up to 730 billion yen in Japan and the United States toward supplying automotive batteries for BEVs, aiming to begin battery production between 2024 and 2026. Through this investment, we aim to boost production capacity by up to 40 GWh. In May 2023, Toyota also announced its plan to further invest $2.1 billion in its battery manufacturing plant in the United States for new infrastructure to support future expansion. Toyota will continue working to build a supply system that can steadily meet the growing demand for BEVs around the world.

At the New Management Policy & Direction Announcement held on April 7, 2023, Toyota announced that it will expand its current BEV lineup, aim to introduce ten new BEV models by 2026, and set a pace for annual sales of 1.5 million Toyota and Lexus brand BEV units by 2026. In addition, Toyota has plans to release next- generation BEVs in 2026 that will double the driving range compared to that of the current bZ4X by using batteries with greater efficiency.

Plans for the release of BEVs in each region are as follows.



Developed countries		In parallel with the preparation of a next-generation BEVs scheduled for launch in 2026, with a focus on the bZ series and with further refined performance, Toyota plans to greatly expand its product lineup.

The United States		In 2026, Toyota plans to start the local production of a 3-row SUV equipped with batteries to be produced in North Carolina.

China		In addition to the bZ4X and bZ3, Toyota debuted new BEV models, the bZ3C and the bZ3X, locally developed and fit to local needs, were launched in December 2024 and March 2025 respectively, and Toyota plans to continue increase the number of models in the following years.

Asia and other emerging markets (Global South)		In order to respond to the growing demand for BEVs, Toyota started local production of BEV pickup trucks by the end of 2023 and plans to also launch a small BEV model.

In May 2023, we launched the BEV Factory, a business unit dedicated to BEVs. The BEV Factory was reorganized in April 2025 and continues its role as the “BR BEV” under the direct control of the entire company. What we hope to achieve with BEV Factory is to change the future with BEVs through transformation on multiple axes: cars, manufacturing and the way we work.

On the car axis, through technologies such as the integration of next-generation batteries and sonic technology, we aim to achieve a vehicle cruising range of 1,000 km. To bring more stylish design, we will use AI to increase aerodynamic performance, while our designers will focus on expressing natural sensibility. We believe Arene and full over-the-air updates will vastly expand the possibilities for enjoying cars. Like our manual transmission EVs, we plan to deliver exciting surprises and fun to our customers with technologies achievable only by a carmaker.

On the manufacturing axis, the car body will be constructed from three main components in a new modular structure. Adopting giga casting will allow significant component integration, which contributes to the reduction of vehicle development costs and factory investment. In addition, with our self-propelling production technology, we aim to reduce our manufacturing procedures and plant investment by half.

We plan to roll out next-generation BEVs globally and as a full lineup to be launched in 2026. We expect that our next-generation BEVs will adopt our new batteries, through which we are determined to become a world leader in battery EV energy consumption. With the resources we earn, we will improve our product appeal to exceed customer expectations and secure earnings.

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 in 2026, it is also evolving batteries with new technologies to meet customer expectations.

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.

The performance version next-generation battery is being developed with Prime Planet Energy & Solutions Corporation, while the popularization and high-performance versions of the next-generation battery, high-performance versions of the bipolar lithium-ion battery, and all-solid-state battery for BEVs are being developed with Toyota Industries, combining the knowledge of the Toyota Group.

In May 2023, Toyota announced that it intends to invest roughly 5 trillion yen investment in BEV production, additional battery plants, and research and development expenses through 2030.

Liquid Lithium-ion Battery Development

1. Next-generation Batteries: Performance Version

We aim for the next-generation BEVs to be introduced in 2026 to 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 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 current 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 in 2026–2027. We are aiming for a 20% increase in cruising range* and 40% reduction in cost compared with the current 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 26 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.)

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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 solid-state battery that inhibit the 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.

Hydrogen Business

The hydrogen markets in Europe, China, and North America are expected to be among the largest in the near future, and the fuel cell market is also expected to expand rapidly toward that point. We are promoting external sales of fuel cells using the Mirai’s hydrogen units and have received offers from third parties to purchase 100,000 units of fuel cells annually by 2030. Most of them are for commercial vehicles.

To respond to the rapid changes in the market, 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 promotes business on three 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. The second is strengthening alliances with leading partners. In September 2024, Toyota announced the strengthening of its collaboration with the BMW Group in the hydrogen sector, and are working together on the development of fuel cells systems and the improvement of infrastructure. Toyota has already built relationships with OEMs that, when combined, hold a significantly large market share in according to our estimate, and by consolidating sufficient quantities through these alliances, we are working to deliver affordable fuel cells to our customers. The third is competitiveness and technology. We are working on “innovative evolution of competitive next-generation fuel cell technologies,” such as next-generation cell technologies and fuel cell systems.

We will work toward full-scale commercialization as we move forward with these initiatives. We expect that our next-generation system will achieve significant FCEV production cost reduction through technological progress, volume efficiency, and localization. Furthermore, in collaboration with partners, if we are able to significantly increase the volume of purchase offers for units, we believe we will be able to reduce our costs further and generate solid profit while meeting the expectations of governments and our many customers. We will work together in development, production, and sales to achieve this goal.

In addition, the price of hydrogen is still very high. In order to promote the widespread use of hydrogen, Toyota will continue to work with its partners to contribute to the production, transportation, and usage of hydrogen. The relationships we have built with strong partners will be used as opportunities to accelerate our efforts to commercialize hydrogen by establishing customer-oriented bases in major markets and by offering affordable products in sufficient quantities.

Hydrogen is an important fuel in Toyota’s CO₂ emission reduction efforts aimed at achieving carbon neutrality. We are promoting its utilization to contribute to the creation of a hydrogen-powered society. Our efforts to this end include the development and demonstration of FCEVs, such as passenger cars and commercial trucks and buses, fuel cell stationary generators, and hydrogen engine vehicles with internal combustion engines. Through such initiatives, we are working with various industry partners in the areas of producing, transporting, and using hydrogen.

Fuel cell systems comprise stacks of circuits embedded in thin sheets, called the “cells,” that generate electricity through chemical reactions between oxygen and hydrogen. Toyota is developing innovative next- generation fuel cells that is expected to deliver industry-leading performance for commercial use (long life, low cost, and low fuel consumption).

These next-generation cells, which we aim to commercialize in 2026, are expected to improve generating capacity by 30% compared with current fuel cells. On the durability front, FCEVs could stay on the road

2.5 times as long as standard diesel machines before requiring maintenance, making them virtually maintenance-free over the life of a vehicle. Compared with current cells, Toyota’s next-generation systems will also halve the cost of fabricating a stack and increase cruising range by 20%. This improvement will make it possible to drive from Tokyo to Osaka without refueling.

These next-generation cells reflect the expertise that Toyota has built up over 30 years: real-time measurement and analysis of the processes occurring within cells, simulations for nanoscale mapping of chemical reactions, and precision coating of the catalysts that drive these reactions. Toyota’s advanced technical capabilities help inhibit deterioration caused by corrosion and other factors, lowering the cost of materials needed for manufacturing.

To accelerate the expansion of hydrogen demand, we are taking on the standardization of tanks for large commercial vehicles, which are expected to consume hydrogen on a large scale. We aim to reduce manufacturing costs by 25% by unifying the tank standards of European, U.S., and Japanese companies in order to realize economies of scale. We are also developing liquid hydrogen tanks for large commercial vehicles.

By applying the fuel cell stack and cell technologies developed for the Mirai, we have developed a new electrolyzer that produces hydrogen by electrolyzing water. Trials of this electrolyzer began in March 2023 at the DENSO Fukushima plant. Furthermore, we have started an initiative to produce hydrogen from biogas derived from local chicken manure and food waste in Thailand in collaboration with Mitsubishi Kakoki Kaisha, Ltd. and Toyota Tsusho Corporation.

Development of Hydrogen Engines

In 2024, Toyota’s efforts to race a Corolla equipped with one of its hydrogen engines currently in development entered their fourth 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 CO₂ 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 late 2020, after taking a test drive in a hydrogen engine prototype car, master driver Morizo (Chairman Akio Toyoda) decided on the spot to enter a hydrogen engine car in Super Taikyu Series races. The development of race vehicles is dramatically faster and more agile than that of mass-production vehicles. We decided that racing would provide the ideal environment for honing our hydrogen engines being developed with the goal of achieving carbon neutrality.

In 2021 and 2022, Toyota raced a Corolla with a hydrogen engine that ran on gaseous hydrogen fuel. Building on these achievements, in the 2023 season, we have launched a world-first initiative to expand the options for producing, transporting and using hydrogen by employing liquid hydrogen fuel.

Switching to liquid hydrogen fuel increases the fuel’s volumetric energy density, approximately doubling the vehicle’s cruising range, which had been an issue with gaseous fuel. In addition, liquid hydrogen stations take up only a quarter of the space required to install a gaseous hydrogen station, enabling refueling in the pit itself.

The liquid hydrogen-powered Corolla was scheduled to compete for the first time at the Round Suzuka Super Taikyu 5 Hours Race in March 2023. However, during a private test run shortly before the race, a vehicle fire occurred due to a hydrogen leak from a gaseous hydrogen pipe in the engine compartment. The vehicle could not be repaired in time, and Toyota was forced to drop out of the race.

Over the following two months, aiming to race in the Fuji 24 Hours Race, the design of the hydrogen piping that caused the vehicle fire was changed, with safety as the highest priority. As a result, a hydrogen engine-

equipped Corolla completed the Fuji 24 Hours Race in May 2023. This achievement was made possible by agile development and improvement efforts advanced through motorsports with the support of our many partners.

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 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 the modification of many parts. 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 45 companies by the end of the 2023 season.

Furthermore, the Corolla with the liquid hydrogen engine took part in Round 4: the Super Taikyu Race in Autopolis in July as well as Round 7: the S-Tai Final Fuji 4 Hours Race with Fuji Niq Festival in November. The maximum number of laps (cruising range) that may be driven with a single hydrogen supply rose from 16 to 20 in the six months between the May 24-hour race at Fuji and the November final race at the same venue. Additionally, the vehicle weight was lowered by 90 kilograms. The mobile hydrogen station’s joints, which previously caused strain on operators while refueling, have become lighter, and the time needed to refuel has been cut down from one minute and forty seconds to about one minute. In these ways, both the vehicle and hydrogen station evolved significantly.

Toyota will continue to expand the possibilities of hydrogen engines. Aiming to create a carbon neutral world, we will continue to evolve alongside our partners in line with the principle of “ever-better car making from a starting point in motorsports” and our multi-pathway approach.

Toyota’s work on hydrogen engines is closely related to its work on conventional gasoline engines’ combustion technologies. Gasoline engines have up until now used rapid combustion to boost thermal efficiency and adjusted the fuel-to-air ratio based on the situation to minimize harmful compounds. Since hydrogen burns even more quickly than gasoline, ever-more-accurate combustion control and sophisticated analysis and simulation technologies are needed, which should result in even lower CO₂ and gasoline engine emissions.

Toyota plans to leverage the significantly shorter development timeframe in motorsports as opposed to mass production vehicles. We believe that this will enable Toyota to achieve carbon neutrality while utilizing internal combustion engines.

Software and Connected Initiatives

Toyota is committed to providing new value based on software for the realization of a mobility society. By seamlessly connect daily lives and cars as well as proposing and delivering experiences and services that are one step ahead of their expectations, we will alter lifestyles, transform mobility into excitement, and enrich our customers’ lives. Connecting people and cars, and social systems and cars, will create an ecosystem that becomes part of the social system, leading to the realization of well-being.

Arene is a software platform that accelerates such intelligence, providing applications that bring a comfortable riding experience through advanced safety technologies and infotainment in the in-car experience. This will be updated to reflect the changing times. Regarding the out-car experience, we will increase the value we offer via cross-industry collaboration with partners in housing, energy, logistics and other sectors serving as essential components of social systems.

One of Toyota’s competitive advantages lies in its extensive global dealer network. By interacting directly with customers, we are able to gain a realistic understanding of the information and needs that are critical for a vehicle to add value. By combining that information and those needs with vehicle data, we create value the likes of which only Toyota can provide.

Efforts in Realizing a Safe Mobility Society

The development of safe vehicles is of undeniable importance for Toyota to achieve its ultimate goal of eliminating traffic accident casualties. At the same time, however, it is crucial to educate drivers, pedestrians, and individuals and to install traffic safety infrastructure, including traffic signals and roads. To achieve a safe mobility society, Toyota believes 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.

The Toyota Safety Sense system packages multiple preventative safety functions that help reduce serious traffic accidents with the potential to cause death or injury. These functions include Pre-Collision Safety, which assists in avoiding and mitigating damage from collisions with cars in front of a vehicle or with pedestrians; Lane Departure Alert, which helps prevent accidents caused by a vehicle leaving its current lane; and Automatic High Beam, which helps ensure optimal forward visibility during nighttime driving. Since its market launch in 2015, Toyota Safety Sense has been installed in more than 53 million vehicles globally (as of March 2025). 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.

Collision safety measures combine vehicle bodies that absorb the energy of collisions with devices that provide support to protect drivers, passengers, and pedestrians and thereby minimize collision damage. In the pursuit of world-leading safety, Toyota has formulated a target related to collision safety performance called “the Global Outstanding Assessment (“GOA”)” and developed a collision safety body structure and passenger protection devices in 1995. Since then, Toyota has continued to evolve GOA, striving to improve the real-world safety performance of its vehicles in a wide variety of accidents.

To analyze vehicle-related injuries, Toyota collaborated with Toyota Central R&D Labs., Inc., to develop the Total Human Model for Safety (“THUMS”), a virtual human body model. THUMS is being used in the research and development of a variety of safety technologies, including seat belts, airbags, and other safety devices, as well as vehicle structures that mitigate injuries in accidents involving pedestrians. Toyota made the THUMS software available on its website free of charge in January 2021, and is currently exploring future applications for this software in automotive assessments, an area where virtual evaluations are gaining momentum.

Emergency response time is of the essence when it comes to responding to an accident or medical emergency. In the event of an accident or medical emergency, Toyota’s HELPNET^® emergency reporting system service contacts a dedicated operator who then contacts police or fire services to ensure the rapid dispatch of emergency vehicles. Moreover, HELPNET^® automatically contacts an operator when the airbags deploy and supports D-Call Net^®, a service that makes quick deployment decisions for air ambulances.

Toyota has been engaged in the research and development of automated driving technologies since the 1990s. The Mobility Teammate Concept is an automated driving concept unique to Toyota that is designed to enhance communication between drivers and their cars, enabling them to assist one another in coordinated driving as companions. Rather than cars taking over driving from people and replacing them, drivers and cars act as partners to protect one another so that drivers can enjoy the experience of driving while deferring to automated driving at times, achieving truly safe, secure, and unrestricted mobility.

The Lexus LS and Mirai models launched in April 2021 are equipped with “Toyota/Lexus Teammate” state-of-the-art driving assist technology, with some grades including Advanced Drive, a system that assists driving on motor-vehicle-only roadways. The Advanced Drive on-board system will accurately recognize the vehicle’s surroundings, make decisions, and assist driving under the driver’s supervision according to actual traffic conditions. This system can keep the vehicle in its lane, maintain the appropriate distance from other vehicles, navigate a lane split, change lanes, and overtake other vehicles until leaving the motor-vehicle-only roadway for the driver’s destination. The system contributes to high levels of safety and peace of mind, reducing driver fatigue and providing a pleasant journey to the driver’s destination.

Deep learning and other AI technologies support driving by predicting and responding to a wide variety of situations that could occur when driving. In addition, Advanced Drive uses software updates, allowing cars to stay up to date with the latest software via either a wireless or wired connection.

Cars have many uses, and driver needs continue to diversify. Accordingly, Toyota is advancing research and development of automated driving technologies not only for personally owned vehicles (POVs) but also in the field of mobility as a service (MaaS) for people and goods. Toyota was one of the first companies to launch advanced automated driving technology for vehicles sold to corporate customers. Data gathered from these vehicles is being collected, analyzed, and fed back into development to further evolve automated driving technologies.

Toyota conducts traffic safety awareness-raising initiatives targeting drivers and pedestrians to help prevent traffic accidents. One such initiative for drivers is the Toyota Driver Communication safe driving technique seminar held periodically at Toyota Safety Education Center Mobilitas, which is located on the grounds of Fuji Speedway. For pedestrians, in cooperation with Toyota dealers across Japan, Toyota has been donating traffic safety teaching materials to kindergartens and nursery schools nationwide since 1969.

Commercial Sector Initiatives

In April 2021, Isuzu Motors Limited (“Isuzu”), Hino, and Toyota established Commercial Japan Partnership Technologies (CJPT), a new company, with the aim to accelerate the implementation and spread of CASE in society to help address various difficulties facing the transportation industry as well as help achieve a carbon- neutral society. Suzuki Motor Corporation (“Suzuki”) and Daihatsu joined the partnership in July 2021 (In October 2023, CJPT reinstated Hino as a partner.).

Distribution by truck accounts for the majority of overland logistics in Japan, and the transportation sector (including buses and taxis) involves a number of people. Commercial vehicles account for a significant proportion of the total distance traveled by automobiles and about half of all CO₂ emissions from automobiles in Japan. Furthermore, numerous logistics companies operating in Japan currently face numerous management issues, such as high-frequency distribution, harsh work environments, labor shortages, and rising operating costs. The power of CASE, centered on connected technologies and services, is a promising approach to affecting improvements that will help resolve these issues. Given the increasingly pressing circumstances surrounding carbon neutrality, CJPT seeks a wide range of like-minded partners, aiming to apply their diverse strengths for the sake of those supporting transportation and for society.

Our efforts to achieve carbon neutrality center on two pillars: electrification and enhanced logistics efficiency. In the area of electrification, we will ambitiously work with more partners to find solutions to a variety of problems while giving customers more electrified vehicle options in accordance with their specific needs. We also intend to make significant contributions toward enhancing logistics efficiency. We plan to take the ideas underpinning the TPS to streamline onsite work while using connected technologies to facilitate real-time processing of various logistics and traffic flow data, which can be used to optimize operations. These are carbon–neutrality-focused initiatives that can be enacted immediately and which we believe will serve to lower running costs for logistics while simultaneously reducing CO₂ emissions.

We are working with shippers and logistics companies in Fukushima Prefecture and Tokyo on the largescale social implementation of electric vehicles. A total of 580 vehicles will be used, including heavy and light-duty fuel cell electric trucks, and light-duty BEV trucks and mini-commercial vans, to comprehensively cover transportation from trunk lines to the last mile. As of the end of October 2024, 220 electrified vehicles have hit the roads. In addition to promoting implementation in cities with populations of around 300,000, which are common in Japan, we will work to develop standards for these vehicles and develop an energy management system that is integrated with operation management to lessen the social burden associated with the introduction and use of electric vehicles and address transportation-related issues. Furthermore, in a public-private initiative aimed at carbon neutrality, we have begun sharing data with national bodies promoting digital transformation for commercial vehicles. This includes data about electrified vehicles on the road, such as that on driving, batteries, charging, and refueling with hydrogen.

The city of Fukuoka, Fukuoka Prefecture, has begun implementing FCEVs as garbage compactor trucks, ambulances, food delivery trucks, BRT buses, and other vehicles that support daily living, utilizing hydrogen stations operated by the city and other entities. Tokyo has launched a staged support project for introducing these vehicles that aims to put fuel cell garbage compactor trucks into action and is working with local governments to bring hydrogen-powered vehicles into key areas of the Tokyo metropolitan area to encourage familiarity among residents and facilitate widespread use across multiple municipalities.

The Japanese government has set targets for 2030 regarding the use of commercial electrified vehicles. For small light-duty trucks under eight tons, the target is a 20%–30% electrification rate, and for heavy-duty trucks of eight tons or more, the target is 5000 vehicles. In addition, the target for hydrogen consumption for FCEVs is 80,000 tons. Japan’s Ministry of Economy, Trade and Industry’s (“METI”) “Basic Hydrogen Strategy,” revised in 2023, and the interim report of the METI-held Mobility Hydrogen Public-Private Conference include provisions for looking into focused support for commercial FCEVs, which are expected to elicit greater demand in Japan for hydrogen in the future, as well as for selecting areas to concentrate the introduction of FCEVs in an effort to create demand clusters and ensure viability. From this government policy, both the public sector and the private sector in Japan will work together to promote the popularization of commercial electric vehicles.

In April 2021, CJPT begun collaboration with AEON GLOBAL SCM Co., Ltd. to improve logistics at the Minami-Osaka distribution center for AEON GLOBAL SCM Co., Ltd. AEON GLOBAL SCM Co., Ltd. has combined its retail logistics know-how with the TPS philosophy to better visualize and streamline the flow of goods, resulting in increased loading efficiency thanks to improved operations at the distribution center, as well as optimized delivery using real-time data. These improvements have manifested as a 10% increase in efficiency of total truck travel distances and a 10% drop in CO₂ emissions for AEON GLOBAL SCM Co., Ltd. as a result of their collaboration with CJPT. From September 2022, the scope of these activities was extended to wholesalers and suppliers, and through cross-industry efforts, we have helped streamline transportation and delivery from upstream to downstream.

Starting in July 2024, we will consolidate these optimized operations at its new logistics center, AEON Fukuoka XD, to maximize the benefits of this heightened logistics efficiency. We will also promote the electrification of vehicles, with the goal of significiantly reducing CO₂ emissions by 2030. Our overall goal in these endeavors is to create a model that will both resolve logistics-related issues while moving toward carbon neutrality and expanding the model nationwide.

CJPT’s domestic initiatives have expanded their reach into Thailand, and it has signed a memorandum of understanding with Charoen Pokphand Group (“CP”) and Siam Cement Group (“SCG”) in October 2023 for collaboration in three areas: data solutions, mobility solutions, and energy solutions, aiming toward happiness for all in the country. With the various companies involved in this project working together across industries, CJPT-Asia was established in Thailand to better promote activities. In terms of data solutions, CJPT-Asia analyzed on–site issues at CP and SCG logistics warehouses and took steps to improve efficiency, utilizing real-time data for parcels and other items to improve the efficiency of deliveries. We have since confirmed that on–site improvements made at SCG’s distribution centers have improved container loading rates, while driving distances

for CP Group’s online deliveries have been reduced and transportation routes have been optimized. As for mobility solutions, CJPT-Asia has introduced light and heavy fuel cell trucks, the Hilux Revo e, the JPN Taxi LPG-HEV, and commercial vans. We are currently conducting demonstration testing using carbon–neutrality-oriented vehicles suited to Thailand’s economic environment, energy situation, and usage patterns, which differ from those of Japan. For energy solutions, CP is investigating the possibility of utilizing energy sources well-suited to Thailand’s environment, such as biogas derived from manure collected from CP’s largescale poultry farms to produce hydrogen in a hydrogen production facility, which can be used by the fuel cell trucks introduced in the aforementioned mobility solutions demonstration testing.

Going forward, Toyota will use this project to deepen collaborative ties with other partners and make broad contributions both in Japan and throughout Asia, helping fulfill the automotive industry’s mission of improving people’s lives and leaving a better Earth for the next generation.

Woven City

Toyota Woven City, a Test Course for Mobility: Producing Well-being for All

Toyota aspires to transform into a mobility company. On our road toward accomplishing this goal, Toyota Woven City will function as a venue for creating new value. Toyota and its group company Woven by Toyota Inc. are advancing the Woven City project. Construction of the buildings for Phase 1 of this mobility test course project were completed in October 2024, and actual demonstration tests using the facility are scheduled to begin in fall 2025 or thereafter. 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 mechanisms and services to help shape a better future and enhance well-being for all.

Start Testing from Mobility of People, Goods, Information, and Energy

In its quest to become a mobility company, Toyota captures mobility in a broad definition that goes beyond simply movement in physical spaces. The word “move,” from which “mobility” is derived, can refer to movement from point A to point B as well as to the feeling of being emotionally moved. Accordingly, Toyota views “mobility” as referring to things that can move people both physically and emotionally. Thus at Woven City we will start testing the mobility of people, goods, information, and energy.

“For others” and for a better future, they are what Woven City is founded on.

Not for short-term gains, it is a long-term investment in, and a commitment to, a brighter tomorrow. Why does Toyota carry out to such a degree? That is because we believe we have a responsibility as a corporate citizen living on this planet, to invest in the collective future, to share the insight and technologies amassed by Toyota over the years, and to help create ideas that benefit people and the world. To fulfill the responsibility, Woven City is where we develop products and services for enhancing future wellbeing for all.

“Come and join”, Team of Like-Minded Inventors and Weavers

Woven City is a test course for mobility in the shape of a city, based on the concepts of A Living Laboratory^™, Human-Centered, and Ever Evolving City^™. The people involved in the Woven City project are referred to as “Inventors” and “Weavers.” The Inventors are Toyota Group companies as well as to the like-minded outside companies, research institutions, start-ups, and other organizations who have joined this quest for expanding mobility. The following five companies have already raised their hands to accompany us on this journey, and they plan to use the mechanism of Woven City to conduct tests that capitalize on their respective strengths.

LOGO


Company	Business Description	Theme of Co-Creation in Woven City
Daikin Industries, Ltd.	Manufacturing, sales and after-sales services of air conditioning products, fluorochemical products, etc.	Testing “pollen-free spaces” and “personalized functional environments”
DyDo DRINCO, INC.	Manufacturing and sales of soft drinks and other beverages, etc.	Creating new value through innovative vending machine concepts
NISSIN FOOD PRODUCTS CO., LTD.	Manufacturing and sales of instant noodles and related products, etc.	Creating and evaluating food environments to inspire new ‘food cultures’
UCC Japan Co., Ltd.	Regional headquarters of Japanese operating companies engaged in coffee manufacturing and sales	Exploring the potential value of coffee through futuristic cafe experiences
Zoshinkai Holdings Inc.	Comprehensive education services offering correspondence education and classroom programs	Leveraging data to realize innovative educational methods and new learning environments

*	As of January 7, 2025

Toyota plans to launch an accelerator program in summer 2025 to invite start-ups and entrepreneurs to utilize Woven City. Toyota and Woven by Toyota will also take advantage of Woven City to conduct tests as Inventors. We expect to test our e-Palette as an autonomous driving service platform and smart logistics for an automation concept for logistics. The products and services developed by Inventors and exhibited at Woven City will be tested by Weavers, or 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.

At the time of the official launch (start of testing) of Woven City, scheduled for fall 2025 or thereafter, approximately 100 residents—primarily Toyota and Woven by Toyota staff and their families—are expected to reside in Woven City as Weavers. The community will then gradually expand to include external Inventors and their families. The Phase 1 area is projected to accommodate around 360 residents, with the total population of Woven City expected to reach approximately 2,000 by 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 the fiscal 2026 and beyond. Both Inventors and Weavers are united by their commitment to Toyota’s goal of working “for others”. Guided by this shared commitment, the like-minded individuals and we gathering at Woven City will band together to pursue the goal of producing happiness for all through the expansion of mobility.

Testing Using Toyota Assets and Feedback from a Physical Environment

Woven City provides a mechanism that acts as the foundation for demonstration testing. Inventors are able to accelerate their testing and development activities by receiving data and feedback from the Weavers in Woven City and by using the assets. These assets include the hardware mass production expertise of Toyota as well as the software technologies of Woven by Toyota. Such assets can be utilized to support Inventors in developing new products, services, software, and applications. Moreover, data and feedback gained from physical environments can be incorporated into the testing and development of hardware and software. The development and testing possibilities granted by Toyota’s assets and physical environment data and feedback are key characteristics of the mechanism of Woven City. Another characteristic of the mechanism is how they provide a physical environment modeled after a city. This characteristic makes it possible to recreate simulations conducted in digital environments using digital twin technologies in a physical environment to gain additional feedback. The incorporation of this feedback into digital simulations enhances the accuracy of said simulations. This cycle of digital and physical verification can be advanced rapidly to accelerate testing and development activities. Moreover, our digital twin technologies are not only applicable to Woven City; they can also be used in relation to other areas like factories as well as logistics, automated driving, traffic safety, and various other areas.

Toyota shares these assets with Inventors. Woven City is designed for collaboration. By combining the strengths of Toyota with those of other industries and specialized areas, we aim to create unprecedented new value, products, and services. As Woven City is an Ever Evolving City^™, we will be making kaizen, or continuous improvement, which will never end. Pedestrian-only roads, mixed pedestrian and personal mobility roads, and autonomous mobility-only roads are the three types of threads that weave the fabric that is Woven City to allow for tests that comprehensively evaluate factors pertaining to 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.

In general, it is said that only around 5% of a car’s time in existence is spent being driven. How the remaining roughly 95% is spent is something that we will investigate by incorporating real feedback at Woven City, a physical environment that is home to people, mobility, and infrastructure.

Quest to Become a Mobility Company that Move People’s Hearts

Woven City will see its official launch in fall 2025 or later. This city will be used as a proving ground for creating true mobility that moves people’s hearts, paving the way towards the next generation of movement, and crafting a society that unlocks the full potential of people. 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.


Timeline
January 2020		Announcement of concept at CES 2020
February 2021		Phase 1 Groundbreaking Ceremony; start of site preparation work in March 2021
October 2022		Phase 1 safety prayer ceremony; start of building work for Phase 1 in November 2022
October 2024		Completion of Phase 1 construction
Fall 2025 or later (scheduled)		Phase 1 official launch

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 ¥4,481.1 billion in fiscal 2025, ¥3,484.1 billion in fiscal 2024, and ¥2,809.6 billion in fiscal 2023. In fiscal 2025, 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 remained at a high level of approximately 35%, and the balance of earning assets continued to steadily increase. In addition, Toyota is making efforts to provide both its customers and dealers with stable financial services by diversifying its funding methods through direct financing from the market, such as ABCP (Asset Backed Commercial Paper) and ABS (Asset Backed Securities), in addition to using already existing means as commercial paper, corporate bonds and bank borrowings. Furthermore, Toyota continued to perform detailed credit appraisals and serve customers by monitoring bad debt and loan payment extensions, but the percentage of credit losses rose to 0.46% in fiscal 2025 from 0.40% in fiscal 2024, due to financial pressure on households caused by inflation. Toyota continues to work towards improving its risk management measures in connection with credit and residual value risks.

Toyota Motor Credit Corporation is Toyota’s principal financial services subsidiary in the United States. Toyota also provides financial services in 42 other countries and regions through various financial services subsidiaries, including:

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Toyota Finance Corporation in Japan;

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Toyota Credit Canada Inc. in Canada;

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Toyota Finance Australia Ltd. in Australia;

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Toyota Kreditbank GmbH in Germany;

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

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Toyota Leasing (Thailand) Co., Ltd. in Thailand; and

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Toyota Motor Finance (China) Co., Ltd. in China.

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

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. In Europe, this service is being made available in wider areas. 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.

Finance receivables for all of Toyota’s dealer and customer financing operations were ¥33,625.0 billion as of March 31, 2025, representing an increase of 6.1% as compared to the previous year. The majority of Toyota’s financial services are provided in North America. As of March 31, 2025, 53.9% of Toyota’s finance receivables were derived from financing operations in North America, 15.0% from Europe, 11.7% from Asia, 8.9% from Japan and 10.5% from other areas.

Approximately 40% of Toyota’s unit sales in the United States during fiscal 2025 included a finance or lease arrangement with Toyota. Because the majority of Toyota’s financial services operations are related to the sale of Toyota vehicles, a decrease in vehicle unit sales may lead to a contraction of Toyota’s financial services operations.

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

For information on Toyota’s finance receivables and operating leases, please see “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.

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, 2025, Toyota Finance Corporation has 16.0 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 ¥1,447.1 billion in fiscal 2025, ¥1,368.1 billion in fiscal 2024, and ¥1,224.9 billion in fiscal 2023.

Governmental Regulation, Environmental and Safety Standards

Toyota is required to comply with the regulations applicable to its products relating to the emission levels, fuel economy, noise, safety and so on. In addition, Toyota is subject to laws in various jurisdictions regulating the levels of pollutants generated by its plants. 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.

International Harmonization of Vehicle Regulations

The World Forum for Harmonization of Vehicle Regulations (“WP.29”) of the United Nations Economic Commission for Europe 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 and has been working to promote international harmonization of the technical prescriptions for the construction and approval of wheeled vehicles. 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 24 Global Technical Regulations have been established to date. As the progress of the international harmonization of technical prescriptions will lead to the reduction of the variations in product specifications from country to country, it is expected to lead to greater efficiency in Toyota’s product development.

Japan was elected as vice chair of WP.29 in November 2022 to lead discussions of international harmonization of vehicle regulations. This was the first time that a vice chair was elected from outside Europe.

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 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 (the “EPA”) to establish and enforce air quality standards, including emission control standards on passenger vehicles, light-duty trucks and heavy-duty vehicles. Manufacturers are not permitted to sell vehicles in the United States that do not meet the standards. In March 2014, the 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 the rule, tailpipe emission standards for volatile organic compounds, carbon monoxide, 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), become increasingly stringent in phases from model years 2017 to 2025. The rule brought federal emission standards for these pollutants in line with California’s emission standards. The new Tier 3 rule also required reductions in gasoline’s sulfur content beginning in model year 2017.

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 tightens criteria pollutant limits, requiring reductions in non-methane organic gases and nitrogen oxides emissions and a particulate matter cap, fully phased in by 2030-31. 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

Under the federal Clean Air Act, the State of California has been permitted to establish its own vehicle emission control standards if it receives a waiver from the EPA that allows the California standards to preempt less-stringent federal standards. The EPA granted such a preemption waiver to California in January 2013. The waiver provided a legal basis for California’s Advanced Clean Cars (“ACC”) program.

In January 2012, the California Air Resources Board (“CARB”) adopted the ACC program, developed in coordination with the EPA and the federal National Highway Traffic Safety Administration (“NHTSA”). The initial ACC program 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, and particulate matter. The regulations also addressed standards for evaporative emissions and extended vehicle useful life requirements.

CARB also implemented a “zero-emission vehicles” (“ZEV”) mandate under the ACC program, requiring manufacturers to sell a specified percentage of ZEVs—including Battery Electric Vehicles (“BEV”), Fuel Cell Electric Vehicles (“FCEV”) and certain advanced technology vehicles such as PHEVs that meet “partial zero-emission vehicles requirements”. Toyota’s MIRAI qualifies as a zero-emission vehicle. The current Prius Prime has been certified as a partial 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 November 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).

As of 2025, legal challenges to the ACC II program are underway, 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 shifts under the current Trump administration. For example, the US legislature passed resolutions in May 2025 under the Congressional Review Act to disapprove California’s EPA waivers, and these resolutions were signed into law by President Trump on June 12, 2025. Developments like this create significant uncertainty around future enforcement of emissions standards, with potential legal battles ahead regarding states’ rights under the Clean Air Act.

California has adopted regulations that require that On-Board Diagnostics (“OBD”) systems 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

At least seventeen states and the District of Columbia have adopted regulations substantially similar to California’s LEV standards under Section 177 of the Clean Air Act. Also, as of 2025, fifteen of these states (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 same ZEV standards. Several states have also adopted California’s ACC II regulations, mandating that 100% of new light-duty vehicle sales be ZEVs by 2035. As of 2025, some of these states’ measures face reversal, with state governors for example citing concerns over government mandates on consumers.

Canadian Standards

Canada has finalized vehicle emission standards equivalent to the federal standards in the United States in October 2014, in response to the strengthening of the federal vehicle emission standards in the United States applicable to model years 2017 to 2025. Furthermore, certain Canadian provinces have enacted or are considering enacting their own ZEV regulations. On January 11, 2018, the Ministry of Sustainable Development, Environment and the Fight against Climate Change of the Province of Quebec issued regulations on zero-emission vehicles including BEVs, FCEVs and PHEVs, among others. In July 2020, the Governor of British Columbia approved their own ZEV regulations. More recently, Prince Edward Island and Nova Scotia have introduced ZEV incentive programs and signaled interest in aligning with national ZEV targets through supportive policies and infrastructure development, though they have not yet enacted binding ZEV sales mandates. Canada also adopted a more stringent fuel regulation in 2017, reducing the annual average sulfur concentration of gasoline to 10mg/kg and implementing a credit system to secure compliance. In December 2023, Environment and Climate Change Canada decided to regulate zero-emission vehicles from model years 2026 to 2035, requiring 100% zero emissions for light-duty passenger vehicles and light-duty trucks sold after 2035.

European Standards

In 2007, the European Parliament adopted 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 RDE regulations, and tighten the method for calculating CO₂ emissions for PHEVs.

On May 28, 2024, Euro 7, which further strengthens Euro 6, came into effect. The dates of application of the Euro 7 regulations 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, trucks and trailers from May 29, 2028, and to new buses, lorries and trailers from May 29, 2029. The Euro 7 regulations maintain the Euro 6 exhaust emission limits for passenger vehicles, lowers exhaust emission limits for buses and trucks (e.g., stricter particulate matter count regulations), sets brake particle emissions for passenger vehicles, and introduces minimum performance requirements for battery durability in electric and hybrid passenger vehicles (BEVs/PHEVs). Currently, detailed requirements are being considered for the introduction of the new regulations.

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 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 that 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. Tightening of the next-generation emissions regulations (China V and China VI) 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

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

In December 2011, the EPA and the NHTSA issued a joint proposed rule to reduce greenhouse gas emissions and improve fuel economy for passenger cars, light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. Pursuant to the rule, which was finalized in August 2012, these vehicles would be required to meet an estimated combined average emission level of 163 grams of carbon dioxide per mile in model year 2025, equivalent to 54.5 miles per gallon if these requirements are met through improvements in fuel economy standards. At the same time, the NHTSA issued CAFE standards for passenger vehicles and light-duty trucks that would require manufacturers to meet an industry average fuel economy level of 49.6 miles per gallon in model year 2025.

In January 2012, as part of the ACC program, CARB set greenhouse gas standard for passenger cars and light duty trucks for model year 2015 through 2025.

Under the first Trump Administration, the EPA and the NHTSA proposed less stringent greenhouse gas emission standards and CAFE standards, and the withdrawal of California’s waiver to issue its own, more stringent greenhouse gas emission standards under the LEV III program. However, under the Biden Administration, the EPA and the NHTSA withdrew these proposed greenhouse gas emission standards and CAFE standards, and in March 2022, the EPA reinstated California’s authority to enforce its own greenhouse gas emissions standards.

On December 30, 2021, the EPA issued a final rule revising passenger car and light-duty truck greenhouse gas emissions standards for model years 2023 through 2026. The new rule was based on Presidential Executive Order 13990 and is more stringent compared to the Safer Affordable Fuel Efficient (“SAFE”) Vehicles Rule issued in April 2020 which temporarily relaxed the greenhouse gas emissions rate to 1.5% per year. The new rule projected reductions in greenhouse gas emissions, year-over-year, by 10% for model year 2023, 5% for 2024, 6.6% for 2025, and more than 10% 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.

On March 31, 2022, the NHTSA issued a final rule revising passenger car and light-duty truck fuel economy standards for model years 2024 through 2026. As with the EPA’s December 2021 greenhouse gas emission rule, this final rule is based on Presidential Executive Order 13990. The final rule establishes standards that would require an industry- wide fleet of approximately 49 mpg for passenger cars and light duty trucks in model year 2026. This is to be achieved by increasing fuel efficiency, year-over-year, by 8% for model year 2024, 8% for

2025, and 10% for 2026 which is more stringent than the SAFE Vehicles Rule that temporarily relaxed the rate to 1.5% per year.

In March 2024, the EPA issued a final rule setting greenhouse gas emissions standards for light-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 represents an almost 50% reduction from current levels and is expected to accelerate the market shift towards electrification. As required under Executive Order 14037, which set a goal that 50% of new vehicles sold in the United States in 2030 shall be ZEVs, the EPA coordinated and/or engaged with, among others, the Department of Transportation, labor unions, and states (including California) to develop these new standards.

Both the CAFE and greenhouse gas emissions standards are expected to remain dynamic in response to shifting federal policy priorities, technological developments, and market trends. The EPA and NHTSA may consider further tightening standards beyond model year 2032, for example, but future adjustments could also face legal and political challenges. As such, the regulatory landscape is likely to evolve, with periodic rulemakings, midterm reviews and potential litigation shaping the trajectory of vehicle emissions and fuel economy standards in the coming years.

European Standards

In April 2019, the European Parliament and the Council adopted 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.

As part of its “Fit for 55” package, on April 19 2023, the European Parliament and the European Commission adopted 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 April 1, 2025, the European Commission proposed 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.

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, has been in effect since 2021. As a further enhancement of fuel consumption regulations, GB19578-2024, which is the Level 6 Fuel Consumption Regulations for passenger vehicles, has been enacted and will take effect starting in 2026. GB27999 is also under consideration. 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 is the Level 4 Fuel Consumption Regulations for light commercial vehicles, has been enacted and will be applied to new vehicles from January 2026. Moreover, the implementation of the Life Cycle Assessment (LCA), 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, has been enacted and will be 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 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 and will become mandatory for imported vehicles starting October 2025.

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, enhancements to the U.S. New Car Assessment Program (“USNCAP”), Expansion of Event Data Recorder (“EDR”) requirements, and prevention of impaired driving. The NHTSA has so far completed several key rulemakings, including updates to USNCAP to incorporate pedestrian automatic emergency braking, blind spot detection, and lane keeping support, and has finalized a rule requiring automatic emergency braking systems in all passenger vehicles and light trucks by 2029. In addition, NHTSA has amended EDR regulations to expand the pre-crash data recording window.

Further public comment on strengthening USNCAP is anticipated, particularly regarding the inclusion of additional advanced safety features and pedestrian protection technologies. 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 Standards

In December 2019, the EU issued the revised General Safety Regulation 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

A new UNR on Driver Control Assistance Systems (DCAS) which are a subset of Advanced Driver Assistance Systems (ADAS) as UNR No.171 and a new UNR on ACPE Acceleration Control for Pedal Error (ACPE) as UNR No.175 for being able to limit unintended acceleration of the vehicle when an accelerator control misapplication by the driver has been detected were entered into force in 2024.

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.

GRVA has been actively developing a new UNR/GTR on Automated Driving Systems, 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, amendment of all relevant UN GTRs and UNs for considering ADS fitness have been amending toward to voting at WP.29 in June 2026.

WP.29 has endorsed “Considerations on Artificial Intelligence in the context of road vehicles” at June 2024. GRVA is exploring regulatory measures addressing artificial intelligence. Now WP.29 will be exploring some instruments addressing artificial intelligence (“AI”) used in vehicles. Also, driver distraction, safety of children left in vehicles, awareness of vulnerable road users proximity, driver drowsiness and distraction warning system has been developing the Regulations.

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 (“ICV”) 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 it is anticipated that there will be a shift toward only permitting technologies that provide support even in complex driving scenarios, by establishing performance requirements that significantly exceed those of UNRs.

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, the business entity is required to give prior notice to regulators, and if a business entity discharges, uses or stores substances that are environmental burdens or causes noise or vibration from such facility, the business entity is also required to comply with the applicable standards. Toyota is subject to local regulations, which in some cases impose more stringent obligations than the Japanese central government requirements. 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 2023, Toyota achieved a recycling/recovery rate of 97% for automobile shredder residue (the legal requirement being 70%) and 95% for air bags (the legal requirement being 85%) and reached the targets set forth in this law.

U.S. Standards

The environmental regulations applicable in the United States include, among others, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Pollution Prevention Act of 1990 and the Toxic Substances Control Act. Toyota is subject to a variety of state legislation that parallels, and in some cases imposes more stringent obligations than, federal requirements.

Pursuant to the Clean Air Act, the EPA has promulgated National Ambient Air Quality Standards (“NAAQS”) for six “criteria” pollutants including for particulate matter. The Clean Air Act requires that the EPA review and possibly revise these NAAQS every five years. On January 6, 2023, the EPA announced a proposed decision to revise primary (health-based) annual particulate matter (PM_2.5) standard from 12.0 µg/m3 to within the range of 9.0 to 10.0 µg/m3. The EPA proposed to make no changes to the secondary (welfare-based) annual PM_2.5 standard, primary and secondary 24-hour PM_2.5 standards, and primary and secondary PM₁₀ standards. In March 2024, the EPA announced a final rule, effective May 2024, lowering the primary (health-based) annual particulate matter (PM_2.5) standard to 9.0 µg/m3. This revised standard, as well as any future NAAQS revisions to other criteria pollutants, could lead to additional pollution control requirements on the industry, including on Toyota’s manufacturing operations.

The rule has faced legal challenges from several states, including Louisiana and Texas, as well as industry groups. They argue that the EPA’s action was procedurally improper and failed to adequately consider economic impacts, and filed petitions for judicial review in the D.C. Circuit Court, 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 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 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), and Directive 2007/46/EC, 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 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 hybrid electric vehicles, PHEVs, FCEVs, BEVs and high fuel efficiency, low emission engines.

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.”

Governance

Toyota has inherited the spirit of “Toyoda Principles” since our foundation, and has aimed to create a prosperous society through our business activities, based on “the Guiding Principles at Toyota.” In 2020, based on these Principles, we compiled the “Toyota Philosophy” and set the mission of “Producing Happiness for All.” We aim to be the “best company in town” that is both loved and trusted by people. We aim to contribute to the sustainable development of our society and planet through such “Toyota Philosophy.”

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”) / Chief Compliance Officer, which deals with themes associated with Governance. In addition, subcommittees have been established to deliberate on individual issues and themes that are closer to actual practice on a functional basis.

Furthermore, we have appointed a Chief Sustainability Officer to lead the engagement with external stakeholders and dissemination of information regarding sustainability activities.

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management framework based on ISO (International Organization for Standardization and COSO (Committee for Sponsoring organizations of the Treadway Commission).

Approach to and Initiatives Towards Human Resources

Toyota and the Toyota Group have been focusing on human resource development since its foundation based on the philosophy that “monozukuri (manufacturing) depends on human resource development.”

In the midst of a once-in-a-century transformation taking place in the automobile industry, Toyota and the Toyota Group have set out the theme of inheritance and evolution and is doing its utmost to realize its transformation into a mobility company for the future in addition to carrying on what makes us Toyota — “let’s make ever-better cars,” “let’s aim to be best-in-town, rather than being the best in the world” and “let’s work for the sake of others.”

Amid the era in which it is hard to predict the future, each and every one of us at Toyota, our 370,000 colleagues around the world, must share the same thoughts, working together organically as a team at the same time in order to uphold our founding spirit and what makes us Toyota, as symbolized by the Toyoda Principles, and to carve out the future of automobiles using the Toyota Philosophy as a guideline, and to that end, we need to develop human resources.

Looking at the global Toyota and the Toyota Group as a whole, in addition to instilling the philosophy in all regions around the world, through various opportunities such as training for global executive candidates, the head office and regional entities are working together to strengthen a common foundation for human resource development based on Toyota’s “philosophy, skills, and behavior (such as Toyota Philosophy and TPS).” In addition, for regional entities, we are promoting the establishment of a system that flexibly promotes the formulation and execution of human resource strategies rooted in the region in response to the characteristics of the region and the diverse needs of customers.

We have also been engaged in ongoing dialogue between labor and management regarding investment in human resources, including human resources development. Under the shared value of “the company wishes for the happiness of its employees and employees wish for the development of the Company,” we have had discussions between labor and management on various measures for the future based on the common recognition that “people” are our greatest asset. We have also confirmed specific initiatives to lead to speedy change, and labor and management worked together to promote such initiatives.

In the discussion held in March 2023 between labor and management, they confirmed to implement initiatives based upon three main pillars—diversity, growth, and contributions—designed to transform Toyota into a place where anyone can take on new challenges at any time, as many times as possible, without fear of mistakes, and promoted such initiatives. While continuing to promote initiatives based on the three pillars, in order to achieve change for the future in an era of rapid environmental change and an uncertain future, Toyota believes that it is also essential to take steps to “establish today how we will work in 10 years” with an eye to the “future.” To such ends, through discussions between labor and management in March 2024, we mapped out specific initiatives.

Climate Change-related Disclosures

Toyota has announced that, in response to climate change, it would address global-scale challenges to achieve carbon neutrality by 2050. In order to tackle these challenges, Toyota intends to respond quickly to changing demands, take into account the different energy conditions in each country and region around the world, and provide a variety of bespoke solutions that correspond to such country-specific and region-specific conditions.

In addition, Toyota has endorsed and signed on to the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”) in April 2019. Toyota has prepared the discussion below, which relates to Toyota’s climate change-related risks and opportunities, in light of such recommendations. Certain emissions reduction targets referenced below have been set by Toyota with reference to and in line with criteria established by the Science Based Targets Initiative (“SBTi”); 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.

1. Governance

(a) The Board’s Oversight of Climate-related Risks and Opportunities

Toyota addresses climate-related issues at the Board of Directors’ meetings to ensure effective strategy formulation and implementation in line with the latest societal developments. The Board deliberates and oversees related strategy, major action plans, and business plans, and important climate-related matters are included in the Board’s agenda.

With oversight by the Board of Directors, the CN Strategy Subcommittee monitors progress toward qualitative and quantitative targets for addressing climate issues. As part of such monitoring, the Board considers climate-related issues, including risks and opportunities related to products, such as fuel efficiency and emission regulations, as well as risks and opportunities related to low-carbon technology development. It also considers the financial impact of such factors.

These governance mechanisms are used to formulate long-term strategy, including the Toyota Environmental Challenge 2050, and in formulating and revising medium- to long-term targets and action plans.

Examples of decisions made by the Board of Directors in 2024 include the following.

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Granting approval to invest in IONNA, a rapid charging network for BEVs in North America, with the aim of expanding the charging infrastructure essential for the widespread adoption of BEVs to achieve carbon neutrality.

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Granting approval to execute a comprehensive partnership agreement with the Shanghai municipal government and establish a company to develop and produce BEVs and batteries. The new company will develop Lexus-branded BEVs, with production scheduled to begin in 2027 or later.

(b) Management’s Role in Assessing and Managing Climate-related Risks and Opportunities

Magnitude of impact calculated for risk assessment is rated on a five-point scale for each of the following factors: “finance,” “reputation,” “violation of laws and regulations,” and “business continuity” (“finance” is indexed as a percentage of sales). Vulnerabilities are assessed on the two elements of the “current status of countermeasures” and “probability of occurrence.”

Significant risks assessed by region, function (e.g., manufacturing, sales), and product based on the above criteria are assigned to risk owners. Each group chief officer or in-house company president supervise the activities of the companies, and at the subordinate level, the general managers supervise the activities of divisions and implement and monitor countermeasures.

Climate-related risks and opportunities are assessed by the Sustainability Subcommittee and the Carbon Neutral Strategy Subcommittee, in addition to the TGRS above. The following matters are discussed, and the response status is monitored and reviewed by the divisions in charge and relevant officers at the respective committees. Toyota strives to identify the various risks and opportunities that will arise from environmental issues, takes action while continuously confirming the validity of strategies such as the Toyota Environmental Challenge 2050 and works to enhance its competitiveness.

The Sustainability Subcommittee assesses and discusses the relevance of initiatives in consideration of issues related to promoting sustainability and perspectives of external stakeholders. The Carbon Neutral Strategy Subcommittee assesses and discusses the relevance of initiatives related to fuel economy regulations and procurement, direct operations such as CO₂ emission regulations for plants, logistics, and other non-production locations, as well as water risks. Meetings of the above committees are attended by executive- or general manager-level members of relevant divisions, such as technology, environment, finance, purchasing, production, and sales. In conducting assessments, Toyota calculates current and future GHG emissions in its vehicles, production and sales, and supply chain operations, and assesses them against relevant scientific evidence-based pathways to reduced emissions. Significant risks and opportunities that require prompt response are reported to the Board of Directors as appropriate for response measures to be determined.

2. Strategy

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. The core idea of Toyota’s multi-pathway strategy is to offer a diverse range of mobility options that align with the future of energy and the needs and expectations of local communities and customers, while promoting the decarbonization of manufacturing and supply chains. 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 contributing to the goal of carbon neutrality through a diverse lineup of mobility options that can utilize electricity derived from renewable energy, hydrogen, synthetic fuels, biofuels and other energy sources in anticipation of a future of electricity and hydrogen.

Existing infrastructure and assets must be used to practically and reliably reduce GHG emissions. Energy policies, such as renewable energy and charging infrastructure, and industrial policies, such as purchase subsidies, supplier support and battery recycling systems, are indispensable in the goal of achieving carbon neutrality in the automotive industry. Responses must also be developed to address uncertainties related to national energy policies, industrial policies, and customer choice.

Category 11 emissions (gCO₂e/km) reduction targets according to their science-based criteria aimed at holding the increase in the global average temperature to well below 2°C above pre-industrial levels, in conjunction with the above-mentioned validation.

(iii) Impact assessment periods

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Transition risks: 2030–2035

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Physical risks: 2050 and 2090

Identification and Assessment of Risks and Opportunities

Toyota identifies key drivers of risks and opportunities (risk drivers) related to climate changes based on future-society scenarios from the perspectives of transition risks (policy/regulation, market, technology, reputational) and physical risks (acute/chronic). Starting from these identified risk drivers, Toyota conducts a comprehensive analysis to map out the factors that could lead to specific risks and opportunities, in order to ensure a thorough identification of risks and opportunities. By incorporating the risks and opportunities identified in TGRS into those identified through this factor analysis, Toyota evaluates how the manifestation and magnitude of impact of these risks and opportunities may change under different climate scenarios that cover the risk drivers (e.g., under the 4°C scenario, the impact of physical risks is assessed by analyzing the geographic information of Toyota’s global production sites).

Selecting Scenarios

The following published scenarios have been selected as reference scenarios.

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1.5ºC scenario (multiple published scenarios such as IEA*¹ IPCC*² AR6 WG 3*³)

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4ºC scenario (IPCC AR6 WG1*⁴ SSP5-8.5*⁵)

International Energy Agency

Intergovernmental Panel on Climate Change

Working Group III contribution to the Sixth Assessment Report by IPCC

Working Group I contribution to the Sixth Assessment Report by IPCC

Combined scenario of Shared Socioeconomic Pathway and Representative Concentration Pathway RCP 8.5

Approach to Scenario Selection

Toyota considers that the future of energy that supports society will ultimately converge on electricity and hydrogen, driven by the widespread adoption of renewable energy. However, Toyota also acknowledges that, at present, energy landscapes vary significantly across countries and regions, resulting in differing paces of transition. In light of recent global developments, discussions have begun on how to balance environmental issues and economic security. At the same time, Toyota has observed a slowdown in renewable energy investments due to inflation around the world, as well as weaker sales of BEVs in markets such as North America and Europe.

Against this backdrop, Toyota’s multi-pathway strategy is designed to advance a transition that is in line with reality, by offering a range of mobility options that align with the reality of energy and diverse customer needs in the short term, while anticipating a future of electricity and hydrogen in the medium- to long-term.

Discussions are also underway in international forums such as the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change on transitional measures for the period leading up to the future, mitigation measures tailored to the circumstances of each country and region, and the introduction of diverse decarbonization measures.

In light of the above, in the 1.5°C scenario analysis, for passenger vehicles, Toyota has verified the resilience of strategies, taking into account not only the IEA Net Zero Emissions (NZE) scenario—which emphasizes the adoption of BEVs and PHEVs as primary decarbonization measures—but also other 1.5°C scenarios that reflect regional characteristics and diversification of mitigation measures (e.g., carbon dioxide removal (CDR) technologies, carbon capture and storage (CCS) technologies, and carbon-neutral fuels).

Toyota has summarized the key assumptions and perspectives underlying each scenario and has identified the following challenges associated with their realization.

The IEA NZE scenario assumes a global acceleration in the use of renewable energy and the widespread adoption of BEVs in the automotive sector, leading to a rapid reduction in GHG emissions. However, in practice, the pace of these initiatives is expected to vary by region, depending on local energy conditions and policy developments.

Under other 1.5°C scenarios, the types and adoption volumes of biofuels may vary by region due to factors such as competition with food production and different supply volumes owing to land use constraints. Additionally, the market adoption of decarbonization technologies requires significant initial investment, which may result in varying degrees of progress depending on investment conditions (over time, as these technologies become more widely adopted in the market, we expect costs to be optimized).

Financial Impact Assessment

Toyota has verified the causal relationships between the identified risks and opportunities and financial indicators. By evaluating the relevance and significance of management themes—such as mobility concepts—and key sustainability initiatives in relation to the identified risks and opportunities, taking into account the assumptions specific to each scenario, Toyota has assessed the potential financial impacts of the identified risks and opportunities.

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Resilience Analysis

Overview of Resilience Analysis

In pursuit of carbon neutrality, Toyota’s multi-pathway strategy is designed to practically advance a transition by offering a range of mobility options tailored to the unique fuel and infrastructure needs of each region in anticipation of a future of energy. Toyota references the TCFD framework in conducting scenario analysis, and applies a 1.5°C scenario for transition risks and a 4°C scenario for physical risks to identify climate-related risks and opportunities and to assess their financial impacts.

In light of recent global developments and ongoing international discussions on climate change, Toyota has compared and examined not only the IEA NZE scenario but also other 1.5°C scenarios. Recognizing that any scenario assumptions may be subject to certain limitations, Toyota carefully considers these factors in outlining its initiatives to minimize identified risks and capture opportunities, while outlining its initiatives that can contribute to addressing social challenges associated with the realization of each scenario. By doing so, Toyota validates the resilience of its business activities.

1.5°C Scenario Analysis

The IEA has identified the following challenges that must be addressed to achieve the NZE scenario.

As the decarbonization of electricity progresses through the active adoption of renewable energy, in the transportation sector, the passenger vehicle segment is expected to undergo the shift to BEVs, leading to a rapid reduction of GHG emissions after 2030, and ultimately achieving net zero emissions by 2050. To realize this pathway, governments around the world are expected to implement ambitious climate policies, including the introduction or strengthening of carbon pricing mechanisms, more stringent fuel economy regulations, and bans on the sale of new internal combustion engine vehicles. In parallel, governments are anticipated to expand incentive programs to further promote the adoption of BEVs. Driven by these policy measures and increasing environmental awareness among consumers, the market is expected to embrace BEVs. On the technology front, advancements are anticipated in vehicle electrification, innovative battery development, and the deployment of energy management systems that utilize renewable electricity. These developments are expected to facilitate the broader electrification of society and the transition to renewable energy sources. As a result, improvements in energy efficiency are expected to lead to a reduction in overall energy consumption across society.

The transition risks in this scenario include the following:

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Fines if fuel efficiency, GHG, or ZEV regulations are not complied with;

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Reduced production or lower sales volumes resulting from sudden product changes required to comply with new regulations;

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Higher research and development expenses associated with the development of new powertrain technologies;

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Supply shortages and increased procurement costs due to increased demand for raw materials related to BEVs as vehicle electrification accelerates; and

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Higher manufacturing costs due to persistently high prices (including I-REC prices) of renewable energy as its share in the energy mix expands.

3. Metrics and Targets

(a) Metrics Used by the Organization to Assess Climate-related Risks and Opportunities in Line with Its Strategy and Risk Management Process

Toyota constantly monitors global trends and customer feedback to identify future challenges and promote solutions through new ideas and technologies. At the same time, global environmental issues such as climate change, water shortages, resource depletion, and biodiversity loss are expanding and becoming more serious every day. Toyota believes that setting multiple metrics to comprehensively manage climate-related risks and opportunities is important as a measure for adaptation to and mitigation of climate change. As such, the metrics include not only the amount of GHG emissions but also other elements deeply related to climate change, such as energy, water, resource recycling, and biodiversity.

The following targets have been set based on these indicators and are systematically promoted as “6 challenges” through initiatives in six areas.

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Long-term strategy (2050 Target): Toyota Environmental Challenge 2050

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Medium-term strategy (2030 Target): 2030 Milestone, in line with SBTi criteria

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Short-term strategy (2025 Target): 7th Toyota Environmental Action Plan

Toyota aims to achieve Scope 1, 2 and 3 to become carbon neutral (CN) by 2050 by promoting the following challenges from the list of “6 challenges.”

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In September 2022, Toyota received certification and approval from SBTi for its reduction targets for Scope 1, Scope 2, and Scope 3 Category 11 emissions with a reference year of 2019 as shown in the table below, and is updating its mid-term targets accordingly. Considering carbon pricing promotes the review of high-emission businesses, Toyota is using a certain carbon price as an indicator within the company and utilizing it in the consideration of capital investments and other matters. Since taking carbon pricing into account encourages the reassessment of high-emission businesses, Toyota utilizes a set internal carbon price as a benchmark for evaluating capital investments and related decisions.

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.

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:

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further improvements in hybrid technologies, including in functions and cost, and contributions to the environment through advancements;

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improvement in internal combustion engine fuel economy technology as well as improvement in technology in connection with more stringent emission standards;

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development of BEVs, FCEVs and other alternative fuel vehicles;

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development of advanced safety technology designed to promote driving and vehicle safety;

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development of automated driving technologies;

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connected car technologies; and

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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, 2025, 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 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 2023, Toyota filed approximately 15,000 patent applications domestically and internationally. In Japan, based on the ranking published by IP Force, Toyota was ranked 3rd among companies and 1st among automobile manufacturers that year in terms of the number of patent registrations as of December 31, 2023. In the United States, based on the ranking published by IFI CLAIMS, Toyota was ranked 12th among companies and 1st among automobile manufacturers that year in terms of the number of patent registrations as of December 31, 2023.

Capital Expenditures and Divestitures

Set forth below is a chart of Toyota’s principal capital expenditures between April 1, 2022 and March 31, 2025, 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		1,612.9		Japan	Internal funds, financing from issuance of bonds, etc.
Investment primarily in technology and products by Prime Planet Energy & Solutions, Inc.		129.2		Japan	Capital Increase
Investment primarily in technology and products by Toyota Auto Body Co., Ltd.		96.4		Japan	Internal funds
Investment primarily in technology and products by Hino Motors, Ltd.		73.6		Japan	Internal funds
Investment primarily in technology and products by Toyota Motor Kyushu, Inc.		62.4		Japan	Internal funds

Outside of Japan
Investment primarily to promote localization by Toyota Battery Manufacturing, Inc.		646.3		United States	Internal funds
Investment primarily to promote localization by Toyota Motor Manufacturing, Kentucky, Inc.		186.3		United States	Internal funds
Investment primarily to promote localization by Toyota Motor Manufacturing De Guanajuato, S.A. de C.V.		185.3		Mexico	Internal funds
Investment primarily to promote localization by Toyota Motor Manufacturing, Indiana, Inc.		175.5		United States	Internal funds
Investment primarily to promote localization by Toyota Motor Manufacturing Canada, Inc.		137.4		Canada	Internal funds
Investment primarily to promote localization by Toyota Motor Thailand Co., Ltd.		107.2		Thailand	Internal funds
Investment primarily to promote localization by Toyota Motor Technical Center (China) Co., Ltd.		105.0		China	Internal funds
Investment primarily to promote localization by Toyota do Brazil LTDA.		85.3		Brazil	Internal funds
Investment primarily to promote localization by Toyota Motor Manufacturing, Texas, Inc.		68.6		United States	Internal funds


Description of Activity	Total Cost (Yen in billions)		Location	Primary Method of Financing
Investment primarily in leased automobiles by Toyota Motor Credit Corporation		6,202.5	United States	Internal funds, financing from issuance of bonds, etc.

Set forth below is information with respect to Toyota’s material plans to construct, expand or improve its facilities between April 2025 and March 2026, 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		890.0		Japan	Internal funds

Outside of Japan
Investment primarily in manufacturing facilities by Toyota Battery Manufacturing, Inc.		221.0		United States	Internal funds
Investment primarily in manufacturing facilities by Toyota Motor Manufacturing Canada Inc.		123.9		Canada	Internal funds
Investment primarily in manufacturing facilities by Toyota Motor Manufacturing, Kentucky, Inc.		118.6		United States	Internal funds
Investment primarily in manufacturing facilities by Toyota Motor Europe NV/SA		110.3		Belgium	Internal funds
Investment primarily in manufacturing facilities by Toyota Motor Manufacturing, Indiana, Inc.		108.6		United States	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 judgement 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.

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 has been cooperating with these investigations. In June 2025, the DOJ informed Toyota that it has closed its investigation into the matter. Investigations by governmental authorities related to these matters could result in the imposition of penalties, fines or other sanctions, or litigation. Toyota cannot predict the scope, duration or outcome of these matters at this time.

On March 4, 2022, Hino Motors, Ltd., a publicly traded Japanese company that produces and sells commercial trucks and buses, and of which Toyota owns 50.18% of the voting interests as of March 31, 2025, 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.

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. 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. 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.

In these resolutions, Hino agreed to the payment of criminal and civil penalties. In addition, Hino has stated that, after obtaining approval of the authorities in the civil settlement, it will implement measures for the engines in the market and a project for reducing environmental burdens. Furthermore, Hino has stated that it will extend 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 tentative 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.

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.

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. See “Item 4. Information on the Company — 4.B Business Overview — Selected Initiatives” for further discussion of these and related matters.

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, 2025, Toyota Motor Corporation had 209 Japanese subsidiaries and 376 overseas subsidiaries. The following table sets forth for each of Toyota Motor Corporation’s principal subsidiaries, the country of incorporation and the percentage ownership interest and the voting interest held by Toyota Motor Corporation.


Name of Subsidiary	Country of Incorporation	Percentage Ownership Interest		Percentage Voting Interest
			%		%
Toyota Financial Services Corporation	Japan		100.00		100.00
Hino Motors, Ltd.	Japan		50.11		50.18
Prime Planet Energy & Solutions, Inc.	Japan		51.00		51.00
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


Name of Subsidiary	Country of Incorporation	Percentage Ownership Interest		Percentage Voting Interest
Toyota Motor Manufacturing, Indiana, Inc.	United States		100.00		100.00
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 Manufacturing France S.A.S.	France		100.00		100.00
Toyota Motor Finance (Netherlands) B.V.	Netherlands		100.00		100.00
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

4.D PROPERTY, PLANTS AND EQUIPMENT

As of March 31, 2025, 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, 2025, with respect to Toyota’s principal facilities and organizations, all of which are owned by Toyota Motor Corporation or its subsidiaries. However, small portions, all under approximately 20%, of some facilities are on leased premises.

Facility or Subsidiary Name

Location

Land Area
(thousands
of square
meters)

Number of
Employees

Principal
Products or
Functions

Japan (Toyota Motor Corporation)

Toyota Technical Center Shimoyama

Toyota City, Aichi Pref.

5,573

1,751

Research and Development

Tahara Plant

Tahara City, Aichi Pref.

4,029

6,519

Automobiles

Toyota Head Office and Technical Center

Toyota City, Aichi Pref.

2,725

22,930

Research and Development

Higashi-Fuji Technical Center

Susono City, Shizuoka Pref

2,719

2,410

Research and Development

Motomachi Plant

Toyota City, Aichi Pref.

1,575

8,078

Automobiles

Tsutsumi Plant

Toyota City, Aichi Pref.

1,004

4,848

Automobiles

Kinu-ura Plant

Hekinan City, Aichi Pref.

910

2,507

Automobile parts

Honsha Plant

Toyota City, Aichi Pref.

623

1,817

Automobile parts

Facility or Subsidiary Name

Location

Land Area
(thousands
of square
meters)

Number of
Employees

Principal
Products or
Functions

Myochi Plant

Miyoshi City, Aichi Pref.

555

1,425

Automobile parts

Toyota Woven City

Susono City, Shizuoka Pref

263

Research and Development

Japan (Subsidiaries)

Daihatsu Motor Co., Ltd.

Ikeda City, Osaka, etc.

7,721

10,812

Automobiles

Hino Motors, Ltd.

Hino City, Tokyo, etc.

5,795

11,950

Automobiles

Toyota Auto Body Co., Ltd.

Kariya City, Aichi Pref., etc.

2,141

11,732

Automobiles

TOYOTA Mobility Tokyo Inc.

Minato-ku, Tokyo, etc.

386

6,436

Sales facilities

Prime Planet Energy & Solutions, Inc.

Chuo-ku, Tokyo, etc.

300

4,014

Automobiles

Outside Japan (Subsidiaries)

Toyota Battery Manufacturing, Inc.

North Carolina, U.S.A.

7,400

1,935

Automobiles

Toyota Motor Manufacturing, De Guanajuato, S.A. de C.V.

Guanajuato, Mexico

6,091

2,865

Automobiles

Toyota Motor Manufacturing, Kentucky, Inc.

Kentucky, U.S.A.

5,161

9,308

Automobiles

Toyota Motor Manufacturing Canada, Inc.

Ontario, Canada

4,752

8,074

Automobiles

Toyota Motor Manufacturing, Indiana, Inc.

Indiana, U.S.A.

4,359

7,410

Automobiles

Toyota is constantly engaged in upgrading, modernizing and revamping the operations of its manufacturing facilities based on its assessment of market needs and prospects. To respond flexibly to fluctuations in demand in each of its production operations throughout the world, Toyota continually reviews and implements appropriate production measures such as revising 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, 2025, property, plant and equipment having a net book value of approximately ¥1,616.3 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.

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.

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 88% of Toyota’s total revenues before the elimination of intersegment revenues for fiscal 2025. Toyota’s primary markets based on vehicle unit sales for fiscal 2025 were: Japan (21.3%), North America (28.9%), Europe (12.5%) and Asia (19.6%).

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 2025, although there was a continued decline in housing prices and stagnant consumer sentiment in China, the global economy remained strong supported by the continued expansion of the United States economy, mainly in private consumption.

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


	Thousands of units
	Year Ended March 31,
	2023		2024		2025
Japan		2,069		1,993		1,991
North America		2,407		2,816		2,703
Europe		1,030		1,192		1,172
Asia		1,751		1,804		1,838
Other*		1,565		1,638		1,659

Overseas total		6,753		7,450		7,372

Total		8,822		9,443		9,362

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

During both fiscal 2024 and fiscal 2025, Toyota’s consolidated vehicle unit sales in Japan decreased. Overseas consolidated vehicle unit sales increased overall during fiscal 2024 due to strong market conditions, while vehicle unit sales decreased overall during fiscal 2025, due mainly to a decrease in North America, despite increases in Asia, excluding China, and the Middle East.

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 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 — 4B. Business Overview — Legal Proceedings” and notes 24 and 30 to the consolidated financial statements.

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

Financial Services Operations

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 2025 mainly due to an increase in loan balance. Also, vehicles and equipment on operating leases increased during fiscal 2025 mainly due to an increase in the number of operating leases in finance subsidiaries in North America.

For details on receivables related to financial services and vehicles and equipment on operating leases, see notes 8 and 12 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 19 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 “Item11. Quantitative and Qualitative Disclosures about Market Risk” and notes 20 and 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 2024 and 2025 mainly as a result of higher interest rates.

Toyota launched its credit card business in Japan in April 2001. As of March 31, 2024, Toyota had 16.2 million cardholders, an increase of 0.04 million cardholders compared with March 31, 2023. As of March 31, 2025, Toyota had 16.0 million cardholders, a decrease of 0.12 million cardholders compared with March 31, 2024. Credit card receivables as of March 31, 2024 increased by ¥4.0 billion from March 31, 2023 to ¥558.7 billion, and that as of March 31, 2025 increased by ¥15.7 billion from March 31, 2024 to ¥574.5 billion.

Other Business Operations

Toyota’s other business operations consist of its information technology business and others.

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

Currency Fluctuations

Toyota is affected by fluctuations in foreign currency exchange rates. Toyota is exposed to fluctuations in the value of the Japanese yen against the U.S. dollar and the euro 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 2024 and 2025, Toyota produced 75.9% and 73.5%, respectively, of its non-domestic sales outside Japan. In North America, 75.9% and 76.0% of vehicles sold in fiscal 2024 and 2025, respectively, were produced locally. In Europe, 73.1% and 69.6% of vehicles sold in fiscal 2024 and 2025, respectively, were produced locally. In Asia, 97.4% and 94.6% of vehicles sold in fiscal 2024 and 2025, respectively, were produced locally. Localizing production enables Toyota to locally purchase many of the supplies and resources used in the production process, which allows for a better match of local currency revenues with local currency expenses.

Toyota also enters into foreign currency transactions and other hedging instruments to address a portion of its transaction risk. This has reduced, but not eliminated, the effects of foreign currency exchange rate fluctuations, which in some years can be significant. See notes 20 and 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 revenues, operating income and net income attributable to Toyota Motor Corporation. In fiscal 2025, the Japanese yen was on average weaker against the U.S. dollar and the euro in comparison to fiscal 2024. At the end of fiscal 2025, the Japanese yen was stronger against the U.S. dollar and the euro in comparison to the end of fiscal 2024. In fiscal 2024, the Japanese yen was on average weaker against the U.S. dollar and the euro in comparison to fiscal 2023. At the end of fiscal 2024, the Japanese yen was weaker against the U.S. dollar and the euro in comparison to the end of fiscal 2023. See note 19 to the consolidated financial statements for additional information.

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.

Geographic Breakdown

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


	Yen in millions
	Year ended March 31,
	2023		2024		2025
Japan		9,122,282		10,193,556		10,719,120
North America		13,509,027		17,624,268		18,930,253
Europe		4,097,537		5,503,738		6,110,052
Asia		7,076,922		7,604,269		7,903,360
Other*		3,348,530		4,169,494		4,373,919

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

Results of Operations — Fiscal 2025 Compared with Fiscal 2024


	Yen in millions
	Year ended March 31,						2025 v. 2024 Change
	2024			2025			Amount			Percentage
Sales revenues:
Japan		21,020,721			21,859,094			838,373			4.0	%
North America		17,943,072			19,300,327			1,357,254			7.6
Europe		5,681,764			6,313,489			631,725			11.1
Asia		8,730,749			8,988,062			257,314			2.9
Other*		4,389,785			4,521,257			131,472			3.0
Intersegment elimination/unallocated amount		(12,670,767	)		(12,945,525	)		(274,758	)		—

Total		45,095,325			48,036,704			2,941,380			6.5	%
Operating income (loss):
Japan		3,484,270			3,151,123			(333,147	)		(9.6	)
North America		506,319			108,808			(397,512	)		(78.5	)
Europe		388,096			415,553			27,457			7.1
Asia		865,591			896,510			30,919			3.6
Other*		198,345			252,626			54,281			27.4
Intersegment elimination/unallocated amount		(89,687	)		(29,033	)		60,655			—

Total		5,352,934			4,795,586			(557,348	)		(10.4	)%
Operating margin		11.9	%		10.0	%		(1.9	)%
Income before income taxes		6,965,085			6,414,590			(550,495	)		(7.9	)
Net margin from income before income taxes		15.4	%		13.4	%		(2.0	)%
Net income attributable to Toyota Motor Corporation		4,944,933			4,765,086			(179,847	)		(3.6	)
Net margin attributable to Toyota Motor Corporation		11.0	%		9.9	%		(1.1	)%

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

Sales Revenues

Toyota had sales revenues for fiscal 2025 of ¥48,036.7 billion, an increase of ¥2,941.3 billion, or 6.5%, compared with the prior fiscal year. The increase resulted mainly from the ¥1,770.0 billion favorable impact of changes in exchange rates.

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


	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount		Percentage
Vehicles		35,249,865		36,892,232		1,642,368		4.7	%
Parts and components for production		1,596,111		1,606,173		10,062		0.6
Parts and components for after service		3,166,586		3,423,389		256,803		8.1
Other		1,068,169		1,074,505		6,336		0.6

Total Automotive		41,080,731		42,996,299		1,915,568		4.7
All Other		567,399		602,578		35,179		6.2

Total sales of products		41,648,130		43,598,877		1,950,747		4.7
Financial services		3,447,195		4,437,827		990,632		28.7

Total sales revenues		45,095,325		48,036,704		2,941,380		6.5	%

Toyota’s sales revenues include sales revenues from sales of products, consisting of sales revenues from automotive operations and all other operations, which increased by 4.7% during fiscal 2025 compared with the prior fiscal year to ¥43,598.8 billion, and sales revenues from financial services operations, which increased by 28.7% during fiscal 2025 compared with the prior fiscal year to ¥4,437.8 billion. The increase in sales revenues from sales of products is primarily driven by the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions. For a description of the factors contributing to the increase in sales revenues from financial services operations, see “Financial Services Operations.”

The following table shows the number of financing contracts by geographic region at the end of fiscal 2025 and 2024, respectively.


	Number of financing contracts in thousands
	As of March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Japan		2,781		2,740		(41	)		(1.5	)%
North America		5,589		5,647		58			1.0
Europe		1,784		1,944		160			9.0
Asia		2,133		2,245		112			5.3
Other*		981		1,054		73			7.4

Total		13,268		13,630		362			2.7	%

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

Geographically, sales revenues (before the elimination of intersegment revenues) for fiscal 2025 increased by 4.0% in Japan, 7.6% in North America, 11.1% in Europe, 2.9% in Asia, and 3.0% in Other compared with the prior fiscal year. Excluding the impact of changes in exchange rates of ¥1,770.0 billion, sales revenues in fiscal 2025 would have increased by 3.0% in Japan, 2.4% in North America, 5.7% in Europe and 30.0% in Other, while decreased by 1.5% in Asia compared with the prior fiscal year.

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

Japan


	Thousands of units
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Toyota’s consolidated vehicle unit sales*		4,014		3,932		(82	)		(2.0	)%
* including number of exported vehicle unit sales

	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Sales revenues:
Sales of products		20,679,979		21,468,488		788,509			3.8	%
Financial services		340,742		390,606		49,864			14.6

Total		21,020,721		21,859,094		838,373			4.0	%

Sales revenues in Japan increased due primarily to the favorable impacts of changes in exchange rates related to export transactions and price revisions despite vehicle unit sales decreasing by 82 thousand vehicles compared with the prior fiscal year. For fiscal 2024 and 2025, exported vehicle unit sales were 2,021 thousand units and 1,941 thousand units, respectively.

North America


	Thousands of units
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Toyota’s consolidated vehicle unit sales		2,816		2,703		(113	)		(4.0	)%

	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Sales revenues:
Sales of products		15,705,804		16,606,446		900,642			5.7	%
Financial services		2,237,268		2,693,881		456,613			20.4

Total		17,943,072		19,300,327		1,357,254			7.6	%

Despite the impact of the suspension of production at Toyota Motor Manufacturing Indiana in the U.S., sales revenues in North America increased due primarily to the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions.

Europe


	Thousands of units
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Toyota’s consolidated vehicle unit sales		1,192		1,172		(20	)		(1.6	)%

	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Sales revenues:
Sales of products		5,255,395		5,577,646		322,252			6.1	%
Financial services		426,369		735,843		309,473			72.6

Total		5,681,764		6,313,489		631,725			11.1	%

Sales revenues in Europe increased primarily due to the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions despite vehicle unit sales decreasing by 20 thousand vehicles compared with the prior fiscal year.

Asia


	Thousands of units
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,804		1,838		34		1.9	%

	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount		Percentage
Sales revenues:
Sales of products		8,485,219		8,701,501		216,282		2.5	%
Financial services		245,529		286,561		41,031		16.7

Total		8,730,749		8,988,062		257,314		2.9	%

Sales revenues in Asia increased due primarily to the 34 thousand vehicles increase in vehicle unit sales, the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions. The increase in vehicle unit sales is attributable mainly to strong sales in India.

Other


	Thousands of units
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,638		1,659		21		1.3	%


	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount			Percentage
Sales revenues:
Sales of products		4,037,260		4,023,077		(14,183	)		(0.4	)%
Financial services		352,525		498,180		145,655			41.3

Total		4,389,785		4,521,257		131,472			3.0	%

Sales revenues in Other increased due primarily to the 21 thousand vehicles increase in vehicle unit sales, in loan balance and the favorable impact of changes in exchange rates. The increase in vehicle unit sales is attributable mainly to strong sales in the Middle East.

Operating Costs and Expenses


	Yen in millions
	Year ended March 31,				2025 v. 2024 Change
	2024		2025		Amount		Percentage
Operating costs and expenses
Cost of products sold		33,600,612		35,510,157		1,909,545		5.7	%
Cost of financing services		2,126,395		2,948,509		822,114		38.7
Selling, general and administrative		4,015,383		4,782,452		767,069		19.1

Total		39,742,390		43,241,118		3,498,728		8.8	%


	Yen in millions
	2025 v. 2024 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix		30,000
Effect of changes in exchange rates		1,180,000
Effect of increase of cost of financial services		680,000
Effect of cost reduction efforts		±0
Increase or decrease in expenses and expense reduction efforts		990,000
Other		618,728

Total		3,498,728

Operating costs and expenses increased by ¥3,498.7 billion, or 8.8%, to ¥43,241.1 billion during fiscal 2025 compared with the prior fiscal year.

Cost Reduction Efforts

During fiscal 2025, the impact of effect of cost reduction efforts is ¥0.0 billion. The impact includes a ¥240.0 billion reduction principally attributable to value engineering activities and other cost reduction efforts concerning design-related costs, resulting from continued cost reduction efforts together with our suppliers, and a ¥45.0 billion reduction attributable to cost reduction efforts principally at plants and logistics departments. However, that decrease was offset by a ¥285.0 billion increase in operating costs and expenses attributable to the impact of our efforts to strengthen the foundation of our suppliers and soaring materials prices.

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 Products Sold

Cost of products sold increased by ¥1,909.5 billion, or 5.7%, to ¥35,510.1 billion during fiscal 2025 compared with the prior fiscal year. This increase mainly reflected the ¥905.0 billion unfavorable impact of fluctuations in foreign currency translation rates, the ¥275.0 billion increase in product-quality related expenses and the ¥170.0 billion increase in labor costs.

Cost of Financial Services

Cost of financial services increased by ¥822.1 billion, or 38.7%, to ¥2,948.5 billion during fiscal 2025 compared with the prior fiscal year. This increase was due mainly to the increase in funding costs resulting from higher interest rates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by ¥767.0 billion, or 19.1%, to ¥4,782.4 billion during fiscal 2025 compared with the prior fiscal year. This increase was due mainly to the ¥235.0 billion increase in expenses and the ¥175.0 billion in expenses related to Hino’s certification issues.

Operating Income


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing efforts		145,000
Effect of cost reduction efforts		±0
Effect of changes in exchange rates		590,000
Increase or decrease in expenses and expense reduction efforts		(990,000	)
Other		(302,348	)

Total		(557,348	)

Toyota’s operating income decreased by ¥557.3 billion, or 10.4%, to ¥4,795.5 billion during fiscal 2025 compared with the prior fiscal year. This decrease was due to the ¥990.0 billion aggregate unfavorable impact of changes in expenses and expense reduction efforts, as well as the ¥302.3 billion unfavorable impact of “Other” factors, partially offset by the ¥590.0 billion favorable impact of changes in exchange rates and the ¥145.0 billion favorable impact of marketing efforts.

The aggregate unfavorable impact of changes in expenses and expense reduction efforts was due to the ¥620.0 billion increase in expenses, etc., the ¥235.0 billion increase in labor cost and the ¥130.0 billion increase in R&D expenses. “Other” includes ¥280.5 billion in expenses related to Hino’s certification issues.

The favorable impact of changes in exchange rates was due mainly to the ¥415.0 billion impact of overseas transactions such as imports and exports denominated in foreign currencies. Marketing efforts includes the ¥190.0 billion impact of the expansion of value chain profits.

During fiscal 2025, operating income (before elimination of intersegment profits) compared with the prior fiscal year decreased by ¥397.5 billion, or 78.5%, in North America, ¥333.1 billion, or 9.6%, in Japan, and increased by ¥54.2 billion, or 27.4%, in Other, ¥30.9 billion, or 3.6%, in Asia, and ¥27.4 billion, or 7.1%, in Europe.

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

Japan


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing efforts		55,000
Effect of cost reduction efforts		(160,000	)
Effect of changes in exchange rates		645,000
Increase or decrease in expenses and expense reduction efforts		(525,000	)
Other		(348,147	)

Total		(333,147	)

North America


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing efforts		5,000
Effect of cost reduction efforts		125,000
Effect of changes in exchange rates		(55,000	)
Increase or decrease in expenses and expense reduction efforts		(430,000	)
Other		(42,512	)

Total		(397,512	)

Europe


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing activities		(55,000	)
Effect of cost reduction efforts		60,000
Effect of changes in exchange rates		10,000
Increase or decrease in expenses and expense reduction efforts		(5,000	)
Other		17,457

Total		27,457

Asia


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing activities		(15,000	)
Effect of cost reduction efforts		10,000
Effect of changes in exchange rates		15,000
Increase or decrease in expenses and expense reduction efforts		10,000
Other		10,919

Total		30,919

Other


	Yen in millions
	2025 v. 2024 Change
Changes in operating income and loss:
Effect of marketing efforts		80,000
Effect of cost reduction efforts		(35,000	)
Effect of changes in exchange rates		(25,000	)
Increase or decrease in expenses and expense reduction efforts		(25,000	)
Other		59,281

Total		54,281

Other Income and Expenses

Share of profit (loss) of investments accounted for using the equity method during fiscal 2025 decreased by ¥171.9 billion, or 22.5%, to ¥591.2 billion compared with the prior fiscal year. This decrease was due mainly to a decrease during fiscal 2025 in net income attributable to the shareholders of companies accounted for by the equity method.

Other finance income decreased by ¥190.5 billion, or 25.5%, to ¥556.7 billion during fiscal 2025 compared with the prior fiscal year. This decrease was due mainly to a decrease during fiscal 2025 in profit on sales of securities and interest income.

Other finance costs increased by ¥87.0 billion, or 83.9%, to ¥190.7 billion during fiscal 2025 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2025 in losses on securities revaluation.

Foreign exchange gain (loss), net increased by ¥517.7 billion to ¥705.2 billion during fiscal 2025 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 ¥517.7 billion increase in foreign exchange gain (loss), net was due mainly to the reclassification of the gain on the disposal of certain consolidated subsidiaries from “Exchange differences on translating foreign operations” in the consolidated statement of comprehensive income to “Foreign exchange gain (loss), net” in the consolidated statement of income during fiscal 2025.

Other income (loss), net decreased by ¥61.4 billion, to ¥43.4 billion in losses during fiscal 2025 compared with the prior fiscal year.

Income Taxes

The provision for income taxes decreased by ¥268.8 billion, or 14.2%, to ¥1,624.8 billion during fiscal 2025 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 2025 was 25.3%.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests decreased by ¥101.8 billion, or 80.5%, to ¥24.6 billion during fiscal 2025 compared with the prior fiscal year. This decrease was due mainly to a decrease during fiscal 2025 in net income of consolidated subsidiaries.

Net Income Attributable to Toyota Motor Corporation

Net income attributable to Toyota Motor Corporation decreased by ¥179.8 billion, or 3.6%, to ¥4,765.0 billion during fiscal 2025 compared with the prior fiscal year.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax decreased by ¥2,863.1 billion to losses of ¥746.0 billion for fiscal 2025 compared with the prior fiscal year. This decrease resulted mainly from exchange differences on translating foreign operations losses of ¥827.8 billion in fiscal 2025 compared with gains of ¥1,178.8 billion in the prior fiscal year, due mainly to the exchange rate fluctuations of the yen against the U.S. dollar and the euro, and net changes in revaluation of financial assets measured at fair value through other comprehensive income gains of ¥133.2 billion in fiscal 2025 compared with gains of ¥569.7 billion in the prior fiscal year, due mainly to changes in prices of marketable stocks in stock exchange markets.

Segment Information

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


	Yen in millions
	Year ended March 31,						2025 v. 2024 Change
	2024			2025			Amount			Percentage
Automotive:
Sales revenues		41,266,204			43,199,865			1,933,661			4.7	%
Operating income		4,621,475			3,940,278			(681,197	)		(14.7	)
Financial Services:
Sales revenues		3,484,198			4,481,180			996,982			28.6
Operating income		570,023			683,519			113,495			19.9
All Other:
Sales revenues		1,368,164			1,447,114			78,949			5.8
Operating income		175,241			181,194			5,953			3.4
Intersegment elimination/unallocated amount:
Sales revenues		(1,023,242	)		(1,091,455	)		(68,213	)		—
Operating income		(13,805	)		(9,405	)		4,401			—
Total

Sales revenues		45,095,325			48,036,704			2,941,380			6.5	%
Operating income		5,352,934			4,795,586			(557,348	)		(10.4	)%

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 2025 by ¥1,933.6 billion, or 4.7%, to ¥43,199.8 billion compared with the prior fiscal year. The increase mainly reflects the ¥1,590.0 billion favorable impact of changes in exchange rates.

Operating income from the automotive operations decreased by ¥681.1 billion, or 14.7%, to ¥3,940.2 billion during fiscal 2025 compared with the prior fiscal year. This decrease in operating income was due mainly to the ¥990.0 billion aggregate unfavorable impact of changes in expenses and cost reduction efforts, partially offset by the ¥580.0 billion favorable impact of changes in exchange rates.

Financial Services Operations Segment

Sales revenues for the financial services operations increased during fiscal 2025 by ¥996.9 billion, or 28.6%, to ¥4,481.1 billion compared with the prior fiscal year. This increase was due mainly to the increase in loan balance and the favorable impact of changes in exchange rates.

Operating income from financial services operations increased by ¥113.4 billion, or 19.9%, to ¥683.5 billion during fiscal 2025 compared with the prior fiscal year. This increase was due mainly to the increase in loan balance and decrease in valuation losses on interest rate swaps stated at fair value.

All Other Operations Segment

Sales revenues for Toyota’s other operations segments increased by ¥78.9 billion, or 5.8%, to ¥1,447.1 billion during fiscal 2025 compared with the prior fiscal year.

Operating income from Toyota’s other operations segments increased by ¥5.9 billion, or 3.4%, to ¥181.1 billion during fiscal 2025 compared with the prior fiscal year.

Results of Operations — Fiscal 2024 Compared with Fiscal 2023


	Yen in millions
	Year ended March 31,						2024 v. 2023 Change
	2023			2024			Amount			Percentage
Sales revenues:
Japan		17,583,196			21,020,721			3,437,525			19.6	%
North America		13,843,901			17,943,072			4,099,172			29.6
Europe		4,273,735			5,681,764			1,408,028			32.9
Asia		8,044,906			8,730,749			685,843			8.5
Other*		3,472,193			4,389,785			917,592			26.4
Intersegment elimination/unallocated amount		(10,063,633	)		(12,670,767	)		(2,607,133	)		—

Total		37,154,298			45,095,325			7,941,027			21.4	%
Operating income (loss):
Japan		1,901,463			3,484,270			1,582,808			83.2
North America		(74,736	)		506,319			581,056			—
Europe		57,460			388,096			330,636			575.4
Asia		714,451			865,591			151,140			21.2
Other*		231,362			198,345			(33,017	)		(14.3	)
Intersegment elimination/unallocated amount		(104,974	)		(89,687	)		15,286			—

Total		2,725,025			5,352,934			2,627,909			96.4	%
Operating margin		7.3	%		11.9	%		4.6	%
Income before income taxes		3,668,733			6,965,085			3,296,352			89.8
Net margin from income before income taxes		9.9	%		15.4	%		5.5	%
Net income attributable to Toyota Motor Corporation		2,451,318			4,944,933			2,493,615			101.7
Net margin attributable to Toyota Motor Corporation		6.6	%		11.0	%		4.4	%

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

Sales Revenues

Toyota had sales revenues for fiscal 2024 of ¥45,095.3 billion, an increase of ¥7,941.0 billion, or 21.4%, compared with the prior fiscal year. The increase resulted mainly from the ¥5,130.0 billion impact of increased vehicle unit sales and changes in sales mix and the ¥1,320.0 billion favorable impact of changes in exchange rates.

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


	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount			Percentage
Vehicles		28,394,256		35,249,865		6,855,609			24.1	%
Parts and components for production		1,710,422		1,596,111		(114,311	)		(6.7	)
Parts and components for after service		2,866,196		3,166,586		300,390			10.5
Other		805,995		1,068,169		262,174			32.5

Total Automotive		33,776,870		41,080,731		7,303,861			21.6
All Other		590,749		567,399		(23,350	)		(4.0	)

Total sales of products		34,367,619		41,648,130		7,280,511			21.2
Financial services		2,786,679		3,447,195		660,516			23.7

Total sales revenues		37,154,298		45,095,325		7,941,027			21.4	%

Toyota’s sales revenues include sales revenues from sales of products, consisting of sales revenues from automotive operations and all other operations, which increased by 21.2% during fiscal 2024 compared with the prior fiscal year to ¥41,648.1 billion, and sales revenues from financial services operations, which increased by 23.7% during fiscal 2024 compared with the prior fiscal year to ¥3,447.1 billion. The increase in sales revenues from sales of products is mainly due to an increase in Toyota vehicle unit sales of 621 thousand vehicles and the favorable impact of changes in exchange rates compared with the prior fiscal year.

The following table shows the number of financing contracts by geographic region at the end of fiscal 2024 and 2023, respectively.


	Number of financing contracts in thousands
	As of March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Japan		2,767		2,781		14		0.5	%
North America		5,500		5,589		89		1.6
Europe		1,647		1,784		137		8.3
Asia		2,034		2,133		99		4.9
Other*		938		981		43		4.6

Total		12,886		13,268		382		3.0	%

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

Geographically, sales revenues (before the elimination of intersegment revenues) for fiscal 2024 increased by 19.6% in Japan, 29.6% in North America, 32.9% in Europe, 8.5% in Asia, and 26.4% in Other compared with the prior fiscal year. Excluding the impact of changes in exchange rates of ¥1,320.0 billion, sales revenues in fiscal 2024 would have increased by 18.0% in Japan, 21.2% in North America, 19.5% in Europe, 3.1% in Asia, and 55.3% in Other compared with the prior fiscal year.

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

Japan


	Thousands of units
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Toyota’s consolidated vehicle unit sales*		3,703		4,014		311		8.4	%
* including number of exported vehicle unit sales

	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Sales revenues:
Sales of products		17,271,451		20,679,979		3,408,528		19.7	%
Financial services		311,744		340,742		28,998		9.3

Total		17,583,196		21,020,721		3,437,525		19.6	%

Despite the impact of the suspension of shipments by Daihatsu Motor Co., Ltd. and Toyota Industries Corporation, sales revenues in Japan increased due primarily to the 311 thousand vehicles increase in domestic and exported vehicle unit sales, and the favorable impacts of changes in exchange rates related to export transactions and price revisions compared with the prior fiscal year. For fiscal 2023 and 2024, exported vehicle unit sales were 1,634 thousand units and 2,021 thousand units, respectively.

North America


	Thousands of units
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Toyota’s consolidated vehicle unit sales		2,407		2,816		409		17.0	%

	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Sales revenues:
Sales of products		11,965,050		15,705,804		3,740,754		31.3	%
Financial services		1,878,850		2,237,268		358,418		19.1

Total		13,843,901		17,943,072		4,099,171		29.6	%

Sales revenues in North America increased due primarily to the 409 thousand vehicles increase in vehicle unit sales, the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions. The increase in vehicle unit sales is attributable mainly to strong sales of such models as the RAV4 and Corolla supported by strong market conditions as compared to the prior year.

Europe


	Thousands of units
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,030		1,192		162		15.7	%

	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Sales revenues:
Sales of products		4,003,043		5,255,395		1,252,352		31.3	%
Financial services		270,693		426,369		155,676		57.5

Total		4,273,735		5,681,764		1,408,028		32.9	%

Sales revenues in Europe increased due primarily to the 162 thousand vehicles increase in vehicle unit sales, the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions. The increase in vehicle unit sales is attributable mainly to the market progressing in a steady manner and strong sales of such models as the Corolla.

Asia


	Thousands of units
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,751		1,804		53		3.0	%

	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Sales revenues:
Sales of products		7,832,020		8,485,219		653,199		8.3	%
Financial services		212,886		245,529		32,643		15.3

Total		8,044,906		8,730,749		685,843		8.5	%

Sales revenues in Asia increased due primarily to the 53 thousand vehicles increase in vehicle unit sales, the favorable impact of changes in exchange rates compared with the prior fiscal year and price revisions. The increase in vehicle unit sales is attributable mainly to strong sales in India.

Other


	Thousands of units
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Toyota’s consolidated vehicle unit sales		1,565		1,638		73		4.6	%


	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Sales revenues:
Sales of products		3,225,962		4,037,260		811,298		25.1	%
Financial services		246,232		352,525		106,293		43.2

Total		3,472,193		4,389,785		917,592		26.4	%

Sales revenues in Other increased due primarily to the 73 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year and the inflationary economy in Argentina. The increase in vehicle unit sales is attributable mainly to strong sales in Oceania.

Operating Costs and Expenses


	Yen in millions
	Year ended March 31,				2024 v. 2023 Change
	2023		2024		Amount		Percentage
Operating costs and expenses
Cost of products sold		29,128,561		33,600,612		4,472,051		15.4	%
Cost of financing services		1,712,721		2,126,395		413,674		24.2
Selling, general and administrative		3,587,990		4,015,383		427,393		11.9

Total		34,429,273		39,742,390		5,313,117		15.4	%


	Yen in millions
	2024 v. 2023 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix		3,880,000
Effect of changes in exchange rates		635,000
Effect of increase of cost of financial services		270,000
Effect of cost reduction efforts		(120,000	)
Increase or decrease in expenses and expense reduction efforts		380,000
Other		268,117

Total		5,313,117

Operating costs and expenses increased by ¥5,313.1 billion, or 15.4%, to ¥39,742.3 billion during fiscal 2024 compared with the prior fiscal year.

Cost Reduction Efforts

During fiscal 2024, continued cost reduction efforts together with suppliers contributed to a reduction of operating costs and expenses by ¥120.0 billion. This decrease was due to a ¥265.0 billion reduction principally attributable to value engineering activities and other cost reduction efforts concerning design-related costs, and a ¥120.0 billion reduction attributable to cost reduction efforts principally at plants and logistics departments. However, that decrease was offset by a ¥265.0 billion increase in operating costs and expenses attributable to the impact of soaring materials prices.

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Cost of Products Sold

Cost of products sold increased by ¥4,472.0 billion, or 15.4%, to ¥33,600.6 billion during fiscal 2024 compared with the prior fiscal year. This increase mainly reflected the ¥3,880.0 billion impact of changes in vehicle unit sales and sales mix and the ¥420.0 billion unfavorable impact of fluctuations in foreign currency translation rates.

Cost of Financial Services

Cost of financial services increased by ¥413.6 billion, or 24.2%, to ¥2,126.3 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to the increase in funding costs resulting from higher interest rates and the increase in expenses related to credit losses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by ¥427.3 billion, or 11.9%, to ¥4,015.3 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to the ¥225.0 billion increase in labor costs and the ¥180.0 billion increase in sales expenses.

Operating Income


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		2,000,000
Effect of cost reduction efforts		120,000
Effect of changes in exchange rates		685,000
Increase or decrease in expenses and expense reduction efforts		(380,000	)
Other		202,909

Total		2,627,909

Toyota’s operating income increased by ¥2,627.9 billion, or 96.4%, to ¥5,352.9 billion during fiscal 2024 compared with the prior fiscal year. This increase was due to the ¥2,000.0 billion impact of marketing efforts, the ¥685.0 billion favorable impact of changes in exchange rates, the ¥120.0 billion aggregate favorable impact of factors categorized as cost reduction efforts (including fluctuations in raw materials prices) and other factors, partially offset by the ¥380.0 billion aggregate unfavorable impact of changes in expenses and expense reduction efforts.

Marketing efforts includes the ¥980.0 billion positive impact of changes in vehicle unit sales and sales mix and the ¥920.0 billion in other favorable impacts that are due mainly to price revisions. “Other” includes valuation gains from interest rate swaps and interest rate currency swaps of ¥140.5 billion.

The favorable impact of changes in exchange rates was due mainly to the ¥590.0 billion impact of overseas transactions such as imports and exports denominated in foreign currencies.

During fiscal 2024, operating income (before elimination of intersegment profits) compared with the prior fiscal year increased by ¥1,582.8 billion, or 83.2%, in Japan, ¥581.0 billion in North America, ¥330.6 billion, or 575.4%, in Europe, and ¥151.1 billion, or 21.2%, in Asia, and decreased by ¥33.0 billion, or 14.3%, in Other.

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

Japan


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		1,130,000
Effect of cost reduction efforts		(110,000	)
Effect of changes in exchange rates		625,000
Increase or decrease in expenses and expense reduction efforts		(140,000	)
Other		77,808

Total		1,582,808

North America


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		455,000
Effect of cost reduction efforts		125,000
Effect of changes in exchange rates		60,000
Increase or decrease in expenses and expense reduction efforts		(190,000	)
Other		131,056

Total		581,056

Europe


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		180,000
Effect of cost reduction efforts		75,000
Effect of changes in exchange rates		(5,000	)
Increase or decrease in expenses and expense reduction efforts		10,000
Other		70,636

Total		330,636

Asia


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		115,000
Effect of cost reduction efforts		35,000
Effect of changes in exchange rates		(35,000	)
Increase or decrease in expenses and expense reduction efforts		5,000
Other		31,140

Total		151,140

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Other


	Yen in millions
	2024 v. 2023 Change
Changes in operating income and loss:
Effect of marketing efforts		125,000
Effect of cost reduction efforts		(5,000	)
Effect of changes in exchange rates.		40,000
Increase or decrease in expenses and expense reduction efforts.		(80,000	)
Other		(113,017	)

Total		(33,017	)

Other Income and Expenses

Share of profit (loss) of investments accounted for using the equity method during fiscal 2024 increased by ¥120.0 billion, or 18.7%, to ¥763.1 billion compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2024 in net income attributable to the shareholders of companies accounted for by the equity method.

Other finance income increased by ¥367.8 billion, or 97.0%, to ¥747.2 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2024 in interest income and profit on sales of securities.

Other finance costs decreased by ¥21.4 billion, or 17.1%, to ¥103.7 billion during fiscal 2024 compared with the prior fiscal year. This decrease was due mainly to a decrease during fiscal 2024 in losses on securities revaluation.

Foreign exchange gain (loss), net increased by ¥63.0 billion to ¥187.5 billion during fiscal 2024 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 ¥63.0 billion increase in foreign exchange gain (loss), net was due mainly to the gains recorded in fiscal 2024 resulting from the Japanese yen being weaker against foreign currencies at the maturity dates of the foreign currency deposit and loans than at the dates of the deposit or the lending.

Other income (loss), net increased by ¥96.0 billion, to ¥17.9 billion during fiscal 2024 compared with the prior fiscal year.

Income Taxes

The provision for income taxes increased by ¥717.8 billion, or 61.1%, to ¥1,893.6 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to the increase in income before income taxes. The average effective tax rate for fiscal 2024 was 27.2%.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests increased by ¥84.8 billion, or 203.7%, to ¥126.4 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2024 in net income of consolidated subsidiaries.

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Net Income Attributable to Toyota Motor Corporation

Net income attributable to Toyota Motor Corporation increased by ¥2,493.6 billion, or 101.7%, to ¥4,944.9 billion during fiscal 2024 compared with the prior fiscal year.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax increased by ¥1,289.3 billion to ¥2,117.1 billion for fiscal 2024 compared with the prior fiscal year. This increase resulted mainly from net changes in revaluation of financial assets measured at fair value through other comprehensive income gains of ¥569.7 billion in fiscal 2024 compared with losses of ¥16.5 billion in the prior fiscal year, due mainly to changes in prices of marketable stocks in stock exchange markets, and exchange differences on translating foreign operations gains of ¥1,178.8 billion in fiscal 2024 compared with gains of ¥676.0 billion in the prior fiscal year, due mainly to the weakening of the yen against the U.S. dollar and the euro.

Segment Information

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


	Yen in millions
	Year ended March 31,						2024 v. 2023 Change
	2023			2024			Amount			Percentage
Automotive:
Sales revenues		33,820,000			41,266,204			7,446,204			22.0	%
Operating income		2,180,637			4,621,475			2,440,838			111.9
Financial Services:
Sales revenues		2,809,647			3,484,198			674,551			24.0
Operating income		437,516			570,023			132,507			30.3
All Other:
Sales revenues		1,224,943			1,368,164			143,221			11.7
Operating income		103,451			175,241			71,789			69.4
Intersegment elimination/unallocated amount:
Sales revenues		(700,293	)		(1,023,242	)		(322,949	)		—
Operating income		3,420			(13,805	)		(17,226	)		—
Total

Sales revenues		37,154,298			45,095,325			7,941,027			21.4	%
Operating income		2,725,025			5,352,934			2,627,909			96.4	%

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 2024 by ¥7,446.2 billion, or 22.0%, to ¥41,266.2 billion compared with the prior fiscal year. The increase mainly reflects the ¥5,130.0 billion favorable impact of changes in vehicle unit sales and sales mix and the ¥880.0 billion favorable impact of changes in exchange rates.

Operating income from the automotive operations increased by ¥2,440.8 billion, or 111.9%, to ¥4,621.4 billion during fiscal 2024 compared with the prior fiscal year. This increase in operating income was due mainly to the ¥2,300.0 billion impact of marketing efforts and the ¥660.0 billion favorable impact of changes in exchange rates.

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Financial Services Operations Segment

Sales revenues for the financial services operations increased during fiscal 2024 by ¥674.5 billion, or 24.0%, to ¥3,484.1 billion compared with the prior fiscal year. This increase was due mainly to the increase in loan balance and the favorable impact of changes in exchange rates.

Operating income from financial services operations increased by ¥132.5 billion, or 30.3%, to ¥570.0 billion during fiscal 2024 compared with the prior fiscal year. This increase was due mainly to decrease in valuation losses on interest rate swaps stated at fair value in sales finance subsidiaries in the United States.

All Other Operations Segment

Sales revenues for Toyota’s other operations segments increased by ¥143.2 billion, or 11.7%, to ¥1,368.1 billion during fiscal 2024 compared with the prior fiscal year.

Operating income from Toyota’s other operations segments increased by ¥71.7 billion, or 69.4%, to ¥175.2 billion during fiscal 2024 compared with the prior fiscal year.

Related Party Transactions

See note 32 to the consolidated financial statements for further discussion.

Basic Concept Regarding the Selection of Accounting Standards

TMC has adopted IFRS Accounting Standards for its consolidated financial statements in order to improve the international comparability of its financial information in the capital markets, among other reasons, beginning with the first quarter of the fiscal year ended March 31, 2021.

Outlook

In order to provide the freedom and enjoyment of mobility to all and realize a mobility society that is safe, reliable, and sustainable, Toyota aims to transform itself into a mobility company.

To ensure cars remain a form of mobility that makes people happy, we must minimize the negative effects that cars have on society — such as congestion and increases in traffic accidents and pollution — while maximizing the benefits, including convenience, comfort, and the enjoyment of driving. The Toyota Mobility Concept breaks down this process into three stages: Mobility 1.0 Transitioning Cars to Mobility, Mobility 2.0 Expanding Mobility Access, and Mobility 3.0 Synergy of Mobility & Infrastructure. Based on this conceptual structure, we are taking on various challenges premised on two key themes: carbon neutrality and expanding the value of mobility.

Taking the foregoing external factors and other factors into account, Toyota expects that sales revenues for fiscal 2026 will increase compared with fiscal 2025 due mainly to an increase in vehicle unit sales, partially offset by the unfavorable impact of changes in exchange rates. Toyota expects that operating income will decrease in fiscal 2026 compared with fiscal 2025 due mainly to the unfavorable impact of changes in exchange rates, soaring materials prices, as well as the impact of U.S. tariffs and investments in human resources and growth areas, partially offset by improvement efforts such as cost reductions and expansion of value chain profits. With respect to U.S. tariffs, in May 2025 we announced that we tetatively factored into our expectations about our full-year operating income a ¥180.0 billion negative impact from them for the months of April and May 2025.

Toyota expects that income before income taxes and net income attributable to Toyota Motor Corporation will also decrease in fiscal 2026 compared with fiscal 2025.

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Toyota cannot predict the timing, duration, scope or extent of any future changes to U.S. tariffs and trade policies, or of other tariffs or trade-related actions. Therefore, the outlook for fiscal 2026 does not take into account their impact beyond May 2025.

For the purposes of this outlook discussion, Toyota is assuming an average exchange rate of ¥145 to the U.S. dollar and ¥160 to the euro. Exchange rate fluctuations can materially affect Toyota’s operating results. In particular, a strengthening of the Japanese yen against the U.S. dollar can have a material adverse effect on Toyota’s operating results. See “Item 5. Operating and Financial Review and Prospects — 5.A Operating Results — Overview — Currency Fluctuations” for further discussion.

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

5.B LIQUIDITY AND CAPITAL RESOURCES

Historically, Toyota has funded its cash requirements, including those relating to capital expenditures as well as its research and development activities through cash generated by operations.

In fiscal 2026, 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 2023, 2024 and 2025, 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 decreased by ¥509.4 billion to ¥3,696.9 billion for fiscal 2025, compared with ¥4,206.3 billion for fiscal 2024. The decrease was primarily attributable to the ¥1,377.0 billion increase in income taxes paid, net of refunds.

Net cash used in investing activities decreased by ¥809.0 billion to ¥4,189.7 billion for fiscal 2025, compared with ¥4,998.7 billion for fiscal 2024. The decrease was primarily attributable to the ¥729.3 billion decrease in time deposits compared to the prior fiscal year.

Net cash provided by financing activities decreased by ¥2,300.3 billion to ¥197.2 billion for fiscal 2025, compared with ¥2,497.5 billion for fiscal 2024. The decrease was primarily attributable to the ¥2,119.9 billion increase in payments of long-term debt compared to the prior fiscal year.

For a discussion of cash flows for fiscal 2024 as compared to those for fiscal 2023, see “Item 4.B. 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, 2024.

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Total capital expenditures for property, plant and equipment, including vehicles and equipment on operating leases, increased by ¥1,143.2 billion to ¥5,991.2 billion in fiscal 2025, compared to ¥4,848.0 billion in fiscal 2024. The increase was primarily attributable to the ¥931.7 billion increase in capital expenditures for the purchase of leased assets in the financial services operations segment compared to the prior fiscal year.

Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately ¥2,300.0 billion during fiscal 2026.

Cash and cash equivalents were ¥8,982.4 billion as of March 31, 2025. 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 ¥21,177.7 billion as of March 31, 2025.

Trade accounts and notes receivable, less allowance for doubtful accounts decreased during fiscal 2025 by ¥109.7 billion, or 2.9%, to ¥3,679.7 billion. This decrease was due mainly to a decrease in the impact of changes in exchange rates.

Inventories decreased during fiscal 2025 by ¥7.1 billion, or 0.2%, to ¥4,598.2 billion.

Total finance receivables, net increased during fiscal 2025 by ¥1,930.6 billion, or 6.1%, to ¥33,625.0 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 53.9%, in Europe 15.0%, in Asia 11.7%, in Japan 8.9% and in Other 10.5%.

Other financial assets increased during fiscal 2025 by ¥725.8 billion, or 4.5%. This increase was due mainly to an increase in public and corporate bonds.

Property, plant and equipment increased during fiscal 2025 by ¥1,075.9 billion, or 7.5%. This increase was due mainly to capital expenditures.

Accounts and notes payable increased during fiscal 2025 by ¥275.9 billion, or 5.3%. This increase was due mainly to an increase in accounts payable associated with parts procurement.

Income taxes payable decreased during fiscal 2025 by ¥719.0 billion, or 58.7%. This decrease was mainly due to a decrease in income before income taxes that led to decreased income tax expense.

Toyota’s total borrowings increased during fiscal 2025 by ¥2,231.0 billion, or 6.1%. Toyota’s short-term borrowings consist of loans with a weighted-average interest rate of 2.26% and commercial paper with a weighted-average interest rate of 3.82%. Short-term borrowings decreased during fiscal 2025 by ¥23.4 billion, or 0.4%, to ¥5,464.4 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 1.93% to 8.12%, and maturity dates ranging from 2025 to 2048. The current portion of long-term debt increased during fiscal 2025 by ¥428.0 billion, or 4.3%, to ¥10,272.9 billion and the non-current portion increased by ¥1,755.7 billion, or 8.5%, to ¥22,522.1 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, 2025, approximately 50% 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 15% 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, 2025, Toyota’s total interest-bearing debt was 108.0% of Toyota Motor Corporation shareholders’ equity, compared with 106.8% as of March 31, 2024.

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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 Investors Services (Moody’s), and Rating and Investment Information, Inc. (R&I), as of May 31, 2025. 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 2025 by ¥182.5 billion, or 479.3%, to ¥220.6 billion. The net defined benefit liability (asset) of foreign plans decreased during fiscal 2025 by ¥15.2 billion, or 4.2%, to ¥350.8 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 decrease in stock prices. 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 2025.

For information regarding the amounts of non-derivative financial liabilities and derivative financial liabilities by a remaining contract maturity period, see note 19 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.

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The following tables summarize Toyota’s contractual obligations and commercial commitments as of March 31, 2025


	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		5,464,469		5,464,469		—		—		—
Long-term debt		33,328,410		10,365,047		12,714,587		7,634,239		2,614,537
Commitments for the purchase of property, plant, other assets and services (note 30)		3,807,743		429,884		354,869		683,305		2,339,685

Total		42,600,622		16,259,400		13,069,456		8,317,544		4,954,222

Commercial Commitments (note 30):
Maximum potential exposure to guarantees given in the ordinary course of business		2,314,927		727,105		1,101,358		410,501		75,963

Total		2,314,927		727,105		1,101,358		410,501		75,963

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

Toyota expects to contribute ¥33,651 million domestically and ¥16,454 million overseas to its pension plans in fiscal 2026.

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 ¥157.7 billion as of March 31, 2025.

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 ¥3,034.7 billion as of March 31, 2025.

Guarantees

See note 30 to the consolidated financial statements for further discussion.

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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 ¥1,326.4 billion in fiscal 2025, ¥1,202.3 billion in fiscal 2024, and ¥1,241.6 billion in fiscal 2023.

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 27 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 invested additional $150 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

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and software platforms, Toyota established Woven Planet North America (WPNA) in the United States and 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

Woven by Toyota, U.S., Inc.		Development of automated driving technology and software

Europe

Toyota Motor Europe NV/SA		Planning and evaluation of vehicles manufactured in Europe

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

TOYOTA GAZOO Racing Europe GmbH		Development of motor sports vehicles

Woven by Toyota, U.K., Ltd.		Development of automated driving technology and software platform technology

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Facility		Principal Activity

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 Research & Development Co., Ltd.		Design, evaluation and certification of vehicles manufactured in China

GAC Toyota Motor Co., Ltd. R&D Center		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

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 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

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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 and Supervisory Committee, following approval at the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025. Toyota has five members of the Board of Directors who are Audit and Supervisory Committee members, three of whom are outside Audit and Supervisory Committee members.

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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 TMC (to present) (important concurrent duties) Chairman of TOYOTA FUDOSAN CO., LTD. Director of DENSO Corporation Representative Director of ROOKIE Racing, Inc. Chairman of TOYOTA GAZOO Racing World Rally Team		23,747

Koji Sato (October 19, 1969)	President, Member of the Board of Directors (Representative Director)	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 of TMC (to present) (important concurrent duties) Chairman of Toyota Motor North America, Inc.		187
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 President and Representative Director of Commercial Japan Partnership Technologies Asia Co., Ltd. Chairman of TOYOTA GAZOO Racing Europe GmbH		71

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Name (Date of Birth)	Position	Brief Career Summary and Important Concurrent Duties	Number of Common Shares (in thousands)

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)		97

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, Japan Tobacco Inc. (to present) 2025 Outside Member of the Board of Directors of TMC (to present) (important concurrent duties) Deputy Chairperson of the Board, Japan Tobacco Inc.		1

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Name (Date of Birth)	Position	Brief Career Summary and Important Concurrent Duties	Number of Common Shares (in thousands)

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 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) 2024 Substitute Audit & Supervisory Board Member of TMC 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 Net Protections Holdings, Inc. Outside Director (Audit & Supervisory Committee Member) of CellSource Co., Ltd. Outside Director of Shizuoka Financial Group, Inc.		—
George Olcott (May 7, 1955)	Outside Member of the Board of Directors who is a member of the Audit and Supervisory Committee	1986 Joined S.G.Warburg & Co., Ltd 1999 President of UBS Asset Management (Japan) 1999 President, Japan UBS Brinson 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 and Supervisory Committee of TMC (to present)		4

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Name (Date of Birth)	Position	Brief Career Summary and Important Concurrent Duties	Number of Common Shares (in thousands)

Masahiko Oshima (September 13, 1960)	Outside Member of the Board of Directors who is a Member of the Audit and 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 Retired from SMBC 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 and Supervisory Committee of TMC (to present) (important concurrent duties) Chairman and Representative Director of Ares Management Asia Japan KK. (to present) Outside Audit and Supervisory Board Member of TBS HOLDINGS, INC. (to present)		2

Hiromi Osada (June 11, 1973)	Outside Member of the Board of Directors who is a Member of the Audit and Supervisory Committee	1999 Joined Chunichi Shimbun Co., Ltd. 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 and Supervisory Committee of TMC (to present)		0

*1.	Mr. Koji Sato, who is President and Member of the Board of Directors, concurrently serves as Operating Officer (President).

*2.

Toyota transitioned from a company with Audit & Supervisory Board to a company with Audit and Supervisory Committee on June 12, 2025, following approval at the 121st Ordinary General Shareholders’ Meeting held on the same day. Shigeru Hayakawa and Simon Humphries, each a Member of the Board of Directors, Ikuro Sugawara, Sir Philip Craven, and Emi Osono, each an Outside Member of the Board of Directors, Takeshi Shirane, Masahide Yasuda and Katsuyuki Ogura, each a full-time Audit & Supervisory Board Member, and George Olcott, Catherine O’Connell and Hiromi Osada, each an Outside Audit &

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Supervisory Board Member, retired from their respective positions at the conclusion of the 121st Ordinary General Shareholders’ Meeting.

None of the persons listed above was selected as a member of Board of Directors, Audit & Supervisory Board Member, Audit and 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

•

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 and supervisory committee based on a resolution adopted at the 121st Annual 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 and supervisory committee, including specifying that the policy applies to Board of Directors (excluding those who are Audit and 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 and 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 and 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 and 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 and Supervisory Committee 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 those who are Audit and Supervisory Committee members) was set at 4.0 billion yen per year. The number of members of the Board of Directors to which such resolutions at the 121st Ordinary General Shareholders’ Meeting related was six (including two outside members of the Board of Directors).

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The amount of remuneration for each member of the Board of Directors (excluding those who are Audit and 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.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.

(Note 1)

As of June 12, 2025, the chairperson of the Executive Compensation Meeting was changed from Shigeru Hayakawa, the Vice Chairman of the Board of Directors, to Yoichi Miyazaki, Executive Vice President and a member of the Board of Directors. Shigeru Hayakawa retired as the Vice Chairman of the Board of Directors as of the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025.

(Note 2)

The members of the Executive Compensation Meeting were changed from Ikuro Sugawara, Sir Philip Craven, Masahiko Oshima and Emi Osono, each an outside member of the Board of Directors, to Shigeaki Okamoto and Kumi Fujisawa, each an outside member of the Board of Directors. Ikuro Sugawara, Sir Philip Craven and Emi Osono retired as outside members of the Board of Directors, and Masahiko Oshima, an outside member of the Board of Directors, assumed the office of member of Board of Director who is an Audit and Supervisory Committee member, as of the conclusion of the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025.

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 for a given fiscal year. 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 and Supervisory Committee members) to the Executive Compensation Meeting.

The Executive Compensation Meeting reviews the remuneration system for members of Board of Directors (excluding those who are Audit and 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 and 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 and 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 on determining remuneration and other payments for each member of the Board of Directors (excluding those who are Audit and Supervisory Committee members).

The total amount of remuneration for members of the Board of Directors who are Audit and 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 and 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 and Supervisory Committee members is discussed and determined by members of the Board of Directors who are Audit and Supervisory Committee members within the scope determined by resolution of the shareholders’ meeting.

Executive Compensation Meetings were held in June, July, August, September, October, November and December 2024 and February, March and April 2025 to discuss and determine the amount of remuneration for fiscal 2025 and other relevant matters.

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Remuneration for the members of the Board of Directors 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

•

Review of the range of adjustments in performance-based remuneration

•

Evaluation of actual results of fiscal 2025

•

Determination of the amount of remuneration for each member of the Board of Directors

(Note)

The amount of remuneration for each outside member of the Board of Directors and the amount of remuneration for each non-outside member of the Board of Directors were determined at meetings of the Executive Compensation Meeting held in June 2024 and April 2025, 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 and 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 a benchmark of Japanese and also 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 and 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 and 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

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(3) Consolidated operating income (multiple years)	35%	Evaluate the degree of attainment of consolidated operating income for the last three fiscal years, including fiscal 2025, 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	138%
(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 fiscal 2025 and the cumulative amount of dividend per share during the period from the fiscal year that is four years before fiscal 2025 through fiscal 2025 by the stock price on the last day of the fiscal year that is five years before fiscal 2025 and the rate of change in TOPIX Net Total Return calculated in the same manner as reference values	TOPIX: 213.4%
(5) Return on equity	17.5%	Comparatively evaluate Toyota’s return on equity for fiscal 2025 using the levels recommended by the Ito Review^*1 as reference values	8%
(6) Progress of efforts to resolve sustainability issues	30%	Evaluate the degree of contribution of business activities during fiscal 2025 in accordance with the six key issues (materiality)^*2	Six key issues (materiality)

*1	A report on corporate governance reforms released by METI in 2014

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

As a result of the model certification application issues that were reported by Toyota to MLIT in 2024, we reflected this incident in the evaluation for “Strong Production & Business Operation,” one of our six key evaluation criteria, for members of the Board of Directors (excluding outside members of the Board of Directors) and accordingly reduced remuneration amounts for fiscal 2024. The evaluation for “Strong Production & Business Operation” for operating officers who did not concurrently serve as directors (excluding outside members of the Board of Directors) also reflected this, thus similarly reducing their remuneration for fiscal 2024.

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

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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 the Chairman of the Board of Directors, and 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.

Method of Determining Performance-based Remuneration (Bonus and Share Compensation) for Retired Members of the Board of Directors

Toyota sets the Annual Total Remuneration received by each member of the Board of Directors in a year based on consolidated operating income, the fluctuation of the market capitalization of Toyota* and individual performance evaluation. The balance after deducting monthly compensation as fixed remuneration from Annual Total Remuneration constitutes performance-based remuneration.

Toyota sets an appropriate executive compensation level for Annual Total Remuneration based on position and duties by referencing a benchmark of Japanese and also global companies selected based on the size of each person’s role and other factors.

*	Calculated by multiplying the closing price of Toyota’s common stock for fiscal 2024 on the Tokyo Stock Exchange by the number of shares issued after deducting the number of treasury stock

Concept of Each Item of Performance-based Remuneration for Retired Members of the Board of Directors



Consolidated operating income		Indicator for evaluating Toyota’s efforts based on business performance

Fluctuation of the 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

Directors with Foreign Citizenship (Excluding Outside Members of the Board of Directors and Members of the Board of Directors who are Audit and 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 and 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 and 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.

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Composition and Method of Setting Performance-based Remuneration in the Treatment of Retired Members of the Board of Directors with Foreign Citizenship

Performance-based remuneration is set based on consolidated operating income, the fluctuation of the market capitalization of Toyota and individual performance, taking into account each member’s job responsibilities and the remuneration standards of such member’s home country (application determined individually). The concept of each item is the same as that for Retired Members of the Board of Directors with Japanese citizenship (excluding outside members of the Board of Directors). In addition, there are cases where Toyota provides income tax compensation for certain members of the Board of Directors in light of the difference in income tax rates with those of his or her home country.

Additional Information Regarding Share Compensation

For additional details regarding share compensation provided to Members of the Board of Directors of Toyota, see “Item 6.E. — Share Ownership.”

Fiscal 2025 Compensation

The aggregate amount of remuneration, including bonuses, accrued for all members of the Board of Directors and Audit & Supervisory Board members as a group by Toyota for services in all capacities was ¥4,972 million during fiscal 2025.

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 of Toyota Motor Corporation.

Toyota’s Annual Securities Report filed with the Kanto Local Bureau of Finance on June 18, 2025, contained the following information concerning compensation in fiscal 2025 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:

Toyota became a company with an audit and supervisory committee based on a resolution adopted at the 121st Annual General Meeting of Shareholders held on June 12, 2025. With respect to compensation, etc. for fiscal 2025, the amounts stated pertain to compensation, etc. paid to members of the Board of Directors as a company with an audit & supervisory board.


		Compensation per Type (million yen)
				Performance-based Compensation
Name, Position	Classification of Company	Fixed Compensation		Bonus		Share Compensation	Retirement Benefits		Total Compensation (millions of yen)
Akio Toyoda, Member of the Board of Directors	Toyota Motor Corporation		395		601	953 (352,000 shares)		—		1,949
Shigeru Hayakawa, Member of the Board of Directors*1	Toyota Motor Corporation		95		118	152		—		365
Koji Sato, Member of the Board of Directors	Toyota Motor Corporation		193		236	397 (147,000 shares)		—		826
Hiroki Nakajima, Member of the Board of Directors	Toyota Motor Corporation		96		147	175 (65,000 shares)		—		418
Yoichi Miyazaki, Member of the Board of Directors	Toyota Motor Corporation		100		147	175 (65,000 shares)		—		422
Simon Humphries, Member of the Board of Directors	Toyota Motor Corporation		55		115	89 (33,000 shares)		—		259
James Kuffner*2, Member of the Board of Directors	Toyota Motor Corporation		—		244	—		—		244

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*1	Share compensation is paid in cash to Shigeru Hayakawa, who retired as the Vice Chairman of the Board of Directors at the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025.

*2	Performance-based compensation paid by Toyota to James Kuffner, who retired as member of the Board of Directors, includes performance-based compensation for the years ended March 2023, 2024 and 2025, and is disclosed as the payment amount has been finalized.

The amounts above were recorded as expenses in fiscal 2025.

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 and 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 and Supervisory Committee members) is one year, and that of members of the Board of Directors who are Audit and 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) 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 and Supervisory Committee members. A majority of the members of the Board of Directors who are Audit and 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;

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(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 and 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 and Supervisory Committee members also audit the execution of duties of Toyota’s members of the Board of Directors. Audit and 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.

6.D EMPLOYEES

The total number of Toyota employees, on a consolidated basis, was 383,853 as of March 31, 2025, 380,793 as of March 31, 2024, and 375,235 as of March 31, 2023. The following tables set forth a breakdown of persons employed by business segment and by geographic location as of March 31, 2025.


Segment	Number of Employees	Location	Number of Employees
Automotive	339,062	Japan	203,504
Financial services	15,321	North America	65,294
All other	23,093	Europe	24,366
Unallocated	6,377	Asia	65,749
		Other*	24,940

Total	383,853	Total	383,853

		* “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

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wage negotiations and are based on Toyota’s financial results, prospects and other factors. In fiscal 2025, 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 95,530 during fiscal 2025.

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 2025, 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, 2025, 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.

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 and 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 Toyota (excluding outside members of the Board of Directors and members of the Board of Directors who are Audit and Supervisory Committee members)
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 15, 2022, 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.)

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Amount to be paid		Determined by the Board of Directors of Toyota based on the closing price of Toyota’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 Toyota in advance
Conditions for removal of transfer restrictions		Restrictions will be removed upon the expiration of the transfer restriction period. However, restrictions will also be removed in the case of expiration of the term of office, death, or other legitimate reasons.
Gratis acquisition by Toyota		Toyota will be able to acquire all allotted shares without consideration in the case of violations of laws and regulations or other reasons specified by the Board of Directors of Toyota during the transfer restriction period.

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 association. As of March 31, 2025, the employee stock ownership association held 69,368,281 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 planned ESOP Trust.

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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 (planned) (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		During 2025 (to be disclosed upon resolution)

Trust period		From the trust agreement date to August 31, 2026 (planned)

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 (planned) (includes trust fees and trust expenses)

Method of acquisition of shares		Unspecified (to be disclosed upon resolution)

Timing of acquisition of shares		Unspecified (to be disclosed upon resolution)

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 planned 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, 2025, 15,794,987,460 shares of Toyota’s common stock (of which 2,746,057,686 shares were treasury stock and 13,048,929,774 shares were outstanding) were issued. 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.

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.

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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 the most recent practicable date.


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		9.16

According to The Bank of New York Mellon, depositary for Toyota’s ADSs (the “Depositary”), as of March 31, 2025, 335,787,795 shares of Toyota’s common stock were held in the form of ADSs and there were 1,681 ADS holders of record and 750,662 beneficial owners in the United States. According to Toyota’s register of shareholders, as of March 31, 2025, there were 1,184,935 holders of common stock of record worldwide. As of March 31, 2025, there were 563 record holders of Toyota’s common stock with addresses in the United States, whose shareholdings represented approximately 11.1% 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.

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 ¥12,972.7 billion in fiscal 2025. 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 ¥4,042.6 billion in fiscal 2025. See note 32 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 ¥545.6 billion as of March 31, 2025. Toyota had outstanding trade accounts and other payables to these associates and joint ventures in the amount of ¥1,584.7 billion as of March 31, 2025.

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, 2025, an aggregate amount of ¥71.0 billion in

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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.

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, 2022		25.0		0.17
March 31, 2023		35.0		0.26
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

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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 2025, 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 40 yen per share of common stock, the annual dividend was 90 yen per share of common stock, and the total amount of the dividends on common stock for the year was 1,178.4 billion yen.

Furthermore, Toyota resolved, at its Board of Directors meeting held on May 8, 2024, to repurchase up to 410 million shares of its common stock at a total maximum purchase price of 1 trillion yen, in order to return to profits to our shareholders for fiscal 2024. Additionally, with respect to the share repurchase limit announced on May 8, 2024, Toyota resolved, at its Board of Directors meeting held on September 24, 2024, to increase the maximum limit of share repurchases to 530 million shares at a total maximum purchase price of 1.2 trillion yen.

In addition, on June 3, 2025, Toyota announced its intention to conduct a share repurchase aimed at purchasing 1,192,330,920 shares of Toyota’s common stock held by Toyota Industries. However, because the share repurchase is scheduled to be conducted in relation to a tender offer for the common shares of Toyota Industries and it is subject to the completion of the tender offer for Toyota Industries and completion of the settlement thereof, it is difficult to accurately estimate the date of completion. For details see “Item 4. Information on the Company — 4.A History and Development of the Company — Recent Development — Toyota Industries” and note 34 of Toyota’s consolidated financial statements.

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.

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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, 2025 was 50,000,000,000 shares, of which 15,794,987,460 shares of common stock have been issued. This reflects the retirement of 520,000,000 shares of treasury stock on May 9, 2024.

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

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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;

•

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;

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•

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.

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

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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.

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.

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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.

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 and 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;

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(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.

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.

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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.”

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

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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.

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

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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”);

(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 May 2, 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

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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.

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

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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 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

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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 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.

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10.E TAXATION

The following discussion is a general summary of the principal U.S. federal income and Japanese national tax consequences of the acquisition, ownership and disposition of shares of common stock or ADSs. This summary does not purport to address all material tax consequences that may be relevant to holders of shares of common stock or ADSs, and does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, partnerships and other pass-through entities, investors liable for 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.

For purposes of this discussion, a “U.S. Holder” is any beneficial owner of shares of common stock or ADSs that, for U.S. federal income tax purposes, is:

an individual who is a citizen or resident of the United States;

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof, or the District of Columbia;

an estate the income of which is subject to U.S. federal income tax without regard to its source; or

a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

An “Eligible U.S. Holder” is a U.S. Holder that:

is a resident of the United States for purposes of the Treaty;

does not maintain a permanent establishment in Japan (a) with which the shares of common stock or ADSs are effectively connected and through which the U.S. Holder carries on or has carried on business, or (b) of which the shares of common stock or ADSs form part of the business property; and

is eligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of common stock or ADSs.

This summary does not address any aspects of U.S. federal tax law other than income taxation and does not discuss any aspects of Japanese taxation other than income taxation, as limited to national taxes, inheritance and gift taxation. This summary also does not cover any state or local, or non-U.S., non-Japanese tax considerations. Investors are urged to consult their tax advisors regarding the U.S. federal, state and local and Japanese and other tax consequences of acquiring, owning and disposing of shares of common stock or ADSs. In particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible U.S. Holders. In addition, this summary is based in part upon the representations of the Depositary and the assumption that each obligation in the deposit agreement, and in any related agreement, will be performed in accordance with its terms.

In general, for purposes of the Treaty and for U.S. federal income and Japanese income tax purposes, owners of 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.

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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.

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, 2037. 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.

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

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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 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 principal 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.

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Dividends received on shares and ADSs of certain foreign corporations by non-corporate U.S. investors may be subject to U.S. federal income tax at lower rates than other types of ordinary income if certain conditions are met. Dividends received by non-corporate U.S. Holders with respect to shares of common stock or ADSs of Toyota are expected to be eligible for these reduced rates of tax. U.S. Holders should consult their own tax advisors regarding the eligibility of such dividends for a reduced rate of tax.

The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese yen/U.S. dollar exchange rate in effect on the date that the dividend is included in the gross income of the U.S. Holder, regardless of whether the payment is converted into U.S. dollars on that date. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included in the gross income of a U.S. Holder through the date that payment is converted into U.S. dollars (or otherwise disposed of) will be treated as U.S.-source ordinary income or loss. U.S. Holders should consult their own tax advisors regarding the calculation and U.S. federal income tax treatment of foreign currency gain or loss.

To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of shares of common stock or ADSs exceeds Toyota’s current and accumulated earnings and profits, as determined under U.S. federal income tax principles, the distribution first will be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in those shares or ADSs, and thereafter will be treated as U.S.-source capital gain.

Distributions of additional shares of common stock that are made to U.S. Holders with respect to their shares of common stock or ADSs, and that are part of a pro rata distribution to all of Toyota’s shareholders, generally will not be subject to U.S. federal income tax.

For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect of shares of common stock or ADSs will constitute income from sources outside the United States, and will generally be “passive category income” or, in the case of certain U.S. Holders, “general category income.” 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. Special rules generally will apply to the calculation of foreign tax credits in respect of dividend income that qualifies for preferential U.S. federal income tax rates. Additionally, special rules apply to individuals whose foreign source income during the taxable year consists entirely of “qualified passive income” and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return). Further, under some circumstances, a U.S. Holder that:

(i)

has held shares of common stock or ADSs for less than a specified minimum period; or

(ii)

is obligated to make payments related to Toyota dividends, will not be allowed a foreign tax credit for Japanese taxes imposed on Toyota dividends.

U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Taxation of Capital Gains and Losses

In general, upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S. Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the

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amount realized on the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in those shares of common stock or ADSs. A U.S. Holder generally will have an adjusted tax basis in a share of common stock or an ADS equal to its U.S. dollar cost. Subject to the PFIC rules discussed below, gain or loss recognized on the sale or other taxable disposition of shares of common stock or ADSs generally will be capital gain or loss and, if the U.S. Holder’s holding period for those shares or ADSs exceeds one year, will be long-term capital gain or loss. Non-corporate U.S. Holders, including individuals, currently are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. Under U.S. federal income tax law, the deduction of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder in respect of the sale or other disposition of shares of common stock or ADSs generally will be treated as U.S.-source income or loss for U.S. foreign tax credit purposes.

Deposits and withdrawals of common stock in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

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, 2025, 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

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connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (and, if an applicable tax treaty requires, are attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder).

A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale or other disposition of shares of common stock or ADSs, unless:

(i)

the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the United States (and, if an applicable tax treaty requires, is attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder); or

(ii)

the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in the taxable year of the disposition and other conditions are met.

Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an income tax treaty applies and so requires, is attributable to a U.S. permanent establishment or fixed base of the Non-U.S. Holder, generally will be taxed in the same manner as the income of a U.S. Holder. In addition, under certain 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.

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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 19 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.

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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 2025

For fiscal 2025, the Depositary paid to Toyota, or paid to a third party at Toyota’s instruction, an aggregate of $955,669.25 for standard out-of-pocket maintenance costs for the ADSs (consisting of the expenses of postage 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,

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

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

None.

ITEM 15. CONTROLS AND PROCEDURES

(a) DISCLOSURE CONTROLS AND PROCEDURES

Toyota performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of fiscal 2025. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Form 20-F that Toyota files under the Exchange Act is accumulated and communicated to its management, including the chief executive officer and the principal accounting and financial officer, to allow timely 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 President and Representative Director, who concurrently serves as CEO, and the member of the Board of Directors who concurrently serves as CFO. 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.

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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, 2025.

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, 2025, as stated in its report included herein.

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 2025 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 and Supervisory Committee, in accordance with the Companies Act. Toyota’s Audit and Supervisory Committee is comprised of four members of the Board of Directors who are Audit and Supervisory Committee members, three of whom are outside and independent directors. Each member of the Board of Directors who is an Audit and Supervisory Committee member has been appointed at Toyota’s meetings of shareholders, and the Audit and Supervisory Committee has certain statutory powers independently, including auditing the business affairs and accounts of Toyota.

Toyota’s Audit and Supervisory Committee has determined that it does not have an “audit committee financial expert” serving on the Audit and Supervisory Committee. The qualifications for, and powers of, the Audit and Supervisory Committee member delineated in the Companies Act are different from those anticipated for any audit committee financial expert. Audit and 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 and Supervisory Committee member has the authority to consult internal and external experts on accounting matters. Each Audit and Supervisory Committee member must fulfill the requirements under Japanese laws and regulations and otherwise follow Japanese corporate governance practices and, accordingly, Toyota’s Audit and 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 and Supervisory Committee, Toyota believes that Toyota’s current corporate governance structure, taken as a whole, including the Audit and 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 and Supervisory Committee.

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

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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 2024 and fiscal 2025.


	Yen in millions
	2024		2025
Audit Fees⁽¹⁾		7,787		8,779
Audit-related Fees⁽²⁾		106		134
Tax Fees⁽³⁾		494		453
All Other Fees⁽⁴⁾		20		60

Total		8,407		9,426

(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 and Supervisory Committee

Below is a summary of the current policies and procedures of the Audit and 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 and Supervisory Committee, which reviews and determines whether or not to grant the request in advance. Upon the general pre-approval of the Audit and 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.

The Audit and 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

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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 and Supervisory Committee member (full time), who is designated in advance by a resolution of the Audit and Supervisory Committee, in which case such Audit and Supervisory Committee member (full time) shall report such decision at the next meeting of the Audit and Supervisory Committee. The performance of audit and permissible non-audit services and the payment of fees are subject to review by the Audit and Supervisory Committee at least once every fiscal half year.

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 and 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 Securities Exchange Act of 1934, as amended (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 2025:


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, 2024 – April 30, 2024		5,218,010		3,635		5,216,600		—
May 1, 2024 – May 31, 2024		622		3,502		—		—
June 1, 2024 – June 30, 2024		700		3,200		—		—
July 1, 2024 – July 31, 2024		1,114		3,189		—		—
August 1, 2024 – August 31, 2024		373		2,660		—		—
September 1, 2024 – September 30, 2024		319,796,424		2,766		319,795,675		—
October 1, 2024 – October 31, 2024		19,818,865		2,589		19,818,100		—
November 1, 2024 – November 30, 2024		17,999,996		2,680		17,999,200		—
December 1, 2024 – December 31, 2024		16,045,240		2,665		16,044,000		—
January 1, 2025 – January 31, 2025		13,953,485		2,924		13,952,600		—
February 1, 2025 – February 28, 2025		17,571,107		2,809		17,570,400		—
March 1, 2025 – March 31, 2025		15,453,817		2,790		15,453,200		—

Total		425,859,753		—		425,849,775		—

(1)

A portion of the above purchases were made as a result of holders of shares constituting less than one unit, which is 100 shares of common stock, requesting Toyota to purchase shares that are a fraction of a unit, in accordance with Toyota’s share handling regulations. Toyota is required to comply with such requests pursuant to the Companies Act. See “Item 10. Additional Information — 10.B Memorandum and Articles of

158

Association — Japanese Unit Share System.” The number of shares purchased not pursuant to publicly announced plans or programs conducted in fiscal 2025 is 9,978.

(2)

Toyota announced on May 8, 2024 that it would repurchase up to 410 million shares of its common stock between May 9, 2024 and April 30, 2025 at a total maximum purchase price of 1 trillion yen, in order to return to shareholders the profits derived in fiscal 2024. Toyota further announced on September 24, 2024 that, with respect to the share repurchase limit announced on May 8, 2024, it would increase the maximum limit of share repurchases to 530 million shares at a total maximum purchase price of 1.2 trillion yen between May 9, 2024 and April 30, 2025.

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 and 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 Toyota or any of its subsidiaries at any time during the ten year period before becoming an outside

159

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 Director who are the Audit and 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.

History of belonging to affiliated companies: Persons who are currently functioning as executive directors, members of the Audit and Supervisory Committee (excluding outside members of the Board

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of 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 and 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.

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.

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.

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.

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.

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.

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.

Close relatives: Spouses, or relatives within the second degree of kinship, of members of the Board of Directors, the Audit and 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).

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 and supervisory committee. Toyota, as a Japanese company with an audit and 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 and Supervisory Committee members) and senior management as well as determine the amount of remuneration for each member

161

of the Board of Directors (excluding for Audit and 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 and Supervisory Committee members) is broadly delegated to the Board of Directors and the distribution of remuneration among each Audit and Supervisory Committee member is determined by consultation among the Audit and 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 and 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 and Supervisory Committee must consist of at least three members of the Board of Directors. Toyota currently has four Audit and Supervisory Committee members.

Under the Companies Act, a majority of the Audit and 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 and 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 and 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 and 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 and Supervisory Committee members, and in particular, one or more Audit and 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 and 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

162

dismissal 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 and Supervisory Committee charter.

4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is not required to comply 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 “Code of Ethics” for additional information.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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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 TMC — 4.B. Business Overview — Climate Change-related Disclosures — 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*

and ISO/SAE 21434*

, 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.

164

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 2025, 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 “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 and 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 and Supervisory Committee, as well as the Chief Information & Security Officer (“CISO”) 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 CISO and reports serious cybersecurity risks or incidents to the Board of Directors and the Audit and 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 CISO, 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 CISO to the Board of Directors and Audit and Supervisory Committee through the CRO, who is responsible for overall risk management.

In addition to the meeting mentioned above, the cybersecurity team is in close contact with full-time Audit and Supervisory Committee members, providing regular reports and receiving and responding to their 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 CISO.

The cybersecurity team consists of professionals with cybersecurity expertise. Among the members, the CISO 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 CISO 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.

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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 at March 31, 2024 and 2025		F - 4

Consolidated statement of income for the years ended March 31, 2023, 2024 and 2025		F - 6

Consolidated statement of comprehensive income for the years ended March 31, 2023, 2024 and 2025		F - 7

Consolidated statement of changes in equity for the years ended March 31, 2023, 2024 and 2025		F - 8

Consolidated statement of cash flows for the years ended March 31, 2023, 2024 and 2025		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 50% or less owned persons accounted for by the equity method have been omitted because none of them meets the significance tests specified in Rule

3-09

of Regulation

S-X.

F-1

Table of Contents

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, 2025 and 2024, 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, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025 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, 2025, 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.

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

Table of Contents

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, 2025, estimated liabilities for the costs of recalls and other safety measures totaled ¥1,236,465 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 19 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, 2025, ¥356,304 million of the allowance for credit losses corresponding to ¥27,638,021 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, 2025.

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, Japa

June 18, 2025

We have served as the Company’s auditor since 2006.

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TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended March 31, 2023


			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, 2022				397,050		498,575			26,453,126			2,203,254			(3,306,037	)		26,245,969			908,851			27,154,820

Comprehensive income
Net income				—		—			2,451,318			—			—			2,451,318			41,650			2,492,967
Other comprehensive income, net of tax		25		—		—			—			799,772			—			799,772			27,941			827,713

Total comprehensive income				—		—			2,451,318			799,772			—			3,251,090			69,591			3,320,681

Transactions with owners and other
Dividends paid		25		—		—			(727,980	)		—			—			(727,980	)		(84,986	)		(812,966	)
Repurchase of treasury stock		25		—		—			—			—			(431,099	)		(431,099	)		—			(431,099	)
Reissuance of treasury stock		25		—		334			—			—			573			907			—			907
Equity transactions and other				—		(181	)		—			—			—			(181	)		32,052			31,871

Total transactions with owners and other				—		152			(727,980	)		—			(430,526	)		(1,158,353	)		(52,934	)		(1,211,287	)

Reclassification to retained earnings		25		—		—			166,831			(166,831	)		—			—			—			—

Balances at March 31, 2023				397,050		498,728			28,343,296			2,836,195			(3,736,562	)		28,338,706			925,507			29,264,213

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				397,050		498,728			28,343,296			2,836,195			(3,736,562	)		28,338,706			925,507			29,264,213


Comprehensive income
Net income				—		—			4,944,933			—			—			4,944,933			126,488			5,071,421
Other comprehensive income, net of tax		25		—		—			—			2,054,895			—			2,054,895			62,208			2,117,103

Total comprehensive income				—		—			4,944,933			2,054,895			—			6,999,828			188,696			7,188,523

Transactions with owners and other
Dividends paid		25		—		—			(880,197	)		—			—			(880,197	)		(90,309	)		(970,506	)
Repurchase of treasury stock		25		—		—			—			—			(231,069	)		(231,069	)		—			(231,069	)
Reissuance of treasury stock		25		—		263			—			—			649			911			—			911
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		25		—		—			387,334			(387,334	)		—			—			—			—

Balances at March 31, 2024				397,050		491,802			32,795,365			4,503,756			(3,966,982	)		34,220,991			1,018,347			35,239,338

The accompanying notes are an integral part of these consolidated financial statements

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TOYOTA MOTOR CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS


			Yen in millions
	Notes		For the year ended March 31, 2023			For the year ended March 31, 2024			For the year ended March 31, 2025

Cash flows from operating activities
Net income				2,492,967			5,071,421			4,789,755
Depreciation and amortization				2,039,904			2,087,066			2,251,233
Interest income and interest costs related to financial services, net				(694,331	)		(713,506	)		(747,742	)
Share of profit (loss) of investments accounted for using the equity method				(643,063	)		(763,137	)		(591,219	)
Income tax expense				1,175,765			1,893,665			1,624,835
Changes in operating assets and liabilities, and other				(1,502,482	)		(3,975,836	)		(2,815,549	)
(Increase) decrease in trade accounts and other receivables				(532,432	)		(859,239	)		55,139
(Increase) decrease in receivables related to financial services				(1,760,288	)		(3,398,434	)		(2,389,665	)
(Increase) decrease in inventories				(350,550	)		(207,529	)		(70,654	)
(Increase) decrease in other current assets				(61,538	)		(326,365	)		(462,114	)
Increase (decrease) in trade accounts and other payables				712,400			560,737			362,924
Increase (decrease) in other current liabilities				545,666			666,513			659,088
Increase (decrease) in retirement benefit liabilities				21,213			(161	)		17,377
Other, net				(76,953	)		(411,358	)		(987,645	)
Interest received				1,516,404			2,292,156			2,672,724
Dividends received				460,351			587,259			623,295
Interest paid				(593,216	)		(1,148,392	)		(1,609,083	)
Income taxes paid, net of refunds				(1,297,224	)		(1,124,322	)		(2,501,315	)

Net cash provided by (used in) operating activities				2,955,076			4,206,373			3,696,934

Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others				(1,450,196	)		(1,846,447	)		(1,906,811	)
Additions to equipment leased to others				(1,907,356	)		(2,867,660	)		(2,996,920	)
Proceeds from sales of fixed assets excluding equipment leased to others				56,436			154,985			70,821
Proceeds from sales of equipment leased to others				1,659,161			2,008,634			1,707,899
Additions to intangible assets				(348,280	)		(334,287	)		(354,196	)
Additions to public and corporate bonds and stocks				(1,150,214	)		(2,972,779	)		(3,965,550	)
Proceeds from sales of public and corporate bonds and stocks				393,982			1,201,405			1,035,922
Proceeds upon maturity of public and corporate bonds				939,747			1,049,963			2,713,649
Other, net		33		207,829			(1,392,565	)		(494,551	)

Net cash provided by (used in) investing activities				(1,598,890	)		(4,998,751	)		(4,189,736	)

Cash flows from financing activities
Increase (decrease) in short-term debt		17		239,689			401,740			75,675
Proceeds from long-term debt		17		9,276,918			12,057,349			13,381,581
Payments of long-term debt		17		(8,353,033	)		(8,752,329	)		(10,872,262	)
Dividends paid to Toyota Motor Corporation common shareholders		25		(727,980	)		(880,197	)		(1,132,329	)
Dividends paid to non-controlling interests				(84,986	)		(90,309	)		(127,232	)
Reissuance (repurchase) of treasury stock				(431,099	)		(231,069	)		(1,179,043	)
Other, net				24,310			(7,627	)		50,845

Net cash provided by (used in) financing activities				(56,180	)		2,497,558			197,236

Effect of exchange rate changes on cash and cash equivalents				103,305			189,914			(134,089	)

Net increase (decrease) in cash and cash equivalents				1,403,311			1,895,094			(429,656	)

Cash and cash equivalents at beginning of year		6		6,113,655			7,516,966			9,412,060

Cash and cash equivalents at end of year		6		7,516,966			9,412,060			8,982,404

The accompanying notes are an integral part of these consolidated financial statements

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Reporting entity

TMC is a limited liability, joint-stock company located in Japan, and TMC’s principal executive offices are 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.

Toyota and its associates are primarily engaged in the design, manufacture, and sale of sedans, minivans, 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 customers to support the sales of vehicles and other products manufactured by Toyota and its associates.

2. Basis of preparation

(1) Compliance with IFRS Accounting Standards

Toyota’s consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the IASB.

The consolidated financial statements were approved on June 18, 2025 by Koji Sato, President, member of the Board of Directors, and Yoichi Miyazaki, CFO, member of the Board of Directors.

(2) Basis of measurement

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 plans indicated in “3.Material accounting policies”.

(3) Functional currency and presentation currency

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, except when otherwise indicated. Amounts may not sum to totals due to rounding.

3. Material accounting policies

Basis of consolidation -

(1) Subsidiaries

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 recognized in profit or loss.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Associates and joint ventures

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 loss.

Foreign currency translation -

(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 is recognized as other comprehensive income.

(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 or loss.

Cash and cash equivalents -

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 maturities from the acquisition date.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial instruments -

(1) Financial assets

(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”. The sale or purchase of financial assets that occurred in the normal course of business are recognized and derecognized at the trade date.

Financial assets classified as being measured at fair value through profit or loss are measured at fair value, but other financial assets are initially recognized and measured at fair value adding transaction costs directly attributable to acquisition. Trade receivables that do not contain significant financial elements 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

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.

For equity financial assets such as shares held mainly for the purpose of maintaining or enhancing business relationships with investees, they are irrevocably designated at initial recognition as financial assets measured at fair value through other comprehensive income.

(d) Financial assets measured at fair value through profit or loss

Financial assets other than (a) to (c) are classified as financial assets measured at fair value through profit or loss.

(ii) Subsequent measurement

After initial recognition, financial assets are measured based on the following classification.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(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.

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.

(iii) Impairment of financial assets

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.

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 finance lease receivables, the allowance is continuously measured at amounts equal to expected credit losses over the expected life of financial assets.

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

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 entirely or a portion thereof.

(iv) Derecognition of financial assets

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 continues to retain 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 and the relevant liabilities that might possibly be paid in association therewith.

(2) Financial liabilities

(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 gain or losses on derecognition are recognized as finance income or costs and recognized in profit or loss.

(iii) Derecognition of financial liabilities

Toyota derecognizes financial liabilities when the financial liabilities expire, that is, when the liability identified in the contract expires due to performance, discharges, cancels, or matures.

(3) Derivative financial instruments

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. All derivative transactions are measured at fair value as assets or liabilities.

Toyota does not use derivative financial instruments for speculative or trading purposes.

Finance receivables -

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.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The determination of finance receivable portfolios is based primarily on the qualitative consideration 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 contracts acquired must first meet specified credit standards. Thereafter, Toyota retains responsibility for contract collection and administration.

The contract periods of auto loans primarily range from 2 to 7 years. Toyota acquires security interests in the vehicles financed and has the right to repossess vehicles if customers fail to meet their contractual obligations. Almost all auto loans are

non-recourse,

which relieves the dealers from financial responsibility in the event of repossession.

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 the 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 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 or personal assets, or both, 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 characteristics associated with the underlying finance receivables.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Allowance for credit losses on finance receivables -

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 uses 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 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 being in default in accordance with internal management rules.

(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 sorted primarily by credit qualities based on internal risk assessments. Toyota reviews the change of the segment as an index 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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 the 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 affect future operating results of the financial services operations.

Inventories -

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 weighted-average method.

Property, plant and equipment -

Property, plant and equipment is measured based on the cost model and carried at its cost less accumulated 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

years, to the estimated residual value. Incremental direct costs incurred in connection with the acquisition of lease contracts are capitalized and amortized on a straight-line method over the lease term.

Toyota is exposed to risk of loss on the disposition of

off-lease

vehicles to the extent that sales proceeds are not sufficient to cover the carrying value of the leased asset at lease termination. Toyota evaluates at the end of each reporting period the estimated residual value to cover probable estimated losses related to unguaranteed

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 appropriate in relation to the estimated losses on its owned portfolio.

Intangible assets -

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 a 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.

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 amortized using the straight-line method over their estimated useful lives, mainly 5 years. Goodwill is not material to Toyota’s consolidated statement of financial position.

Impairment of

non-financial

assets -

At the end of the reporting period, the carrying amount of

non-financial

assets other than inventories and deferred tax assets are assessed to determine whether or not there is any indication of impairment. If there is such an indication, the recoverable amount of such an asset or a cash-generating unit is estimated. An impairment loss would be recognized when the carrying amount of an asset or a cash-generating unit exceeds the estimated discounted cash flows expected to result from the use of the assets and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the carrying amount of the assets over their recoverable amount.

Leases -

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 at the amount of the initial measurement of the lease liability by adjusting any lease

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

payments made or before the commencement date. Lease liability is initially measured at the present value of the lease payments that are not 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. Lease liability is measured at amortized cost using the effective interest method. In the consolidated statement of financial position, lease liability is included in short-term and long-term debt. Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability and recognized in profit or loss over the lease term.

Many lease contracts relating to land and buildings entered into by Toyota include extension options that can be 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 assesses it to be reasonably certain, the extension option is included in the lease term.

Toyota recognizes the lease payments associated with lease terms 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 of the lease whether each lease is a finance lease or operating lease.

A lease is classified as a finance lease if it transfers substantially all of the risks and rewards incidental to the ownership of an underlying asset. Otherwise leases are classified as operating leases.

Toyota recognizes the operating lease payments in profit or loss on a straight-line basis over the lease term.

Employee benefit obligations -

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 the 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Defined contribution plan

For defined contribution plans, when employees render services, contribution payables are recognized in profit or loss.

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. The accrued warranty costs represent management’s best estimate at the time of sale of the total costs that Toyota will incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs is primarily based on historical experience of product failures as well as current information on repair costs. 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.

The 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

warranty provisions. If these factors require a significant increase in Toyota’s accrued estimated warranty costs, it would negatively affect future operating results of the automotive operations.

Revenue recognition -

In automotive operations, performance obligations are considered to be satisfied when completed vehicles and parts are delivered to the agreed locations with dealers. For parts for production, it is when they are loaded on a ship or delivered to manufacturing companies. We do not have any material 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 volume or vehicle unit sales of certain models sold by a dealer during a certain period of time. Toyota accrues these incentives as revenue reductions upon the sale of a vehicle corresponding to the program by the amount determined in the related incentive program utilizing the most likely outcome method.

The sale of certain vehicles includes a contractual right, which entitles customers to free vehicle maintenance. We use an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. Such revenues from free maintenance contracts are deferred and recognized as revenue over the period of the contract in proportion to the costs expected to be incurred in satisfying the obligations under the contract.

Revenues from the sales of vehicles under which Toyota conditionally guarantees the minimum resale value are recognized on a pro rata basis from the date of sale to the first exercise date of the guarantee in accordance with lease accounting. The underlying vehicles of these transactions are recorded as assets and are 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 expected to be within one year or less, as a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

Income taxes -

Income tax expenses are presented as the aggregate amount of current taxes and deferred taxes.

Deferred tax assets and deferred tax liabilities are recognized for future tax consequences attributable to 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 reporting period, to recover or settle the carrying amount of its assets and liabilities.

Earnings per share attributable to Toyota Motor Corporation -

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-average number of common shares outstanding taking into consideration the effect of dilutive securities.

New accounting standards and interpretations not yet adopted -

Toyota is currently evaluating the impact of the adoption of these standards and interpretations on Toyota’s consolidated financial statements.


Standards	Standards names	Mandatory adoption (from fiscal years beginning on or after)	Reporting periods in which Toyota is scheduled to adopt the standards	Overview of new or amended standards and interpretations
IFRS 18	Presentation and disclosure in financial statements	January 1, 2027	Fiscal year ending March 31, 2028	Improved comparability in the statement of profit or loss (income statement) Enhanced transparency of management-defined performance measures More useful grouping of information in the financial statements

4. Significant accounting judgments and estimates

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 were 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”)

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 19 (2))

Impairment of

non-financial

assets (Note 3 “Impairment of

non-financial

assets” and Note 12)

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 15)

5. Segment information

(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, 2023


	Yen in millions
	Automotive		Financial services		All other		Inter-segment Elimination/ Unallocated Amount			Consolidated

Sales revenues
Revenues from external customers		33,776,870		2,786,679		590,749		—			37,154,298
Inter-segment revenues and transfers		43,131		22,968		634,194		(700,293	)		—

Total		33,820,000		2,809,647		1,224,943		(700,293	)		37,154,298
Operating expenses		31,639,363		2,372,131		1,121,492		(703,713	)		34,429,273

Operating income		2,180,637		437,516		103,451		3,420			2,725,025

Total assets		26,321,858		35,525,441		2,946,994		9,508,887			74,303,180
Investments accounted for using the equity method		4,717,231		92,903		272,752		144,460			5,227,345
Depreciation and amortization		1,205,687		799,156		35,062		—			2,039,904
Capital expenditures		1,688,114		1,786,373		38,748		(17,015	)		3,496,219

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and for the year ended March 31, 2024


	Yen in millions
	Automotive		Financial services		All other		Inter-segment Elimination/ Unallocated 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

As of and 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		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

Accounting policies applied by each segment are in conformity with those of Toyota’s consolidated financial statements. Transfers between industry segments are made in accordance with terms and conditions in the ordinary course of business.

Unallocated amounts included in assets represent assets held for corporate purpose, which mainly consist of cash and cash equivalents and financial assets measured at fair value through other comprehensive income, and the balances as of March 31, 2023, 2024 and 2025 are ¥11,101,175 million, ¥15,790,074 million and ¥15,643,613 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) Consolidated Financial Statements on

Non-Financial

Services Businesses and Financial Services Business

The financial data below presents separately Toyota’s

non-financial

services and financial services businesses.

(i) Consolidated Statement of Financial Position on

Non-Financial

Services Businesses and Financial Services Business


	Yen in millions
	March 31, 2024			March 31, 2025

Assets
(Non-Financial Services Businesses)
Current assets
Cash and cash equivalents		6,892,817			6,090,957
Trade accounts and other receivable		3,768,520			3,689,021
Other financial assets		3,864,242			6,198,376
Inventories		4,605,368			4,588,755
Other current assets		805,940			1,034,507

Total current assets		19,936,887			21,601,616

Non-current assets
Property, plant and equipment		8,680,731			9,134,857
Other		19,123,829			17,556,285

Total non-current assets		27,804,560			26,691,142

Total assets		47,741,447			48,292,758

(Financial Services Business)
Current assets
Cash and cash equivalents		2,519,244			2,891,447
Trade accounts and other receivable		382,007			410,958
Receivables related to financial services		11,057,269			11,453,249
Other financial assets		1,575,059			1,443,042
Other current assets		352,918			414,216

Total current assets		15,886,497			16,612,912

Non-current assets
Receivables related to financial services		20,637,090			22,171,786
Property, plant and equipment		5,577,058			6,198,838
Other		1,733,539			1,787,250

Total non-current assets		27,947,687			30,157,874

Total assets		43,834,183			46,770,786

(Elimination)
Elimination of assets		(1,461,335	)		(1,462,194	)

(Consolidated)

Total assets		90,114,296			93,601,350

Note: Assets in

non-financial

services include unallocated corporate assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2024			March 31, 2025

Liabilities
(Non-Financial Services Businesses)
Current liabilities
Trade accounts and other payables		4,890,913			5,195,204
Short-term and current portion of long-term debt		929,662			1,188,430
Accrued expenses		1,750,221			1,729,279
Income taxes payable		1,185,678			454,252
Other current liabilities		3,583,929			3,495,075

Total current liabilities		12,340,403			12,062,240

Non-current liabilities
Long-term debt		1,938,535			1,547,461
Retirement benefit liabilities		1,058,742			1,001,227
Other non-current liabilities		2,545,491			2,442,382

Total non-current liabilities		5,542,768			4,991,070

Total liabilities		17,883,171			17,053,309

(Financial Services Business)
Current liabilities
Trade accounts and other payables		651,381			674,347
Short-term and current portion of long-term debt		14,890,892			15,111,977
Accrued expenses		148,767			137,836
Income taxes payable		38,864			51,248
Other current liabilities		2,219,104			2,535,501

Total current liabilities		17,949,008			18,510,910

Non-current liabilities
Long-term debt		19,356,672			21,515,873
Retirement benefit liabilities		19,220			18,341
Other non-current liabilities		1,131,501			1,089,654

Total non-current liabilities		20,507,393			22,623,868

Total liabilities		38,456,401			41,134,778

(Elimination)
Elimination of liabilities		(1,464,614	)		(1,465,650	)

(Consolidated)

Total liabilities		54,874,958			56,722,437

Shareholders’ equity

(Consolidated) Total Toyota Motor Corporation shareholders’ equity		34,220,991			35,924,826

(Consolidated) Non-controlling interests		1,018,347			954,088

(Consolidated) Total shareholders’ equity		35,239,338			36,878,913

(Consolidated) Total liabilities and shareholders’ equity		90,114,296			93,601,350

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(ii) Consolidated Statement of Income on

Non-Financial

Services Businesses and Financial Services Business


	Yen in millions
	For the year ended March 31, 2023			For the year ended March 31, 2024			For the year ended March 31, 2025
(Non-Financial Services Businesses)
Sales revenues		34,409,011			41,832,663			43,787,709
Cost of revenues		29,132,715			33,763,076			35,684,332
Selling, general and administrative		2,990,316			3,278,135			3,984,469

Operating income		2,285,980			4,791,453			4,118,908

Other income (loss), net		943,777			1,608,345			1,622,539

Income before income taxes		3,229,757			6,399,798			5,741,447

Income tax expense		1,040,864			1,741,885			1,446,627

Net income		2,188,893			4,657,913			4,294,820

Net income attributable to
Toyota Motor Corporation		2,152,509			4,540,311			4,281,231
Non-controlling interests		36,384			117,602			13,589

(Financial Services Business)
Sales revenues		2,809,647			3,484,198			4,481,180
Cost of revenues		1,741,117			2,145,694			2,960,227
Selling, general and administrative		631,014			768,481			837,435

Operating income		437,516			570,023			683,519

Other income (loss), net		(5,013	)		1,762			(10,309	)

Income before income taxes		432,503			571,786			673,210

Income tax expense		134,903			151,785			178,000

Net income		297,600			420,000			495,210

Net income attributable to
Toyota Motor Corporation		292,334			411,114			484,129
Non-controlling interests		5,266			8,886			11,081

(Elimination)
Elimination of net income		6,475			(6,492	)		(274	)
(Consolidated)

Net income		2,492,967			5,071,421			4,789,755

Net income attributable to
Toyota Motor Corporation		2,451,318			4,944,933			4,765,086
Non-controlling interests		41,650			126,488			24,670

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(iii) Consolidated Statement of Cash Flows on

Non-Financial

Services Businesses and Financial Services Business


	Yen in millions
	For the year ended March 31, 2023			For the year ended March 31, 2024			For the year ended March 31, 2025

(Non-Financial Services Businesses)
Cash flows from operating activities
Net income		2,188,893			4,657,913			4,294,820
Depreciation and amortization		1,240,749			1,303,053			1,413,066
Share of profit (loss) of investments accounted for using the equity method		(633,324	)		(752,779	)		(579,619	)
Income tax expense		1,040,864			1,741,885			1,446,627
Changes in operating assets and liabilities, and other		463,871			120,731			(370,839	)
Interest received		234,945			454,713			363,304
Dividends received		454,752			582,022			617,644
Interest paid		(28,206	)		(104,008	)		(100,770	)
Income taxes paid, net of refunds		(1,280,341	)		(1,033,448	)		(2,347,622	)

Net cash provided by (used in) operating activities		3,682,203			6,970,082			4,736,610

Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others		(1,439,724	)		(1,815,239	)		(1,878,342	)
Additions to equipment leased to others		(147,792	)		(153,324	)		(24,855	)
Proceeds from sales of fixed assets excluding equipment leased to others		54,572			152,830			68,266
Proceeds from sales of equipment leased to others		44,195			47,557			6,035
Additions to intangible assets		(333,295	)		(317,606	)		(341,131	)
Additions to public and corporate bonds and stocks		(503,977	)		(2,639,166	)		(3,446,017	)
Proceeds from sales of public and corporate bonds and stocks and upon maturity of public and corporate bonds		892,814			1,757,282			3,423,102
Other, net		236,351			(1,386,377	)		(618,309	)

Net cash provided by (used in) investing activities		(1,196,856	)		(4,354,045	)		(2,811,251	)

Cash flows from financing activities
Increase (decrease) in short-term debt		142,688			66,953			(116,549	)
Proceeds from long-term debt		474,535			533,333			162,735
Payments of long-term debt		(637,982	)		(634,215	)		(306,768	)
Dividends paid to Toyota Motor Corporation common shareholders		(727,980	)		(880,197	)		(1,132,329	)
Dividends paid to non-controlling interests		(79,782	)		(85,991	)		(122,565	)
Reissuance (repurchase) of treasury stock		(431,099	)		(231,069	)		(1,179,043	)
Other, net		21,458			(7,570	)		55,560

Net cash provided by (used in) financing activities		(1,238,161	)		(1,238,756	)		(2,638,959	)

Effect of exchange rate changes on cash and cash equivalents		1,690			(32,862	)		(88,260	)

Net increase (decrease) in cash and cash equivalents		1,248,876			1,344,419			(801,860	)

Cash and cash equivalents at beginning of year		4,299,522			5,548,398			6,892,817

Cash and cash equivalents at end of year		5,548,398			6,892,817			6,090,957

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	For the year ended March 31, 2023			For the year ended March 31, 2024			For the year ended March 31, 2025

(Financial Services Business)
Cash flows from operating activities
Net income		297,600			420,000			495,210
Depreciation and amortization		799,156			784,013			838,167
Interest income and interest costs related to financial services, net		(703,971	)		(734,880	)		(769,800	)
Share of profit (loss) of investments accounted for using the equity method		(9,739	)		(10,357	)		(11,600	)
Income tax expense		134,903			151,785			178,000
Changes in operating assets and liabilities, and other		(1,958,779	)		(4,100,301	)		(2,405,422	)
Interest received		1,291,100			1,858,816			2,332,296
Dividends received		5,599			5,236			5,651
Interest paid		(574,650	)		(1,065,757	)		(1,531,190	)
Income taxes paid, net of refunds		(16,883	)		(90,874	)		(153,692	)

Net cash provided by (used in) operating activities		(735,664	)		(2,782,318	)		(1,022,379	)

Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others		(10,472	)		(31,208	)		(28,469	)
Additions to equipment leased to others		(1,759,564	)		(2,714,336	)		(2,972,065	)
Proceeds from sales of fixed assets excluding equipment leased to others		1,865			2,155			2,555
Proceeds from sales of equipment leased to others		1,614,965			1,961,077			1,701,864
Additions to intangible assets		(14,985	)		(16,680	)		(13,064	)
Additions to public and corporate bonds and stocks		(646,237	)		(333,613	)		(519,533	)
Proceeds from sales of public and corporate bonds and stocks and upon maturity of public and corporate bonds		440,915			494,085			326,469
Other, net		(30,385	)		14,732			89,633

Net cash provided by (used in) investing activities		(403,898	)		(623,788	)		(1,412,610	)

Cash flows from financing activities
Increase (decrease) in short-term debt		171,293			339,666			229,903
Proceeds from long-term debt		8,892,261			11,620,147			13,251,352
Payments of long-term debt		(7,868,820	)		(8,221,432	)		(10,618,851	)
Dividends paid to non-controlling interests		(5,204	)		(4,318	)		(4,667	)
Other, net		2,853			(57	)		(4,716	)

Net cash provided by (used in) financing activities		1,192,382			3,734,005			2,853,022

Effect of exchange rate changes on cash and cash equivalents		101,615			222,776			(45,829	)

Net increase (decrease) in cash and cash equivalents		154,436			550,675			372,203

Cash and cash equivalents at beginning of year		1,814,133			1,968,568			2,519,244

Cash and cash equivalents at end of year		1,968,568			2,519,244			2,891,447

(Consolidated)
Effect of exchange rate changes on cash and cash equivalents		103,305			189,914			(134,089	)

Net increase (decrease) in cash and cash equivalents		1,403,311			1,895,094			(429,656	)

Cash and cash equivalents at beginning of year		6,113,655			7,516,966			9,412,060

Cash and cash equivalents at end of year		7,516,966			9,412,060			8,982,404

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) Geographic information

As of and for the year ended March 31, 2023


	Yen in millions
	Japan		North America			Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Sales revenues
Revenues from external customers		9,122,282		13,509,027			4,097,537		7,076,922		3,348,530		—			37,154,298
Inter-segment revenues and transfers		8,460,914		334,874			176,198		967,984		123,663		(10,063,633	)		—

Total		17,583,196		13,843,901			4,273,735		8,044,906		3,472,193		(10,063,633	)		37,154,298
Operating expenses		15,681,733		13,918,637			4,216,276		7,330,455		3,240,832		(9,958,659	)		34,429,273

Operating income (loss)		1,901,463		(74,736	)		57,460		714,451		231,362		(104,974	)		2,725,025

Total assets		23,241,334		26,024,734			6,813,474		7,908,520		4,726,373		5,588,745			74,303,180
Non-current assets		5,658,859		6,255,561			1,042,726		1,031,057		565,377		—			14,553,580

As of and for the year ended March 31, 2024


	Yen in millions
	Japan		North America		Europe		Asia		Other		Inter-segment Elimination/ Unallocated Amount			Consolidated
Sales revenues
Revenues from external customers		10,193,556		17,624,268		5,503,738		7,604,269		4,169,494		—			45,095,325
Inter-segment revenues and transfers		10,827,165		318,805		178,026		1,126,479		220,292		(12,670,767	)		—

Total		21,020,721		17,943,072		5,681,764		8,730,749		4,389,785		(12,670,767	)		45,095,325
Operating expenses		17,536,451		17,436,753		5,293,668		7,865,158		4,191,441		(12,581,079	)		39,742,390

Operating income		3,484,270		506,319		388,096		865,591		198,345		(89,687	)		5,352,934

Total assets		24,711,142		31,886,959		8,749,680		9,096,282		6,167,902		9,502,332			90,114,296
Non-current assets		5,827,404		7,374,724		1,407,680		1,190,348		686,104		—			16,486,260

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and 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

Total assets		26,347,925		33,423,938		9,463,797		9,467,913		6,010,880		8,886,897			93,601,350
Non-current assets		6,246,879		7,887,494		1,589,830		1,225,158		754,669		—			17,704,029

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

Non-current assets do not include financial instruments, deferred tax assets, net defined benefit assets and rights arising under insurance contracts.

The above amounts are aggregated by region based on the location of the country where TMC or consolidated subsidiaries are located. Transfers between geographic areas are made in accordance with terms and conditions in the ordinary course of business.

Revenues from external customers in North America includes amounts related to consolidated subsidiaries located in the United States, totaling

¥12,211,120 million, ¥15,784,361

million and

¥16,981,710

million for the years ended March 31, 2023, 2024 and 2025, respectively. Non-current assets in North America include amounts related to consolidated subsidiaries located in the United States, totaling

¥5,793,572 million, ¥6,679,478

million and

¥7,242,318

million as of March 31, 2023, 2024 and 2025, respectively.

Unallocated amounts included in assets represent assets held for corporate purpose, which mainly consist of cash and cash equivalents and financial assets measured at fair value through other comprehensive income, and the balances as March 31, 2023, 2024 and 2025 are ¥11,101,175 million, ¥15,790,074 million and ¥15,643,613 million, respectively.

(5) Sales revenues by location of external customers


	Yen in millions
	For the years ended March 31,
	2023		2024		2025
Japan		6,742,304		7,399,192		7,723,171
North America		13,578,084		17,694,375		18,985,399
Europe		3,970,857		5,396,610		5,979,720
Asia		7,150,555		7,742,141		7,944,206
Other		5,712,497		6,863,007		7,404,208

Total		37,154,298		45,095,325		48,036,704

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

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Cash and cash equivalents

Cash and cash equivalents consist of the following:


	Yen in millions
	March 31,
	2024		2025
Cash and deposits		6,245,257		6,344,691
Negotiable certificate of deposit and other		3,166,803		2,637,713

Total		9,412,060		8,982,404

7. Trade accounts and other receivables

Trade accounts and other receivables consist of the following:


	Yen in millions
	March 31,
	2024			2025
Accounts and notes receivables		2,672,434			2,480,370
Other receivables		1,149,679			1,236,794
Allowance for doubtful accounts		(32,684	)		(37,442	)

Total		3,789,429			3,679,722

Trade accounts and other receivables which are unconditional rights to considerations 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, 2023 is ¥2,757,412 million.

The changes in the allowance for doubtful accounts consist of the following:


	Yen in millions
	For the years ended March 31,
	2024			2025
Allowance for doubtful accounts at beginning of year		121,628			122,105
Provision for doubtful accounts, net of reversal		4,708			9,835
Write-offs		(3,759	)		(3,128	)
Other		(472	)		(1,516	)

Allowance for doubtful accounts at end of year		122,105			127,296

“Other” includes currency translation adjustments.

A portion of the allowance for doubtful accounts is attributed to certain

non-current

receivable balances which are reported as other financial assets under

non-current

assets.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Finance receivables

Finance receivables consist of the following:


	Yen in millions
	March 31,
	2024			2025
Retail		25,489,945			27,638,021
Finance leases		3,143,424			3,437,970
Wholesale and other dealer loans		5,005,766			4,902,537

Total		33,639,135			35,978,528

Deferred origination costs		439,613			446,538
Less - Unearned income		(1,970,115	)		(2,349,215	)
Less - Allowance for credit losses
Retail		(336,152	)		(356,304	)
Finance leases		(46,909	)		(56,721	)
Wholesale and other dealer loans		(31,213	)		(37,791	)

Total finance receivables, net		31,694,359			33,625,035

Current assets		11,057,269			11,453,249
Non-current assets		20,637,090			22,171,786

Total finance receivables, net		31,694,359			33,625,035

Finance receivables were geographically distributed as follows:


	March 31,
	2024			2025
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		57.1	%		53.9	%
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .		14.5			15.0
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		11.3			11.7
Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6.2			8.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		10.9			10.5

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 of wholesale receivables and other dealer loans are as follows:


	Yen in millions
	March 31, 2024
	Retail		Finance leases		Wholesale and other dealer loans
Within 1 year		7,063,873		961,583		3,587,124
Between 1 and 2 years		5,791,490		673,115		441,004
Between 2 and 3 years		5,034,539		505,715		223,112
Between 3 and 4 years		3,864,320		265,727		185,210
Between 4 and 5 years		2,334,787		96,648		142,215
Later than 5 years		1,400,936		17,703		427,100

Total		25,489,945		2,520,492		5,005,766

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2025
	Retail		Finance leases		Wholesale and other 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

Finance leases receivables consist of the following:


	Yen in millions
	March 31,
	2024			2025
Lease payments		2,520,492			2,814,157
Estimated unguaranteed residual values		622,932			623,812

Total		3,143,424			3,437,970

Deferred origination costs		20,999			25,342
Less - Unearned income		(320,223	)		(372,987	)
Less - Allowance for credit losses		(46,909	)		(56,721	)

Finance leases receivables, net		2,797,291			3,033,603

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9. Other financial assets

Other financial assets consist of the following:


	Yen in millions
	March 31,
	2024		2025
Financial assets measured at amortized cost
Time deposits		1,606,834		2,264,841
Other		824,448		837,954
Financial assets measured at fair value through profit or loss
Public and corporate bonds		221,743		231,713
Stocks		212,393		46,215
Investment trusts		553,174		618,228
Derivatives		552,921		483,378
Financial assets measured at fair value through other comprehensive income
Public and corporate bonds		8,279,783		9,078,437
Stocks		3,829,893		3,246,885
Other		11,537		10,947

Total		16,092,727		16,818,600

Current assets		4,702,168		6,935,759
Non-current assets		11,390,559		9,882,841

Total		16,092,727		16,818,600

Toyota has certain financial instruments, including financial assets and liabilities which arose in the normal course of business. These financial instruments are executed with creditworthy financial institutions, and virtually all foreign currency contracts are denominated in U.S. dollars, euros and other currencies of major developed countries. Financial instruments involve, to varying degrees, market risk as instruments are subject to price fluctuations, and elements of credit risk in the event a counterparty should default. In the unlikely event the counterparties fail to meet the contractual terms of a foreign currency or an interest rate instrument, Toyota’s risk is limited to the fair value of the instrument. Although Toyota may be exposed to losses in the event of

non-performance

by counterparties on financial instruments, it does not anticipate significant losses due to the nature of its counterparties. Counterparties to Toyota’s financial instruments represent, in general, international financial institutions. Additionally, Toyota does not have a significant exposure to any individual counterparty. Toyota believes that the overall credit risk related to its financial instruments is not significant.

Public and corporate bonds included in financial assets measured at fair value through other comprehensive income include securities loaned of ¥2,190,436 million and ¥623,223 million as of March 31, 2024 and 2025, respectively.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Major securities included in stocks measured at fair value through other comprehensive income as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31,
Issue	2024		2025
KDDI CORPORATION		1,134,370		959,347
MS&AD Insurance Group Holdings, Inc.		427,950		340,482
NIPPON TELEGRAPH AND TELEPHONE CORPORATION		363,131		292,242
Mitsubishi UFJ Financial Group, Inc.		232,760		206,749
SUZUKI MOTOR CORPORATION		166,896		173,760

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,
	2024		2025
Total fair value		346,154		681,271
Accumulated other comprehensive income, net		247,475		512,976

10. Inventories

Inventories consist of the following:


	Yen in millions
	March 31,
	2024		2025
Products		2,796,831		2,875,405
Work in process		496,471		486,552
Raw materials		1,117,950		1,013,621
Supplies and other		194,116		222,654

Total		4,605,368		4,598,232

11. Investments accounted for using the equity method

Equity in associates and joint ventures is as follows:


	Yen in millions
	March 31,
	2024		2025
Associates		4,616,598		4,887,674
Joint ventures		1,093,508		910,377

Total		5,710,106		5,798,051

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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,
	2023		2024		2025
Net income
Associates		326,931		478,405		466,473
Joint ventures		316,132		284,732		124,747

Total		643,063		763,137		591,219

Other comprehensive income, net of tax
Associates		99,737		269,753		55,415
Joint ventures		3,295		52,361		2,712

Total		103,033		322,114		58,127

Comprehensive income
Associates		426,669		748,158		521,888
Joint ventures		319,428		337,093		127,459

Total		746,096		1,085,251		649,347

12. Property, plant and equipment

The changes in cost and accumulated depreciation and impairment losses are as follows:

(Cost)


	Yen in millions
	Land			Buildings			Machinery and equipment			Vehicles and equipment on operating leases			Construction in progress			Total
Balance as of April 1, 2023		1,426,370			5,464,811			14,796,619			6,774,427			846,866			29,309,093

Additions		5,217			136,241			581,930			2,893,569			1,075,590			4,692,547
Sales or disposal		(14,729	)		(39,296	)		(545,829	)		(2,974,283	)		(4,771	)		(3,578,908	)
Reclassification from construction in progress		5,691			138,013			776,356			236			(920,295	)		—
Foreign currency translation adjustments		27,296			153,948			919,653			812,366			56,654			1,969,916
Other		(8,033	)		31,032			(59,696	)		17,596			(13,856	)		(32,956	)

Balance as of March 31, 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

F-38

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Accumulated depreciation and impairment losses)


	Yen in millions
	Land			Buildings			Machinery and equipment			Vehicles and equipment on operating leases			Construction in progress			Total
Balance as of April 1, 2023		(7,313	)		(3,529,186	)		(11,529,666	)		(1,605,744	)		(3,210	)		(16,675,119	)

Depreciation		—			(139,999	)		(974,181	)		(842,931	)		—			(1,957,111	)
Impairment losses		—			(208	)		(18,862	)		—			—			(19,069	)
Sales or disposal		579			34,067			498,703			962,901			3			1,496,254
Foreign currency translation adjustments		(825	)		(84,432	)		(666,255	)		(162,784	)		2,810			(911,486	)
Other		574			(34,029	)		(29,354	)		29,549			(2,112	)		(35,373	)

Balance as of March 31, 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 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,
	2024			2025
Vehicles		7,471,187			7,996,894
Equipment		52,724			55,051

		7,523,911			8,051,945
Less - Accumulated depreciation		(1,619,009	)		(1,498,586	)

Vehicles and equipment on operating leases, net		5,904,902			6,553,359

F-39

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents future lease payments to be received for vehicles and equipment on operating leases:


	Yen in millions
	March 31,
	2024		2025
Within 1 year		1,003,221		1,200,378
Between 1 and 2 years		678,342		837,956
Between 2 and 3 years		314,496		374,459
Between 3 and 4 years		77,715		93,396
Between 4 and 5 years		28,267		35,953
Later than 5 years		13,619		17,235

Total future rentals		2,115,660		2,559,377

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

4,306,566

million and ¥

4,664,376

million, as of March 31, 2024 and 2025, respectively. The additions and total cash outflows for these right

use assets for the year ended March 31, 2024 and 2025, were ¥

2,091,013

million and ¥

2,909,058

million, respectively.

Depreciation

expenses for these

right

use

assets for the year ended March 31, 2023, 2024 and 2025, were ¥

666,385

million, ¥

612,569

million and ¥

617,495

million, respectively. Depreciation on these right

use assets is included in

“Cost

of financing

services”

in the consolidated statement of income. Revenue from subleasing these right

use assets was ¥

992,730

million, ¥947,058 million and ¥1,008,634 million for the years ended March 31, 2023, 2024 and 2025, respectively.

13. Right of use assets and lease liabilities

The breakdown of right of use assets is as follows:


	Yen in millions
	March 31,
	2024		2025
Types of original assets
Land		60,388		73,694
Buildings		341,408		355,489
Other		131,040		153,885

Total		532,835		583,068

The increase in the right of use assets for the years ended on March 31, 2024 and 2025 were ¥101,534 million and ¥164,348 million, respectively.

F-40

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The breakdown of main gains and losses on lessee’s leases is as follows:


	Yen in millions
	March 31,
	2023		2024		2025
Depreciation of right of use assets
Land		5,217		9,699		5,094
Buildings		42,408		69,962		52,178
Other		36,566		42,038		43,566

Total		84,191		121,698		100,838

Interest expense on lease liabilities		5,429		6,152		4,331
Short-term leases		97,025		103,544		117,834

		186,645		231,394		223,003

For the years ended March 31, 2024 and 2025, the total cash outflows for lessee leases were ¥188,677 million and ¥208,414 million, respectively.

The following is the maturity analysis of the total future lease payments and the adjustment to the present value:


	Yen in millions
	March 31,
	2024			2025
Within 1 year		83,145			102,412
Between 1 and 5 years		190,511			253,854
Later than 5 years		244,107			273,747

Future lease payment, total		517,763			630,013
Less - Interest expense		(55,195	)		(96,662	)

Present value of lease payment, total		462,568			533,351

Current liabilities		73,456			92,147
Non-current liabilities		389,112			441,204

Present value of lease payment, total		462,568			533,351

14. Intangible assets

The carrying value of intangible assets is as follows:


	Yen in millions
	March 31,
	2024		2025
Capitalized development costs		638,337		582,606
Software and other		716,989		780,660

Total		1,355,326		1,363,266

F-41

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The 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, 2023		1,159,435			965,395			2,124,830

Additions		—			109,051			109,051
Internally developed		124,788			136,107			260,895
Sales or disposal		(230,512	)		(133,477	)		(363,989	)
Foreign currency translation adjustments		4,622			42,104			46,726
Other		0			20,715			20,715

Balance as of March 31, 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


(Accumulated amortization)
	Yen in millions
	Capitalized development costs			Software and other			Total
Balance as of April 1, 2023		(489,823	)		(385,886	)		(875,708	)

Amortization		(160,686	)		(129,956	)		(290,642	)
Sales or disposal		230,512			117,841			348,353
Foreign currency translation adjustments		—			(22,633	)		(22,633	)
Other		—			(2,272	)		(2,272	)

Balance as of March 31, 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 of intangible assets is included in “Cost of products sold” and “Selling, general and administrative” in the consolidated statement of income. There is no material internally generated intangible assets except for capitalized development costs.

F-42

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15. Income taxes

(1) Deferred tax assets and liabilities

Significant components of deferred tax assets and liabilities are as follows:


	Yen in millions
	March 31,
	2024			2025

Deferred tax assets
Defined benefit plan liabilities		100,770			156,650
Accrued expenses and liabilities for quality assurance		724,325			821,680
Other accrued employees’ compensation		138,219			146,548
Operating loss carryforwards for tax purposes		50,214			44,324
Allowance for doubtful accounts and credit losses		103,860			115,209
Property, plant and equipment and other assets		296,739			340,410
Other		569,648			504,892

Total deferred tax assets		1,983,775			2,129,712

Deferred tax liabilities
Changes in fair value of financial instruments measured in other comprehensive income		(1,015,448	)		(727,581	)
Undistributed earnings of foreign subsidiaries		(42,365	)		(63,179	)
Undistributed earnings of associates and joint ventures		(1,176,045	)		(1,223,489	)
Basis difference of acquired assets		(82,852	)		(71,386	)
Capitalized development costs		(189,496	)		(181,775	)
Lease transactions		(897,291	)		(860,487	)
Other		(297,686	)		(143,379	)

Total deferred tax liabilities		(3,701,183	)		(3,271,276	)

Net deferred tax assets and liabilities		(1,717,408	)		(1,141,564	)

F-43

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Of the changes in deferred tax assets and deferred tax liabilities for the years ended March 31, 2023, 2024 and 2025, 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,
	2023			2024			2025
Defined benefit plan liabilities		802			(4,333	)		3,093
Accrued expenses and liabilities for quality assurance		26,942			40,626			108,554
Other accrued employees’ compensation		(2,745	)		6,925			8,930
Operating loss carryforwards for tax purposes		116,344			(133,776	)		(5,609	)
Allowance for doubtful accounts and credit losses		4,474			(551	)		11,776
Property, plant and equipment and other assets		24,850			11,518			49,177
Undistributed earnings of foreign subsidiaries		12,391			(2,869	)		(20,814	)
Undistributed earnings of associates and joint ventures		(63,520	)		(43,526	)		(54,492	)
Basis difference of acquired assets		(12,075	)		1,152			10,991
Capitalized development costs		4,003			12,824			7,815
Lease transactions		(487,702	)		186,196			18,780
Other		44,144			88,582			(25,114	)

Total		(332,091	)		162,768			113,087

The deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset is recognized in the statement of financial position:


	Yen in millions
	March 31,
	2024		2025

Deductible temporary difference		1,292,277		1,944,948
Carryforwards of tax losses		762,196		841,136
Carryforwards of tax credit		95,462		61,687

Total		2,149,935		2,847,770

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,
	2024		2025

Within 5 years		7,791		4,323
Between 5 and 10 years		357,421		319,631
Later than 10 years		396,984		517,182

Total		762,196		841,136

F-44

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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,
	2024		2025

Within 5 years		4,764		3,778
Between 5 and 10 years		3,680		3,878
Later than 10 years		87,018		54,031

Total		95,462		61,687

Of the temporary differences in investments in foreign subsidiaries, because management intends to reinvest undistributed earnings of foreign subsidiaries to the extent not expected to be remitted in the foreseeable future, no deferred tax liability is recognized. As of March 31, 2024 and 2025, the temporary differences totaled ¥4,630,892 million and ¥5,667,006 million, respectively, and Toyota estimates an additional deferred tax liability of ¥232,645 million and ¥245,292 million would be required, respectively, if the full amount of those undistributed earnings were remitted.

(2) Income tax expenses

The income tax expense for the years ended March 31, 2023, 2024 and 2025 consists of the following:


	Yen in millions
	For the years ended March 31,
	2023		2024			2025

Current income tax expense:
TMC and domestic subsidiaries		758,772		1,432,299			965,512
Foreign subsidiaries		84,902		624,134			772,410

Total current		843,674		2,056,433			1,737,922

Deferred income tax expense (benefit):
TMC and domestic subsidiaries		27,783		(42,906	)		(131,329	)
Foreign subsidiaries		304,308		(119,862	)		18,242

Total deferred		332,091		(162,768	)		(113,087	)

Total income tax expense		1,175,765		1,893,665			1,624,835

F-45

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2023, 2024 and 2025. 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,
	2023			2024			2025

Statutory tax rate		30.9	%		30.9	%		30.9	%
Increase (reduction) in taxes resulting from:
Non-deductible expenses		0.8			0.3			0.8
Tax-exempt income		(0.4	)		(0.2	)		(0.6	)
Deferred tax liabilities on undistributed earnings of foreign subsidiaries		1.1			0.6			1.0
Effects of investments accounted for using the equity method		(5.4	)		(3.4	)		(2.8	)
Deferred tax liabilities on undistributed earnings of associates and joint ventures		3.1			2.1			1.9
Change in unrecognized deferred tax assets		6.3			0.4			2.1
Tax credits		(3.5	)		(2.1	)		(4.2	)
The difference between the statutory tax rate in Japan and that of foreign subsidiaries		(1.5	)		(2.0	)		(3.1	)
Unrecognized tax benefits adjustments		0.4			—			(1.1	)
Revision to deferred tax assets and liabilities at the fiscal year-end due to changes in tax rates		—			—			0.4
Other		0.3			0.6			0.0

Average effective tax rate		32.0	%		27.2	%		25.3	%

(3) Global Minimum Taxation

The Organisation for Economic

Co-operation

and Development (OECD) has issued model rules for the framework of global minimum taxation, known as Pillar Two. Toyota operates in jurisdictions where these rules, including the Qualified Domestic Minimum

Top-up

Tax, have been enacted or are close to being enacted.

After assessing the potential impact on the financial statements of our constituent entities, Toyota does not expect any significant exposure to additional corporate income tax due to the global minimum taxation.

Furthermore, Toyota is applying the temporary exception under IAS 12 concerning deferred tax requirements. As a result, Toyota does not recognize or disclose any deferred tax assets or liabilities related to corporate income tax that may arise from the global minimum taxation.

F-46

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

16. Trade accounts and other payables

Trade accounts and other payables consists of the following:


	Yen in millions
	March 31,
	2024		2025

Accounts and notes payables		3,828,068		4,034,920
Other payables		1,423,289		1,492,427

Total		5,251,357		5,527,347

Trade accounts and other payables are classified as financial liabilities measured at amortized cost.

17. Financial liabilities

(1) Financial liabilities

Financial liabilities consist of the following:


	Yen in millions
							Non-cash changes
	As of April 1, 2023			Cash flow			Acquisitions		Reclassification			Changes in foreign currency exchange rates			Changes in fair value			Other			As of March 31, 2024

Current liabilities
Short-term debt		4,590,173			401,740			—		—			519,138			—			(23,093	)		5,487,959
Current portion of long-term debt		7,648,596			(8,673,349	)		—		9,974,103			896,377			—			(858	)		9,844,870
Current portion of long-term lease liabilities		66,870			(78,981	)		—		77,698			3,295			—			4,573			73,456

Current liabilities		12,305,639			(8,350,589	)		—		10,051,801			1,418,811			—			(19,378	)		15,406,284

Non-current liabilities
Long-term debt		16,685,384			12,057,349			—		(9,974,103	)		1,933,312			—			64,442			20,766,384
Long-term lease liabilities		389,250			—			101,534		(77,698	)		20,766			—			(44,740	)		389,112

Non-current liabilities		17,074,634			12,057,349			101,534		(10,051,801	)		1,954,078			—			19,702			21,155,496

Total		29,380,273			3,706,760			101,534		—			3,372,889			—			324			36,561,780

Derivatives		(62,359	)		95,572			—		—			(4,792	)		(68,999	)		—			(40,578	)

F-47

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
							Non-cash changes
	As of April 1, 2024			Cash flow			Acquisitions		Reclassification			Changes in foreign currency exchange rates			Changes in fair value		Other			As of 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

Short-term and long-term debt is classified as financial liabilities measured at amortized cost.

(2) Short-term debt

The breakdown of “Short-term debt” is as follows:


	Yen in millions
	March 31,
	2024		2025

Short-term debt
(Principally from bank)
[Weighted average interest rate
2024 2.27%
2025 2.26%]		1,387,832		1,552,166
Commercial paper
[Weighted average interest rate
2024 4.53%
2025 3.82%]		4,100,127		3,912,303

		5,487,959		5,464,469

F-48

Table of Contents

TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) Long-term debt

The breakdown of “Long-term debt” is as follows:


	Yen in millions
	March 31,
	2024			2025

Unsecured loans
(Principally from bank)
[2024
Weighted average interest 3.68%
Due 2024 to 2042
2025
Weighted average interest 3.56%
Due 2025 to 2042]		6,781,268			7,360,937
Secured loans
(Principally financial receivables securitization)
[2024
Weighted average interest 4.64%
Due 2024 to 2034
2025
Weighted average interest 4.23%
Due 2025 to 2034]		6,458,570			7,556,089
Unsecured bonds of the parent
[2024
Weighted average interest 1.92%
Due 2024 to 2037
2025
Weighted average interest 1.93%
Due 2026 to 2037]		1,221,345			1,108,080
Unsecured bonds and medium-term notes of consolidated subsidiaries
[2024
Weighted average interest 3.49%
Due 2024 to 2048
2025
Weighted average interest 3.61%
Due 2025 to 2048]		16,084,233			16,683,919
Secured bonds of consolidated subsidiaries
[2024
Weighted average interest 7.86%
Due 2024 to 2029
2025
Weighted average interest 8.12%
Due 2025 to 2029]		65,837			86,033

		30,611,253			32,795,058
Less - Current portion due within one year		(9,844,870	)		(10,272,900	)

		20,766,384			22,522,158

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2024 and 2025, the currencies of long-term debt are 53% and 50% in US dollars, 10% and 12% in Japanese yen, 13% and 14% in Euros, 5% and 5% in Australian dollars, 4% and 4% in Canadian dollars, 15% and 15% in other currencies.

(4) Assets pledges as collateral

The breakdown of assets pledged as collateral mainly for loans of consolidated subsidiaries is as follows:


	Yen in millions
	March 31,
	2024		2025

Property, plant and equipment		1,574,373		1,616,300
Other assets		6,731,856		7,936,375

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8,306,230		9,552,674

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 such agreements or otherwise, will be applicable to all present or future indebtedness to such banks.

(5) Interest expenses

The interest expenses for the fiscal year ended March 31, 2024 and 2025 are ¥1,213,021 million and ¥1,654,702 million, respectively. Interest expenses related to the financial business is included in “cost of financial services” in the consolidated statement of income.

18. Other financial liabilities

Other financial liabilities consist of the following:


	Yen in millions
	March 31,
	2024		2025
Financial liabilities measured at amortized cost
Deposits received		1,205,723		1,501,078
Other		558,039		483,751
Financial liabilities measured at fair value through profit or loss
Derivatives		432,189		319,881

Total		2,195,951		2,304,711

Current liabilities		1,700,137		1,869,117
Non-current liabilities		495,814		435,594

Total		2,195,951		2,304,711

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19. Financial risks

(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 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 the 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.

(2) Credit risk

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 periodical 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 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 being secured by vehicles as collateral. Wholesale receivables and other dealer loans are secured by placing appropriate property as collateral. During the reporting period, there is no change in the policy regarding collateral.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The net changes in the allowance for credit losses relating to the retail receivables are as follows:


	Yen in millions
	For the year ended March 31, 2024
	Expected credit loss for 12 months			Lifetime expected credit loss						Total
	Expected credit loss for 12 months			Financial receivable not credit-impaired			Credit-impaired financial receivable			Total
Allowance for credit loss at beginning of year		95,720			124,867			54,284			274,871
Provision for credit loss, net of reversal		34,386			64,742			142,299			241,427
Charge-offs		—			—			(150,458	)		(150,458	)
Other		(19,062	)		(41,819	)		31,193			(29,688	)

Allowance for credit loss at end of year		111,044			147,790			77,318			336,152


	Yen in millions
	For the year ended March 31, 2025
	Expected credit loss for 12 months			Lifetime expected credit loss						Total
	Expected credit loss for 12 months			Financial receivable not credit-impaired			Credit-impaired financial 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		36,053			59,305			181,769			277,127
Charge-offs		—			—			(189,044	)		(189,044	)
Other		(29,265	)		(56,209	)		17,543			(67,931	)

Allowance for credit loss at end of year		117,832			150,885			87,587			356,304

“Other” primarily includes reversal of allowance for credit loss due to the collection of retail receivables.

The table below shows the retail receivables segregated into aging categories based on the numbers of the days outstanding:


	Yen in millions
	March 31, 2024
	Expected credit loss for 12 months		Lifetime expected credit loss				Total
	Expected credit loss for 12 months		Financial receivable not credit-impaired		Credit-impaired financial receivable		Total
Current		22,750,132		1,526,798		—		24,276,931
Past due less than 90 days		318,524		694,558		23,761		1,036,843
Past due 90 days or more		—		4,598		171,574		176,172

Total		23,068,656		2,225,954		195,335		25,489,945

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2025
	Expected credit loss for 12 months		Lifetime expected credit loss				Total
	Expected credit loss for 12 months		Financial receivable not credit-impaired		Credit-impaired financial 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

The 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,
	2024			2025
Allowance for credit loss at beginning of year		36,920			46,909
Provision for credit loss, net of reversal		23,617			31,539
Charge-offs		(7,676	)		(10,311	)
Other		(5,952	)		(11,417	)

Allowance for credit loss at end of year		46,909			56,721

“Other” primarily includes reversal of allowance for credit loss due to the collection of finance lease receivables.

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,
	2024		2025
Current		3,057,602		3,340,414
Past due less than 90 days		60,316		67,627
Past due 90 days or more		25,506		29,928

Total		3,143,424		3,437,970

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2024
	Expected credit loss for 12 months			Lifetime expected credit loss						Total
	Expected credit loss for 12 months			Financial receivable not credit-impaired			Credit-impaired financial receivable			Total
Allowance for credit loss at beginning of year		14,640			4,582			5,399			24,622
Provision for credit loss, net of reversal		6,362			2,539			1,130			10,031
Charge-offs		—			—			(204	)		(204	)
Other		(3,521	)		(1,191	)		1,475			(3,236	)

Allowance for credit loss at end of year		17,481			5,931			7,801			31,213


	Yen in millions
	For the year ended March 31, 2025
	Expected credit loss for 12 months			Expected credit loss for the entire period						Total
	Expected credit loss for 12 months			Financial receivable not credit-impaired			Credit-impaired financial 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		10,856			3,746			1,448			16,050
Charge-offs		—			—			(698	)		(698	)
Other		(3,641	)		(2,658	)		(2,475	)		(8,774	)

Allowance for credit loss at end of year		24,697			7,018			6,076			37,791

“Other” primarily includes reversal of allowance for credit loss due to the collection of wholesale receivables and other dealer loans.

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 has been charged off but subject to ongoing collection activity was not significant for the years ended March 31, 2024 and 2025.

The balances of the wholesale receivables and other dealer loan receivables portfolios by credit status, as well as loan commitments and financial guarantee contracts, as of March 31, 2024 and 2025 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Default: Account is not currently meeting contractual obligations, or we have temporarily waived certain contractual requirements


	Yen in millions
	March 31, 2024
	Expected credit loss for 12 months		Lifetime expected credit loss
	Expected credit loss for 12 months		Financial receivable not credit-impaired		Credit-impaired financial receivable		Total
Wholesale and other dealer loan
Performing		4,741,270		—		—		4,741,270
Credit Watch		61,078		132,721		—		193,799
At Risk		—		45,231		4,258		49,489
Default		—		—		21,209		21,209
Loan commitments		11,129,604		115,327		781		11,245,712
Financial guarantee contracts		3,200,368		36,964		—		3,237,333

Total		19,132,321		330,243		26,247		19,488,811


	Yen in millions
	March 31, 2025
	Expected credit loss for 12 months		Lifetime expected credit loss
	Expected credit loss for 12 months		Financial receivable not credit-impaired		Credit-impaired financial receivable		Total
Wholesale and other dealer loan
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

For the year ended March 31, 2024 and 2025, the amount of finance receivables the terms of which 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 receivables.

(3) Liquidity risk

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 due date because of deterioration of 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 the 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The amounts of

non-derivative

financial liabilities and derivative financial liabilities by a remaining contract maturity period are as follows:

As of March 31, 2024


	Yen in millions
						Maturities
	Book value		Contractual cash flows			Within 1 year			Between 1 and 3 years			Between 3 and 5 years			Later than 5 years

Non-derivative financial liabilities
Short-term debt		1,387,832		(1,398,947	)		(1,398,947	)		—			—			—
Commercial paper		4,100,127		(4,222,660	)		(4,222,660	)		—			—			—
Long-term debt		30,611,253		(33,286,908	)		(10,862,374	)		(13,051,900	)		(6,770,969	)		(2,601,665	)
Lease liabilities		462,568		(517,763	)		(83,145	)		(115,664	)		(74,847	)		(244,107	)

Total		36,561,780		(39,426,278	)		(16,567,126	)		(13,167,564	)		(6,845,816	)		(2,845,772	)

Derivative financial liabilities
Interest derivative		238,503		(237,685	)		(74,298	)		(103,424	)		(54,923	)		(5,040	)
Currency derivative
In		—		1,127,763			150,390			433,343			362,638			181,391
Out		193,686		(1,370,175	)		(222,251	)		(519,535	)		(427,529	)		(200,860	)

Total		432,189		(480,098	)		(146,158	)		(189,617	)		(119,815	)		(24,508	)

Total		36,993,969		(39,906,376	)		(16,713,284	)		(13,357,180	)		(6,965,631	)		(2,870,280	)


As of March 31, 2025
	Yen in millions
						Maturities
	Book value		Contractual cash flows			Within 1 year			Between 1 and 3 years			Between 3 and 5 years			Later than 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 derivative		196,389		(220,341	)		(83,505	)		(108,063	)		(22,712	)		(6,061	)
Currency derivative
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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The unused amount of funding with established issuance limits is as follows:


	Yen in millions
	March 31,
	2024		2025
Corporate bonds and medium-term notes		6,477,572		6,011,789
Commercial paper		1,241,053		1,241,283

Total		7,718,625		7,253,072

As of March 31, 2024 and 2025, Toyota has unused amounts of commitment lines from financial institutions of ¥5,507,761 million and ¥5,503,689 million, respectively.

As of March 31, 2024 and 2025, the balance of credit limits and other

non-contractual

credit facilities with major banks is ¥47,000 million and ¥53,000 million, respectively.

(4) Foreign exchange risk

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, 2024 and 2025 is as follows:


	Yen in millions
	VaR
	Year-end		Average		Maximum		Minimum
For the year ended March 31, 2024		411,300		403,025		413,800		389,000
For the year ended March 31, 2025		465,300		441,800		465,300		408,500

The Monte Carlo simulation method is used for Toyota’s VaR measurement, and measurement is based on a 95% confidence interval and a

ten-day

holding period.

(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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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,
	2024			2025
Impact on income before income taxes		(49,799	)		(104,706	)
Impact on other comprehensive income, before tax effect		(221,420	)		(235,959	)

(6) Market price fluctuation risk

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 manufacture of automobiles. Toyota controls the 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 year ended March 31, 2024, and 2025 is ¥364,120 million and ¥305,475 million, respectively.

20. Derivative financial instruments

(1) Undesignated derivative financial instruments

Toyota uses derivative financial instruments including foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements, and interest rate options, to manage mainly its exposures to foreign currency exchange rate fluctuations and interest rate fluctuations from an economic perspective, and Toyota is unable to or has elected not to apply hedge accounting. Toyota does not use derivatives for speculation or trading.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Fair value and gain and losses of derivatives

The fair values of the derivatives as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31,
	2024		2025
Derivative assets
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap
Current assets
- Other financial assets		180,657		118,941
Non-current assets
- Other financial assets		355,245		276,647

Total		535,901		395,588

Foreign exchange forward, option and other contracts
Current assets
- Other financial assets		17,006		62,945
Non-current assets
- Other financial assets		14		24,845

Total		17,019		87,790



Total derivative assets		552,921		483,378


	Yen in millions
	March 31,
	2024			2025
Derivative financial liabilities
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap
Current liabilities
- Other financial liabilities		(91,120	)		(60,584	)
Non-current liabilities
- Other financial liabilities		(286,396	)		(243,087	)

Total		(377,516	)		(303,670	)

Foreign exchange forward, option and other contracts
Current liabilities
- Other financial liabilities		(54,086	)		(14,711	)
Non-current liabilities
- Other financial liabilities		(588	)		(1,500	)

Total		(54,673	)		(16,211	)



Total derivative liabilities		(432,189	)		(319,881	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The amount of underlying notional of derivatives as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31,
	2024		2025
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap		31,825,306		32,257,298
Foreign exchange forward, option and other contracts		4,217,529		5,492,347

Total		36,042,835		37,749,645

Undesignated derivative financial instruments are used to manage mainly economic risks of fluctuations in foreign currency exchange rates and interest rates of certain receivables and payables. Those economic risks are offset by changes in the fair value of undesignated derivative financial instruments.

The gain (loss) on derivative transactions as of March 31, 2023, 2024 and 2025 were ¥(129,782) million, ¥(267,190) million and ¥(80,831) million, respectively. The amounts are included in cost of financial services and foreign exchange gain (loss), net.

Cash flows from transactions of derivative financial instruments are included in cash flows from operating activities in the consolidated statement of cash flows.

(3) Credit risk related contingent features

Toyota enters into International Swaps and Derivatives Association Master Agreements with counterparties. These Master Agreements contain a provision requiring either Toyota or the counterparty to settle the contract or to post assets to the other party in the event of a ratings downgrade below a specified threshold.

The aggregate fair value amount of derivative financial instruments that contain credit risk related contingent features that are in a net liability position after being offset by cash collateral as of March 31, 2024 and 2025 is ¥13,166 million and ¥20,213 million, respectively. The aggregate fair value amount of assets that are already posted as cash collateral as of March 31, 2024 and 2025 is ¥98,840 million and ¥87,644 million, respectively. If the ratings of Toyota decline below specified thresholds, the maximum amount of assets to be posted or for which Toyota could be required to settle the contracts is ¥20,213 million as of March 31, 2025. See Note 22 for details.

21. Fair value measurements

(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 unobservable inputs for the assets or liabilities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(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.

(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 29% and 71% (as of March 31, 2024) and 32% and 68% (as of March 31, 2025) of public and corporate bonds, respectively. Toyota primarily uses quoted market prices for identical assets to measure the fair value of these securities.

(Stocks)

Listed stocks on the Japanese stock markets represent 85% (as of March 31, 2024) and 79% (as of March 31, 2025) 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 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 fair value of stocks if the unobservable inputs were to be replaced by other reasonable alternative assumptions are not significant.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, the fair value may be impacted materially.

The shares classified as Level 3 are measured by the responsible department 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 has transactions. Therefore, other investment trusts are classified as Level 2.

(v) Derivative financial instruments -

Toyota employs derivative financial instruments, including foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements and interest rate options 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

non-performance

risk, using such as credit default probabilities.

(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, the fair value of the Loans Based on Securitization is classified as Level 3.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) Financial instrument measured at fair value on recurring basis

The following table summarizes the fair values of the assets and liabilities measured at fair value on a recurring basis. Transfers between levels of the fair value are recognized at the date of the event or change in circumstances that caused the transfer:


	Yen in millions
	March 31, 2024
	Level 1		Level 2			Level 3		Total
Other financial assets:
Financial assets measured at fair value through profit or loss
Public and corporate bonds		105,367		106,169			10,208		221,743
Stocks		—		—			212,393		212,393
Investment trusts		288,071		265,103			—		553,174
Derivative financial instruments		—		552,921			—		552,921

Total		393,438		924,193			222,601		1,540,232

Financial assets measured at fair value through other comprehensive income
Public and corporate bonds		4,245,238		4,013,583			20,962		8,279,783
Stocks		3,641,197		—			188,696		3,829,893
Other		11,537		—			—		11,537

Total		7,897,972		4,013,583			209,658		12,121,213

Other financial liabilities:
Financial liabilities measured at fair value through profit or loss
Derivative financial instruments		—		(432,189	)		—		(432,189	)

Total		—		(432,189	)		—		(432,189	)


	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
Derivative financial instruments . . .		—		458,579			24,800		483,378

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
Derivative financial instruments . . .		—		(319,881	)		—		(319,881	)

Total . . . . . . . . . . . . . . . . . . . .		—		(319,881	)		—		(319,881	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) Changes in financial instruments classified as Level 3 and measured at fair value on 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, 2024 and 2025:


	Yen in millions
	For the year ended March 31, 2024
	Public and corporate bonds			Stocks			Derivative financial instruments		Total
Balance at beginning of year		33,332			367,274			—		400,606
Total gains (losses)
Net income (loss)		28			22,254			—		22,282
Other comprehensive income (loss)		—			(6,803	)		—		(6,803	)
Purchases and issuances		4,910			27,768			—		32,678
Sales and settlements		(6,155	)		(971	)		—		(7,126	)
Transfer to (from) Level 3		21			—			—		21
Others		(967	)		(8,432	)		—		(9,399	)

Balance at end of year		31,170			401,089			—		432,259

Unrealized gains or losses included in profit or loss on assets held at March 31		(40	)		22,254			—		22,214

Total		(40	)		22,254			—		22,214


	Yen in millions
	For the year ended March 31, 2025
	Public and corporate bonds			Stocks			Derivative financial instruments		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	)

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 as net of assets and liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

“Others” includes foreign currency translation adjustments for the year ended March 31, 2024 and 2025.

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, 2024
			Fair value
	Carrying amount		Level 1		Level 2		Level 3		Total
Receivables related to financial services		31,694,359		—		—		31,787,879		31,787,879
Interest-bearing liabilities
Long-term debt (Including current portion)		30,611,253		—		23,941,863		6,261,858		30,203,722


	Yen in millions
	March 31, 2025
			Fair value
	Carrying 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

Of financial assets and liabilities that are measured on an amortized cost basis, those with carrying values that app

rox

imate fair value are excluded from the table above.

22. Offsetting Financial Assets and Liabilities

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, 2024
	Gross amounts of recognized financial assets and financial liabilities		Amounts not offset					Net amount
			Financial instruments			Collateral of financial instruments		Net amount
Other financial assets Derivatives		552,921		(94,647	)		(130,363)		327,911
Other financial liabilities Derivatives		432,189		(94,647	)		(52,497)		285,045

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	March 31, 2025
	Gross amounts of recognized financial assets and financial liabilities		Amounts not offset						Net amount
			Financial instruments			Collateral of financial 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

The amounts offset, as presented in the consolidated statement of financial position, in accordance with the criteria for offsetting financial assets and financial liabilities were immaterial.

23. Employee benefits

(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 lengths of service or the number of “points” mainly determined by those. Under normal circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement. Employees receive additional benefits on involuntary retirement, including retirement at the age limit.

Effective October 1, 2004, 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 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). The contributions to the plans are funded with several financial institutions in accordance with the applicable laws and regulations. These pension plan assets consist principally of common stocks, government bonds and insurance contracts.

Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of their employees under which the cost of benefits are currently invested or accrued. The benefits for these plans are based primarily on lengths of service and current rates of pay.

These post-employment benefit plans are exposed to general investment risk, interest rate risk and inflation risk.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 the 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.

(2) Defined benefit obligations and plan assets

The 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,
	2024						2025
	Japanese plans			Foreign plans			Japanese plans			Foreign plans

Present value of defined benefit obligations:
Benefit obligations at beginning of year		1,964,655			1,423,263			1,898,339			1,651,016
Current service cost		80,133			45,581			76,758			49,225
Interest cost		21,666			73,014			26,290			81,411
Remeasurements:
Changes in demographic assumptions		850			1,337			(3,635	)		68
Changes in financial assumptions		(74,816	)		(16,818	)		(181,128	)		(48,712	)
Other		(2,926	)		2,222			(385	)		(15,579	)
Past service cost		418			(18	)		(184	)		(3,027	)
Plan participants’ contributions		1,143			3,835			1,065			4,355
Benefits paid		(90,283	)		(64,789	)		(86,871	)		(76,204	)
Effect of changes in exchange rates and other		(2,501	)		183,389			(696	)		(20,499	)

Benefit obligations at end of year		1,898,339			1,651,016			1,729,554			1,622,053

Fair value of plan assets:
Plan assets at beginning of year		1,840,586			1,109,394			2,128,476			1,284,918
Interest income		21,377			73,033			29,462			57,149
Remeasurement
Actual return on plan assets, excluding interest income		266,101			(30,407	)		(66,135	)		(33,874	)
Employer contributions		47,459			18,252			35,669			19,016
Plan participants’ contributions		1,143			3,835			1,065			4,355
Benefits paid		(47,610	)		(34,845	)		(47,528	)		(42,023	)
Effect of changes in exchange rates and other		(579	)		145,656			—			(18,305	)

Plan assets at end of year		2,128,476			1,284,918			2,081,009			1,271,236

The impact of minimum funding requirement and asset ceiling		268,228			—			572,107			—

Net defined benefit liability (asset)		38,092			366,098			220,652			350,817

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The funded defined benefit obligations and the unfunded defined benefit obligations are as follows:


	Yen in millions
	March 31,
	2024						2025
	Japanese plans			Foreign plans			Japanese plans			Foreign plans

Funded defined benefit obligations		1,415,507			1,250,773			1,265,948			1,225,195
Plan assets		(2,128,476	)		(1,284,918	)		(2,081,009	)		(1,271,236	)
The impact of minimum funding requirement and asset ceiling		268,228			—			572,107			—

Subtotal		(444,741	)		(34,145	)		(242,954	)		(46,040	)

Unfunded defined benefit obligations		482,833			400,243			463,606			396,857

Total		38,092			366,098			220,652			350,817

The net defined benefit liability (asset) recognized in the consolidated statement of financial position are comprised of the following:


	Yen in millions
	March 31,
	2024						2025
	Japanese plans			Foreign plans			Japanese plans			Foreign plans

Retirement benefit liabilities		597,641			480,320			562,375			457,193
Other non-current assets (Retirement benefit assets)		(559,550	)		(114,222	)		(341,723	)		(106,376	)

Net amount recognized		38,092			366,098			220,652			350,817

The weighted average duration of defined benefit obligations are as follows:

March 31,

2024

2025

Japanese plans

Foreign plans

Japanese plans

Foreign plans

Weighted average duration of defined benefit obligations

17.1years

13.7years

16.9years

13.1years

(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,
	2024						2025
	Japanese plans			Foreign plans			Japanese plans			Foreign plans

Discount rate		1.4	%		5.2	%		2.2	%		5.4	%

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(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 the 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, 2024
	Japanese plans						Foreign plans
	Quoted prices in active markets				Total		Quoted prices in active markets				Total
	Available		Not available		Total		Available		Not available		Total
Stocks		604,210		—		604,210		151,669		—		151,669
Government bonds		135,912		3		135,915		278,982		—		278,982
Bonds (other)		—		92,568		92,568		—		271,917		271,917
Commingled funds		—		521,388		521,388		—		399,742		399,742
Insurance contracts		—		236,216		236,216		—		—		—
Other		288,891		249,288		538,180		17,899		164,708		182,607

Total		1,029,013		1,099,463		2,128,476		448,550		836,367		1,284,918


	Yen in millions
	March 31, 2025
	Japanese plans						Foreign plans
	Quoted prices in active markets				Total		Quoted prices in active markets				Total
	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

“Other” consists of cash equivalents, other private placement investment funds and other assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(5) The impact of minimum funding requirement and asset ceiling

The impact of minimum funding requirement and asset ceiling is as follows:


	Yen in millions
	For the years ended March 31,
	2024				2025
	Japanese plans		Foreign plans		Japanese plans		Foreign plans
Beginning balance of the fiscal year		—		—		268,228		—
Interest income		—		—		4,694		—
Remeasurements:
Change in asset ceiling excluding interest income		268,228		—		299,185		—
Translation adjustments		—		—		—		—

Ending balance of the fiscal year		268,228		—		572,107		—

(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,
	2024						2025
	Japanese plans			Foreign plans			Japanese plans			Foreign plans
0.5% decrease		144,307			119,443			119,138			113,268
0.5% increase		(118,737	)		(113,734	)		(103,296	)		(110,060	)

(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, 2026), Toyota expects to contribute

¥33,651

million for Japanese plans and

¥16,454

million for foreign plans to the post-employment benefit plans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(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.

(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 March 31, 2023, 2024 and 2025 are ¥3,985,518 million, ¥4,385,112 million and ¥4,794,497 million, respectively.

24. Liabilities for quality assurance

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 years ended March 31, 2023, 2024 and 2025 consist of the following:


	Yen in millions
	For the years ended March 31,
	2023			2024			2025
Liabilities for quality assurance at beginning of year		1,555,711			1,686,357			1,836,314
Additional provisions		400,419			489,967			689,804
Utilization		(229,623	)		(340,872	)		(550,006	)
Reversals		(59,758	)		(37,664	)		(18,157	)
Other		19,608			38,526			7,793

Liabilities for quality assurance at end of year		1,686,357			1,836,314			1,965,748

“Other” primarily includes the impact of currency translation adjustments and the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below shows the net changes in liabilities for recalls and other safety measures which are comprised in liabilities for quality assurance above for the years ended March 31, 2023, 2024 and 2025.


	Yen in millions
	For the years ended March 31,
	2023			2024			2025
Liabilities for recalls and other safety measures at beginning of year		1,171,213			1,194,156			1,271,690
Additional provisions		231,874			288,278			317,414
Utilization		(178,124	)		(188,902	)		(349,387	)
Reversals		(35,643	)		(31,248	)		(6,402	)
Other		4,836			9,406			3,150

Liabilities for recalls and other safety measures at end of year		1,194,156			1,271,690			1,236,465

25. Equity and other equity items

(1) Equity management

Toyota will efficiently invest in maintenance and replacement of conventional manufacturing facilities and the introduction of new products, and will focus on capital investment and research and development in areas contributing to strengthening competitiveness and future growth. Through these activities, Toyota aims to improve corporate value and keep sustainable growth for realization of a new mobility society. Generally, Toyota Motor Corporation shareholder’s equity covers such activities, with additional short-term and long-term debt, if necessary.

The amount of Toyota Motor Corporation shareholder’s equity and short-term and long-term debt are as follows:


	Yen in millions
	March 31,
	2024		2025
Toyota Motor Corporation Shareholders’ equity		34,220,991		35,924,826
Short-term and long-term debt		36,561,780		38,792,879

(2) Number of shares

As of March 31, 2023, 2024 and 2025, the total number of authorized shares of TMC’s common stock was 50,000,000,000.

The changes in the shares of common stock issued are as follows:


	For the years ended March 31,
	2023		2024		2025
Common stock issued:
Balance at beginning of year		16,314,987,460		16,314,987,460		16,314,987,460
Changes during the year		—		—		(520,000,000	)

Balance at end of year		16,314,987,460		16,314,987,460		15,794,987,460

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The common stock issued by TMC is a

no-parity

stock without any limitations on the content of the rights, and the issued stock is fully paid.

The total number of treasury stock was 2,749,807,731, 2,840,815,433 and 2,746,057,686 as of March 31, 2023, 2024 and 2025, respectively.

(3) Capital surplus and retained earnings

Capital surplus consists of capital reserves and other capital surplus. Retained earnings consist of 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 as a capital reserve or a retained earnings reserve. No further appropriations are required when the total amount of the capital reserve and the retained earnings reserve reaches 25% of stated capital. The Companies Act provides that the retained earnings reserve of TMC and its Japanese subsidiaries is restricted and unable to be used for dividend payments, and is excluded from the calculation of the profit available for dividend.

The amounts of statutory retained earnings of TMC available for dividend payments to shareholders were ¥16,723,895 million and ¥18,333,862 million as of March 31, 2024 and 2025, 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, 2025 includes

¥3,751,118 million relating to equity in undistributed earnings of associates and joint ventures.

(4) Treasury stock

The repurchase, reissuance and retirement of treasury stock are as follows:

For the year ended March 31, 2023

Repurchase of treasury stock

1) Repurchasing of treasury stock resolved at the Board of Directors meeting held on March 23, 2022

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		44,114,900 shares
Total purchase price for repurchase of shares		¥95,392 million

2) Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 11, 2022 and November 1, 2022

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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		169,429,000 shares
Total purchase price for repurchase of shares		¥335,685 million

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.

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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

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(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 value through other comprehensive income			Remeasurements of defined benefit plans			Exchange differences on translating foreign operations			Total

Balance at April 1, 2022		1,134,671			—			1,068,583			2,203,254

Other comprehensive income, net of tax		(105,435	)		82,020			851,129			827,713
Reclassification to retained earnings		(94,233	)		(72,598	)		—			(166,831	)
Other comprehensive income for the period attributable to non-controlling interests		(1,300	)		(9,422	)		(17,219	)		(27,941	)

Balance at March 31, 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

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(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, 2023
	Before tax			Tax effect			After 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		144,160			(44,936	)		99,223

Net changes		144,160			(44,936	)		99,223

Remeasurements of defined benefit plans
Amount incurred during the year		112,151			(46,998	)		65,153

Net changes		112,151			(46,998	)		65,153

Shares of other comprehensive income of equity method investees
Amount incurred during the year		(77,148	)		—			(77,148	)

Net changes		(77,148	)		—			(77,148	)

Items that may be reclassified subsequently to profit (loss)
Exchange differences on translating foreign operations
Amount incurred during the year		676,042			—			676,042
Reclassification to profit (loss)		—			—			—

Net changes		676,042			—			676,042

Net changes in revaluation of financial assets measured at fair value through other comprehensive income
Amount incurred during the year		(165,477	)		49,738			(115,738	)
Reclassification to profit (loss)		—			—			—

Net changes		(165,477	)		49,738			(115,738	)

Shares of other comprehensive income of equity method investees
Amount incurred during the year		180,181			—			180,181
Reclassification to profit (loss)		—			—			—

Net changes		180,181			—			180,181

Total other comprehensive income		869,909			(42,196	)		827,713

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	Yen in millions
	For the year ended March 31, 2024
	Before tax			Tax effect			After 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

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	Yen in millions
	For the year ended March 31, 2025
	Before tax			Tax effect			After 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 is reclassified from “Exchange differences on translating foreign operations” to “Foreign exchange gain (loss), net” in the consolidated statement of income for fiscal 2025.

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(7) Dividends

The paid dividend amounts are as follows:

For the year ended March 31, 2023

Resolution

Type of shares

Total amount
of dividends

(yen in millions)

Dividend per share

(yen)

Record date

Effective date

The Board of Directors Meeting on May 11, 2022

Common shares

385,792

28.00

March 31, 2022

May 27, 2022

The Board of Directors Meeting on November 1, 2022

Common shares

342,187

25.00

September 30, 2022

November 22, 2022

For the year ended March 31, 2024

Resolution

Type of shares

Total amount
of dividends

(yen in millions)

Dividend per share

(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

Resolution

Type of shares

Total amount
of dividends

(yen in millions)

Dividend per share

(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

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Dividends of which record date falls within the year ended March 31, and effective date is after the year ended March 31 are as follows:

For the year ended March 31, 2025

Resolution

Type of shares

Total amount
of dividends

(yen in millions)

Dividend per share

(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

26. Sales revenues

(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
	2023		2024		2025
Sales of products
Automotive
Vehicles		28,394,256		35,249,865		36,892,232
Parts and components for production		1,710,422		1,596,111		1,606,173
Parts and components for after service		2,866,196		3,166,586		3,423,389
Other		805,995		1,068,169		1,074,505

Total automotive		33,776,870		41,080,731		42,996,299
All other		590,749		567,399		602,578

Total sales of products		34,367,619		41,648,130		43,598,877
Financial services		2,786,679		3,447,195		4,437,827

Total sales revenues		37,154,298		45,095,325		48,036,704

The majority of sales of products are revenues recognized from contracts with customers under IFRS 15 “Revenue from Contracts with Customers” (“IFRS 15”), and receivables related to such revenues 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,
	2023		2024		2025
Finance leases
Financial income related to net lease investment		164,820		208,257		258,835
Operating leases		1,169,018		1,207,719		1,350,051

Total		1,333,838		1,415,975		1,608,886

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Financial service revenues other than income from leases mainly consist of interest income using the effective interest method. The amount of interest income using the effective interest method is not significant.

For the years ended March 31, 2023, 2024 and 2025 ¥166,220 million, ¥187,035 million and ¥207,154 million of financial service revenues were accounted for under IFRS 15.

(2) Contract liabilities

Contract liabilities consist of the following:


	Yen in millions
	April 1, 2023		March 31,
	April 1, 2023		2024		2025
Contract liabilities		1,068,212		1,392,390		1,417,919

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 year ended March 31, 2024 and 2025, the amounts transferred from contract liabilities at the beginning of the fiscal year to sales revenue were ¥577,917 million and ¥748,193 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 ¥1,038,630 million and ¥1,156,410 million as of March 31, 2024 and 2025, respectively. The main contents of unsatisfied performance obligations are insurance revenues and maintenance revenues.

For insurance revenues, Toyota receives payment agreed upon 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, 2024, the unsatisfied performance obligations related to insurance revenues were ¥433,218 million, and Toyota expected to recognize as revenue ¥125,303 million in fiscal 2025, and ¥307,914 million thereafter. 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.

For maintenance revenues, Toyota receives payments agreed upon 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 for sales of products related to contracts that have an original expected duration of one year or less have been excluded from this disclosure.

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27. Research and development cost

Research and development costs consist of the following:


	Yen in millions
	For the years ended March 31,
	2023			2024			2025
Research and development expenditures incurred during the year		1,241,686			1,202,373			1,326,496
Amount capitalized		(181,634	)		(124,788	)		(111,546	)
Amortization of capitalized development costs		164,512			160,686			162,068

Total		1,224,564			1,238,271			1,377,018

28. Other finance income and costs

Other finance income and costs consist of the following:


	Yen in millions
	For the years ended March 31,
	2023			2024			2025

Other finance income
Interest income
Financial assets measured at amortized cost		101,737			289,035			256,034
Financial assets measured at fair value through other comprehensive income		132,365			165,653			108,594
Dividend income
Financial assets measured at fair value through other comprehensive income		109,308			127,178			120,435
Other		35,939			165,370			71,637

Total		379,350			747,236			556,700

Other finance costs
Interest expense
Financial liabilities measured at amortized cost		(47,356	)		(64,733	)		(84,106	)
Other		(77,757	)		(38,975	)		(106,605	)

Total		(125,113	)		(103,709	)		(190,711	)

“Other finance income—Other” primarily includes profit on sales of securities.

“Other finance costs—Other” primarily includes losses on securities revaluation.

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29. Earnings per share

Reconciliation of the difference between basic and diluted earnings per share attributable to Toyota Motor Corporation are as follows:


	Yen in millions		Thousands of shares		Yen
	Net income attributable to Toyota Motor Corporation		Weighted-average common shares		Earnings per share attributable to Toyota Motor Corporation

For the year ended March 31, 2023
Net income attributable to Toyota Motor Corporation		2,451,318

Basic and Diluted earnings per share attributable to Toyota Motor Corporation		2,451,318		13,658,382		179.47

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

The following table shows Toyota Motor Corporation shareholders’ equity per share. Toyota Motor Corporation shareholders’ equity per share amounts are calculated by dividing Toyota Motor Corporation shareholders’ equity in the consolidated statement of financial position by common shares issued and outstanding at the end of the year (excluding treasury stock).


	Yen in millions		Thousands of shares		Yen
	Toyota Motor Corporation shareholders’ equity		Common shares issued and outstanding at the end of the year (excluding treasury stock)		Toyota Motor Corporation shareholders’ equity per share
As of March 31, 2024		34,220,991		13,474,172		2,539.75
As of March 31, 2025		35,924,826		13,048,930		2,753.09

“Diluted earnings per share attributable to Toyota Motor Corporation” equals “Basic earnings per share attributable to Toyota Motor Corporation” for the years ended March 31, 2023, 2024 and 2025, because there were no potential dilutive shares during such periods.

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30. Contractual commitments and contingent liabilities

(1) Contractual commitments

Contractual commitments relating to purchase of property, plant and equipment, other assets, and services are ¥4,712,085 million and ¥3,807,743 million as of March 31, 2024 and 2025.

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. 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.

(2) Guarantees

Toyota enters into contracts with Toyota dealers to guarantee customers’ payments of their installment payables that arise from installment contracts between customers and Toyota dealers, as and when requested by Toyota dealers. Guarantee periods are set to match maturity of installment payments, and as of March 31, 2025, range from 1 month to 8

years; however, they are generally shorter than the useful lives of products sold. Toyota is required to execute its guarantee primarily when customers are unable to make the required payment.

The maximum potential amounts of future payments are

¥3,310,990 million and ¥2,314,927 million as of March 31, 2024 and 2025. Liabilities for guarantees totaling ¥11,851 million and ¥8,917 million have been provided as of March 31, 2024 and 2025. Under these guarantee contracts, Toyota is entitled to recover any amount paid by Toyota from the customers whose original obligations Toyota has guaranteed.

(3) Market treatment such as recalls, damages and lawsuits

Toyota and other automakers have been named in certain class actions relating to Takata airbag issues. The actions against Toyota in Brazil and Argentina are 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 an unfavorable judgment in the court of first instance on April 7, 2022, in the appeal court on March 27, 2023, and in 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 judgement of the court of first instance, the Federal Court of Australia, and the High 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.

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 been cooperating with these investigations. In June 2025, the DOJ informed Toyota that it has closed its investigation into the matter. Investigations by governmental authorities related to these matters could result in the imposition of penalties, fines or other sanctions, or litigation. Toyota cannot predict the scope, duration or outcome of these matters at this time.

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For the year ended March 31, 2025, Toyota recorded

281,140

million in costs and expenses related to legacy certification issues concerning vehicle engines of its subsidiary, Hino Motors. This amount covers costs associated with the potential resolution of legacy certification issues with U.S. authorities, the settlement of class action litigation in Canada and legal settlement in Australia, to the extent that Toyota can reasonably estimate them based on available information.

TMC has a concentration of labor supply in employees working under collective bargaining agreements and a substantial portion of these employees are working under the agreement that will expire on August 31, 2027.

31. Details of company organization

(1) Major subsidiaries

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.

Other business consists of information technology-related businesses and other businesses.

(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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, ¥6,257,786 million and ¥7,280,835 million receivables related to financial services, ¥6,371,509 million and ¥7,486,241 million secured debt were included in Toyota’s consolidated financial statements as of March 31, 2024 and 2025, respectively.

(ii)

Unconsolidated structured entities

Other investment trusts and other special purpose entities are instructed based on contractual arrangements, and are designed so that voting or similar rights are not the dominant factor in deciding who controls the entities. The trusts and the special purpose entities are defined as structured entities but are determined that Toyota lacks the power to direct the activities of these investments that most significantly impact the trust’s economic performance and, therefore does not consolidate the investment trusts and the special purpose entities. Investments in the investment trusts and the special purpose 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 ¥92,875 million and ¥167,038 million as of March 31, 2024 and 2025, respectively. The carrying value of the special purpose entities totaled ¥1,911,621 million and ¥2,517,967 million as of March 31, 2024 and 2025, respectively. Toyota does not provide support that is not contractually required to the investments.

32. Related party transactions

(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,
	2024		2025
Trade accounts and other receivables
Associates		464,728		466,420
Joint ventures		145,077		79,251

Total		609,805		545,671

Trade accounts and other payables
Associates		1,423,147		1,576,129
Joint ventures		9,668		8,573

Total		1,432,815		1,584,702

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Yen in millions
	For the years ended March 31,
	2023		2024		2025
Sales revenues
Associates		2,821,963		3,137,067		3,420,576
Joint ventures		722,278		662,202		622,056

Total		3,544,240		3,799,268		4,042,632

Cost of products sold (purchases)
Associates		9,891,804		12,426,770		12,889,776
Joint ventures		59,703		75,042		82,963

Total		9,951,507		12,501,811		12,972,740

Dividends from associates and joint ventures accounted for under the equity method are ¥460,008 million and ¥502,793 million for the years ended March 31, 2024 and 2025, respectively. In addition, Toyota does not engage in transactions with associates and joint ventures outside of the normal course of business.

(2) Compensation of key management

The compensation for the directors and audit & supervisory board members of TMC is as follows:


	Yen in millions
	For the years ended March 31,
	2023		2024		2025

Base compensation		1,226		1,107		1,425
Bonus		397		1,054		1,607
Share compensation		808		1,862		1,940

Total		2,430		4,024		4,972

33. Supplemental cash flow information

“Other, net” in cash flows from investing activities includes a net increase in time deposits of ¥1,395,707 million and a net increase in time deposits of ¥666,401 million for the year ended March 31, 2024 and 2025, respectively.

34. Significant subsequent events

Review of capital relationship with Toyota Industries -

Toyota determined, by way of a written resolution in lieu of a resolution of its board of directors as of June 3, 2025, to execute a master agreement with Toyota Fudosan Co., Ltd. (“Toyota Fudosan”) relating to such matters as: (i) Toyota selling its shares of common stock in Toyota Industries Corporation (“Toyota Industries”), which is an equity-method affiliated company of Toyota, (ii) Toyota subscribing for shares of preferred stock to be issued in a third-party allotment by a stock company to be established by Toyota Fudosan (the “Offeror’s Parent Company”), and (iii) Toyota conducting a tender offer for its own shares (the series of transactions set out in the master agreement, the “Transactions”). Toyota entered into said master agreement as of the same date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Purpose and outline of the Transactions

A stock company, whose issued shares is expected to all be held by the Offeror’s Parent Company, is expected to conduct a tender offer for the shares of Toyota Industries (the “Tender Offer for Toyota Industries Shares”). As a means of providing financial assistance therefor, during the period from the successful completion of the Tender Offer for Toyota Industries Shares to the time of settlement of the Tender Offer for Toyota Industries Shares, Toyota plans to subscribe for shares of preferred stock (non-voting class shares with no conversion rights to common shares) to be issued by the Offeror’s Parent Company a third-party allotment (the “Preferred Shares Contribution”) (Note). Furthermore, after the completion of a series of procedures aimed at taking the shares of Toyota Industries private, including the Tender Offer for Toyota Industries Shares, Toyota plans to sell all of the 74,100,604 shares in Toyota Industries held by Toyota through a share repurchase to be conducted by Toyota Industries, and the estimated value of these shares as of March 31, 2025 derived from the equity method is ¥670,584 million. Therefore, as a result of the sale of the shares of Toyota Industries by Toyota, Toyota Industries is expected to become a consolidated subsidiary of Toyota Fudosan, which is an equity-method affiliated company of Toyota. After the successful completion of the Tender Offer for Toyota Industries Shares and settlement thereof, Toyota plans to also conduct a tender offer for its own shares aimed at purchasing 1,192,330,920 shares of Toyota’s common stock held by Toyota Industries.

Note : The amount of the Preferred Shares Contribution is expected to be ¥706.0 billion.

Share repurchase, tender offer for own shares, and cancellation of treasury shares

Toyota determined, by way of a written resolution in lieu of a resolution of its board of directors as of June 3, 2025, that it plans to conduct a share repurchase, and a tender offer for its own shares (the “Tender Offer for Own Shares”) as the specific method for such repurchase, pursuant to Article 156 of the Companies Act, as applied by replacing certain terms under Article 165, Paragraph 3 of the same Act.

In addition, by way of the written resolution above, Toyota determined matters pertaining to the share repurchase through the Tender Offer for Own Shares, and also determined to cancel its treasury shares under Article 178 of the Companies Act.

If the number of shares tendered in the Tender Offer for Own Shares exceeds the number of shares Toyota intends to purchase, as a result of the subsequent adjustment to the unit numbers on a pro rata basis, the number of shares subject to the repurchase may exceed the number of shares Toyota intends to purchase. Therefore, the maximum number of shares to be purchased will be set at 1,192,331,020 shares, which is the number of shares Toyota intends to purchase plus one unit of shares (100 shares), and in the event of the successful completion and settlement of the Tender Offer for Toyota Industries Shares, Toyota plans to implement the Tender Offer for Own Shares as soon as practicable thereafter, subject to the resolution of the board of directors of Toyota to implement the Tender Offer for Own Shares. As of today, Toyota plans to commence the Tender Offer for Own Shares on or around the middle of January 2026.

Toyota plans to cancel 1,200,000,000 shares on the last day of the quarter in which the settlement of the Tender Offer for Own Shares is completed.

Concluded a definitive agreement for the business integration of MFTBC and Hino -

On June 10, 2025, Toyota, Daimler Truck AG, Mitsubishi Fuso Truck and Bus Corporation (“MFTBC”) and Hino concluded a definitive agreement for the business integration of MFTBC and Hino. Hino is expected to cease being a consolidated subsidiary of Toyota as of the effective date of this business integration (scheduled for April 1, 2026). However, management is currently evaluating the impact of this business integration on Toyota’s consolidated financial statements.

F-89



	Period	Reasons for adoption

Long term	By 2050	Target year for Toyota Environmental Challenge 2050

Medium term	By 2030	2030 Milestone, validated and approved by SBTi*

Short term	Between now and 2025	7th Toyota Environmental Action Plan


		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		10
4.C	ORGANIZATIONAL STRUCTURE		80
4.D	PROPERTY, PLANTS AND EQUIPMENT		81

ITEM 4A.	UNRESOLVED STAFF COMMENTS		82

ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		82

5.A	OPERATING RESULTS		82
5.B	LIQUIDITY AND CAPITAL RESOURCES		106
5.C	RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES		110
5.D	TREND INFORMATION		112
5.E	CRITICAL ACCOUNTING ESTIMATES		112

ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		112

6.A	DIRECTORS AND SENIOR MANAGEMENT		112
6.B	COMPENSATION		119
6.C	BOARD PRACTICES		126
6.D	EMPLOYEES		127
6.E	SHARE OWNERSHIP		128
6.F	DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION		130

ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		130

7.A	MAJOR SHAREHOLDERS		130
7.B	RELATED PARTY TRANSACTIONS		131
7.C	INTERESTS OF EXPERTS AND COUNSEL		132

ITEM 8.	FINANCIAL INFORMATION		132

8.A	CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION		132
8.B	SIGNIFICANT CHANGES		133

ITEM 9.	THE OFFER AND LISTING		133

9.A	LISTING DETAILS		133
9.B	PLAN OF DISTRIBUTION		133
9.C	MARKETS		133
9.D	SELLING SHAREHOLDERS		134
9.E	DILUTION		134
9.F	EXPENSES OF THE ISSUE		134

ITEM 10.	ADDITIONAL INFORMATION		134

10.A	SHARE CAPITAL		134
10.B	MEMORANDUM AND ARTICLES OF ASSOCIATION		134
10.C	MATERIAL CONTRACTS		140


		Page
10.D	EXCHANGE CONTROLS		140
10.E	TAXATION		146
10.F	DIVIDENDS AND PAYING AGENTS		152
10.G	STATEMENT BY EXPERTS		152
10.H	DOCUMENTS ON DISPLAY		152
10.I	SUBSIDIARY INFORMATION		152
10.J	ANNUAL REPORT TO SECURITY HOLDERS		152

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		152

ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		152

12.A	DEBT SECURITIES		152
12.B	WARRANTS AND RIGHTS		152
12.C	OTHER SECURITIES		153
12.D	AMERICAN DEPOSITARY SHARES		153

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		155

ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		155

ITEM 15.	CONTROLS AND PROCEDURES		155

ITEM 16.	[RESERVED]		156

ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT		156

ITEM 16B.	CODE OF ETHICS		156

ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		157

ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		158

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		158

ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		159

ITEM 16G.	CORPORATE GOVERNANCE		159

ITEM 16H.	MINE SAFETY DISCLOSURE		163

ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS		163

ITEM 16J.	INSIDER TRADING POLICIES		164

ITEM 16K.	CYBERSECURITY		164

ITEM 17.	FINANCIAL STATEMENTS		167

ITEM 18.	FINANCIAL STATEMENTS		167

ITEM 19.	EXHIBITS		167



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



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 in fiscal 2025, 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	157%
(2) Fluctuation of Toyota’s market capitalization	30%	Comparatively evaluate the fluctuation of TMC’s market capitalization for fiscal 2025 (average from January through March), using the market capitalization of Toyota and TOPIX for fiscal 2024 (average from January through March) as reference values	Toyota: 46.8 trillion yen TOPIX: 2,665.15	157%


1.1		Amended and Restated Articles of Incorporation of the Registrant (English translation)

1.2		Amended and Restated Regulations of the Board of Directors of the Registrant (English translation)

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) (incorporated by reference to Exhibit 11.1 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))

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 (incorporated by reference to Exhibit 19.1 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))

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 Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page for the registrant’s Annual Report on Form 20-F for the year ended March 31, 2025, has been formatted in Inline XBRL


TOYOTA MOTOR CORPORATION

By:		/s/ Masahiro Yamamoto
Name:		Masahiro Yamamoto
Title:		Chief Officer, Accounting Group