Toyota Motor Corp (TM) Q2 2021 (Session 2) Results - Earnings Call
Toyota Motor Corporation (NYSE:TM) Q2 2021 Earnings Conference Call November 5, 2020 11:40 PM ET
Company Participants
Kenta Kon - Chief Financial Officer
Masayoshi Shirayanagi - Chief Officer for External Affairs and Corporate Communications
Akio Toyoda - CEO, Chief Branding Officer, President & Representative Director
Shigeki Terashi - Chief Competitive Officer, Chief Project Officer & Director
Conference Call Participants
Hans Greimel - Automotive News
Hiroshi Shimizu - Nippon Life
Yasuhisa Shimashita - Journalist
Operator
Ladies and gentlemen, I would like to start the Q2 financial results announcement for fiscal year 2021. This is part two of the announcement. First of all, let me introduce to you the participants from TMC. Representative Director and President, Akio Toyoda, Koji Kobayashi, Board Member, Chief Competitive Officer and Chief Project Officer, Shigeki Terashi.
Now our President Toyoda will make his presentation.
Akio Toyoda
My name is Toyoda. Today based on our first-half results, I would like to share with you my thoughts as the person responsible for the management of Toyota. We thought that a forecast by Toyota would serve as a kind of signpost for those in the automotive industry, especially in these times of much uncertainty regarding the future due to the COVID-19 crisis.
So at our year end results announcement in May this year, we issued a full year forecast for 8 million units in worldwide new vehicle sales, and ¥500 billion in operating income presenting a guideline enabled abnormality management making it possible for each workplace to flexibly respond to changes in the environment. I believe that the upward revision to our forecast this time are due not only to our initiatives of these six months, but also to our initiatives over the past 11 years, making Toyota stronger as a company step-by-step.
The increased strength of our financials and profit structure has also contributed. But I think that the number one factor has been that the people working for Toyota have grown stronger. At our manufacturing plants, we voluntarily produced face masks and medical face shields needed by the society.
Unplanned non-operation days all members engaged in Kaizen continuous improvement and greatly improved productivity. On the sales front, online sales and other initiatives allowed us to continue building relationships with our customers.
Every single vehicle ordered by our customers, keeps our plants and the economy going. To be able to keep on producing one vehicle at a time, I believe that our members in both production and sales desperately and fully devoted themselves to their work. And that led to a rapid sales recovery.
Through this sales recovery at the time of the global financial crisis lag behind the market by 4%. But in the case of COVID-19 crisis, our sales recovery outpaced the market by more than 3%. I believe this is the result of our ever-better cars being made by everyone and the effort to deliver them to our customers.
Thus, plans suspended by COVID-19 got back into action. I believe that the site of plants operating and people working energized their local communities. That's make automobiles a driving force of the economy. I only indicated a direction, I believe all else was thanks to the power of the workplace, which continued to move in that direction.
Moving in that direction was not limited to Toyota, as such actions spread to five automobile trade organizations in Japan, including the Japan Automobile Manufacturers Association. The ripple effect is extremely strong in the automobile industry, and the industry in Japan employs 5.5 million people in Japan.
Automobile businesses generate approximately ¥15 trillion in annual taxes and economic ripple effect is 2.5 times greater than the output of the automotive industry alone. Although, we're only halfway through our fiscal year, I think the fast recovery of the automotive industry is already having a positive impact on Japan's economy. The numbers we announced today are the result of the hard work of many people. They are in no way simply an outcome that came about by itself. I would like to once again express my appreciation to all those concerned. Thank you so very much.
Drive society forward with automobiles. This commitment not something that we realized the COVID-19 crisis. It is exactly the commitment of Kiichiro Toyoda, when he founded Toyota, improve the quality of life of the Japanese people with automobiles. Due to the so-called case revolution, the automobile industry is in a once in a century period of profound transformation. These are times in which the future is unclear and there are no right answers. So, where are we headed? To answer that question, I realized that we needed to know from where we came.
Please have a look at this conical shape. This graph was put together more than 60 years ago by our then top management after the passing of Kiichiro to guide them as they carried the baton passed onto them. I believe that to help Toyota to move even further forward in a united way top management at the time thought about what Toyota was, and believed that their vision of Toyota should not be forgotten.
Toyota, though born in Japan has expanded its presence around the world. Now, we find that we are living in an era of profound transformation. For our 370,000 people worldwide and their families, as well as for the next generation that will support the Toyota of the future. In our Toyota's velocity, we have defined our mission as producing happiness for all.
Even though, Sakichi Toyoda made loom and Kiichiro made an automobile, I think that what they truly wanted to make was a sense of happiness for any customer who used their products, as well as happiness for all the people involved in work related to those products. We realized that even if we change what we make, our pursuit of happiness will never change. And our vision as defined in our Toyota velocity is creating mobility for all.
After all, we are in the car business, therefore, I would like to continue to be discerning when it comes to mobility. And we use the word mobility with an added meaning. That meaning is each person should take action. What is required of us now is that each Toyota person takes actions that lead to the happiness of human kind, including concerning the global environment.
I believe that the Toyota philosophy which is a continuation of Toyota presets is the very spirit of the sustainable development goals. And I believe that management based on this philosophy will lead to sustainable efforts toward achieving these goals, along with the aim of the international society to make a better world.
Even now, during the COVID-19 crisis many people around the world are doing their best to survive while enduring hardship. Toyota's mission being producing happiness for all, we want to work especially in these times of emergency for someone other than ourselves, as well as for society and the future.
Going forward, we will be tested whether or not we can truly produce happiness. We will be grateful if we could receive strict yet warm guidance and support from all of our stakeholders, including you who are with us today. Thank you very much.
Question-and-Answer Session
Operator
Now I'd like to start the Q&A session. [Operator Instructions] From Daily Automotive Journal Mr. [Indiscernible], please. I will switch the screen, so if you find yourself on the screen, please start your question.
We are switching the screen right now. Mr. [Indiscernible] could you start your question, please.
Unidentified Analyst
From Daily Automotive Journal, my name is [indiscernible]. My question is addressed to Mr. Toyoda, President. Once again, what is your appraisal and the assessment of the first-half financial results? And you have increased your forecast upward. What is your outlook for the second-half? Since you became President, I think this is the first time that you are speaking at the announcement of an interim financial results. What is the reason for you taking floor at this juncture?
Akio Toyoda
Let me respond to your question. Thank you for the question. At the initial stage we announced ¥500 billion for the full year basis, it was a projection and we achieved that in the half year period rather than in the full year basis, and that's not an easy task. As I mentioned in my own presentation, it is quite true that this past six months was the period of hard work for those people and again that was very important.
But above anything else, since I became President of the company, we encountered many challenges, great financial result crisis, the Great East Japan earthquake, and extreme recession of the yen. And having gone through those challenges, we added to our efforts and we acquired our effort after effort and that accumulated to produce the results that we see today.
This is the first time that I attend this financial result announcement at the half year period. And as far as TMC is concerned, it is quite rare for the executive to be at the interim results announcement. But the reason why I am taking the floor now is because we are in the time emergency caused by COVID-19 crisis. I have decided to be here.
At the time of the emergency, I think it's very important to contribute your all business and work. But all of us working, we can protect employment, we can generate profit and we can pay tax, that I think is the responsibility and role of the key industry, which is a bedrock of nation.
And automotive industry I believe has a huge spillover effect, the ripple effect is huge. And for us to continue doing business, continue working and energize the related industries. That's my view as well.
And furthermore, at the initial stage for the full year basis to make a projection for the full year basis, I have the following repeating that is to say, by giving some baseline reference point for other, for the dealers, the suppliers and employees. We're energized to respond those guidelines they thought if there any better way, is there any other way that we can energize people, is there anything more that we can do and they took very positive initiatives in doing so. And I just wanted to express my gratitude on this occasion of crisis during that announcement.
And at the same time, many people are fighting this COVID-19 crisis enduring sufferings and yet they are trying to do their best going through this and survive that, I'm aware of that. Although, this is a helping point, but as working together having the third quarter and fourth quarter by continuing to work and continuing our hard work, I just wanted to compare my strong determination to insert on this occasion. That's all. Thank you.
Unidentified Company Representative
Thank you, Mr. [indiscernible].
Operator
We will go onto the next question. From Automotive News, Mr. Hans, please. We'll be switching the screen. When you see yourself on this screen, please start with your question. We are now switching the screen, a moment please. Mr. Hans, please.
Hans Greimel
Hello. Hans Greimel here from Automotive News. May I speak in English today?
Unidentified Company Representative
I answer in Japanese.
Hans Greimel
That's a good deal. Thank you. I'll keep my comments short. I just want to ask if you have an update on the Woven City project. Can you tell us when construction will start? When it will finish? When it will open? When people will start moving there? How many partners you have?
And maybe a second question would be, can you tell us your plans for the Olympics next year? Your technological showcase, how are you going to have to change that for the Olympics next year?
Unidentified Company Representative
Thank you, very much. I'd like to respond in Japanese. Probably you have the simultaneous interpretations, so I would be continuing to speak in Japanese. So, if you can't understand me, you can just raise your hand and let me know that you don't understand.
For the project, live in city project, it is steadily progressing. And the way that we are promoting this, we use that AT Sprint method. So, I told myself the top executive and the person in charge every three weeks we hold a meeting to confirm the direction of the project. This rule that we introduced to have this meeting once every three weeks, every time in this meeting, I will make the decision that we believe is the best at that time.
So, maybe it will be that this decision will be different to what we have decided three weeks ago, but the important thing is that every time we have this meeting, we will make the most appropriate decision that meets the environmental situation. So, this is a rule that we have adopted to promote this project.
Most important is the candidate area that we will be using. This place is a Toyota Motor Corporation's East Japan, Higashi Fuji Plant. And this plant in after one month it will be closing its operation that is the time. And therefore the employees that are working in the plant will be transferring to different locations to the Tofugu plant. And unfortunately, there may be employees because of family reasons or other reasons they may not be able to move to a far place, therefore we will be cooperating and supporting so that they can find a new job and any needs that they have.
And in the meantime, we have been working with the cooperation of the community and also the suppliers and nearby. We are trying to stand by each and every individual working in Higashi Fuji plant to try to secure a place to work for them after the closure of the plant. And we still think that steadily we will be able to secure those job opportunities for them. So this location of the Higashi Fuji plant, we will start the construction work from next year.
And from the public affairs division, I was told that I should not say anything about any date. But I'd like to say that I want to make that announcement on February 23. The reason why February 23, is because two-two-three, when you read it in a Japanese way, it's Fuji San, or we can say it's Mount Fuji.
So in this area, you can call there to be Mount Fuji Day, we can make the ceremony to do the ground-breaking ceremony. If we can do the ground-breaking ceremony at the foot of Mount Fuji, that will be very symbolic. And I'd like to say to everyone that we're making preparations so that it may happen that day.
So what will happening in this decision, well, for us, we have made a declaration that we're going to change ourselves from automobile company to mobility company. So in this plan, we are going to utilize this location to develop the products that can create profit for us in the future, value for us in the future. And one, we're doing to need a demonstration test, and it's going to be [Indiscernible]. One thing that we will do using this [indiscernible] automobile driving vehicles.
Automobile driving vehicles, it's important that you think together with the infrastructure as a package. And by having this infrastructure together, the development speed will be accelerating significantly. And with that belief, we have created one basic unit to create this living city. I think that's a big news for Woven city project.
The basic unit that I'm talking about is that each there will be a 150 meters by 150 meters square unit inside of the location. And that will be three roads. There will be three roads moving in this location. One type of this road will be a dedicated road for automated driving autonomous driving test roads, and other road will be dedicated for pedestrians. And then other third road will be a combination of a small mobility plus the pedestrians. So, in this way we want to look at how we can secure safety for autonomous driving vehicles.
I think it will be easier to understand if we have been kind of road. However, in the up ground there'll be weather conditions, like it will be different according to a sunny day, rainy day, hot day, cold day. The weather conditions will differ. And in these kinds of different as the hottest difference above ground, but underground we can have the environment that will not change with weather. So we can utilize that place for vehicles that those have to think about weather. And up ground we will think about weather conditions plus moving things people and things. And whether from this - I am not an engineer, but probably it'll be the most easiest level to achieve autonomous driving and [Indiscernible] different dedicated roads.
And for the city that is consisted by these three different type of roads, our thinking of having 360 residents living in this area and what kind of people these 360 members are to explain a little bit, one group will be elderly and the second will be people with families, their family group, and the third group of people will be inventors.
In a sense in Japan and this Woven City I want to displace that we will be creating a place that we will be able to understand the needs and the challenges that the elderly and the families are facing in living environment in Japan. And also in this location, we want to have inventors living together with those sort of challenges in their everyday life. So these inventors will be able to invent things, that'll be helpful for the challenges that the elderly and their family has. And that can be invented in a timely manner. And these inventors will apply certain rules. So, they will have a certain period of time that they can work in the city. If they cannot come up with results in that certain period of time, then we will exchange and have them changed with other inventors.
So we're trying to have a rule or a mechanism, so that this place will always be vagrant, that will be quite active. And currently, individuals and also including corporations, corporate organizations, there's about 3,000 peoples in corporate organizations, who have applied and wanted to become a partner with us in this Woven city.
So in that sense I think for this Woven City Project, it is going to be a living laboratory. We'll be doing demonstrations of living lab. So it's an ever-evolving city that will never be completed. And our ultimate goal is to develop a safe mobility, and also, we want to have it human centric. So creating this kind of city a town and together with infrastructure, we want to create the future of mobility. And in order to that we can't just work with us alone in just automobile companies, we want to have many partners to work with us and together with those partners we want to develop that kind of a City. So it will be ever evolving, and it will be a living laboratory.
So, I hope that will be understood. And also, I'd like to ask you also to participate in certain way, we want to create the future together with you as well. So I hope that you can have high expectations and look forward to this project. I am sorry, it was long in explanation, but that's all for my response.
Unidentified Company Speaker
So, Mr. Hans, thank you very much.
Operator
Now let's move onto the next question. Mr. Shimizu of Nippon Life, please.
Hiroshi Shimizu
Thank you for this opportunity. My name is Shimizu of Nippon Life. As an institutional investor owning Toyota shares for a long period of time, I would like to ask the following question of Mr. Toyoda, the President. And including my explanation, I might take a little time. Starting with the strong performance of the second quarter exceeding the market expectations and also the upward revision of the outlook and projection for the full year basis. And I think this is due to the hard work by Mr. Toyoda, and the top management as well as employees and others involved in those hard work efforts. And I'd like to express my respect to that.
I have been paying close attention to the words and phrases by President Toyoda. For example, in the past, you talked about intentional pause to increase competitiveness or making things is making people. And also, I want to ensure that I'll be the last person to spend time dealing with the consequences of the past activities, and those have been very impressive. And I here today heard very strong determination. I think that there are simple and succinct phrases clearly reflected the direction of Toyota moving forward and the determination of President Toyoda.
But I think above and beyond that is the role that Mr. Toyoda plays as a President to ensure sustainable development. Of course, that's natural expected. But going beyond that, Mr. Toyoda seems to be taking long voluntarily even great responsibility at the country and global level. For example, he set us as an objective of preserving 3 million vehicle production and the domestic production. And that's a reflection of determination to protect one of the green Japan, employment, technology and human resources.
And at the same time, he is now trying to implementing initiatives to achieve for a redesign of Toyota to make it a mobility company, and that goes beyond the reform and change of Toyota as an individual company, but rather it reflects the determination of trying to realize the future of the mobility society that no one has ever envision yet with Toyota playing a role.
And to realize that, I think it is essential and dispensable to create the corporate alliances, partnering with other companies. So here, I would like to ask the following question. So here, I'd like to ask the following question. Not limiting yourself to Toyota as a company, but with Toyota playing the central role, you are at the leading edge of trying to create the society of the future and to produce happiness for all, I think you are at the cutting edge of that. But I wonder, what drives you, Mr. Toyoda to make those efforts so passionately aiming at those activities and responsibility that goes beyond one of individual company?
Akio Toyoda
Thank you for your question. Especially focusing amongst media people, I don't receive their positive assessment or evaluation, I'm not familiar, I'm not used to that. So I feel a bit embarrassed by receiving such a positive and favorable assessment.
As Mr. Shimizu just mentioned and reflected in his questions, I just wonder to myself, what really is driving myself. And probably I could say that the one thing, the frustration and the bitterness that I felt. Since I became President and took helm of the company, what I always said that you can never pull it off, you can never achieve this. You have never experienced and your hardship and you don't know what's going on again. You have never been there. So you can't do that. You can't do this job. Let's see what you've got. And many people are simply waiting for me to fair, make mistakes. And, as expected I told you so, this is what we expected that's all the people have been expecting.
And faced with that to this point they have been able to somehow model through, because we encountered many, many challenges and crisis. To meet the crisis, where are the crisis, a characters, in a sense, the critical situation, also reflects opportunity that is to say predicament on the one hand and opportunity on the other hand. That word consistent of these two words. So I have experienced those new use crisis. And every time I tried to turn the crisis or predicament into opportunity. And by doing so, I tried to respond to those people who said you can never pull it up or you can never achieve that.
I wanted to demonstrate that I can do it. I did do this job. So I never wanted to be dusted and that drove me to work harder and harder.
In addition to and I say this in many different opportunities as a member of the founding family, I just wanted to make things right for the founders. I have been operating over the history of over 80 years, and including myself and those people in the management who have been supporting me are now sustaining Toyota.
But looking back the founding members never experienced the benefits of what they have accomplished and the success of their endeavors. I have advocated transforming Toyota from automotive company to capability company. And have in mind the determination of the founding members will change itself from the automatic loom company into the automotive company, and that really reflected within hardship they had to go through. What sort of challenges they had to go through, but completing transforming themselves?
Now, vis-à-vis the future generation can really do the same thing by transforming and redesigning the company completely. So we're able to do that, not just Toyota at the center, but to make sure that Toyota to be the company that is chosen by the people in the future society. And for Toyota to become such a company that I think has been a prime mover that really drove me over the years. And if [Indiscernible] following, I can refer to love Japan, my love for Japan. Toyota is a global company today. And we always wanted to be the best in town company in any country or region in which we are allowed to operate. And we have been trying to be a company chosen by the community. But the fact that we've been able to do that post to what our founders started. That is they established the first automotive company in Japan.
And we all as today convinced. So to that Japan, we want to contribute with our business with our automotive industry. And that I think has been very important driving force behind it.
At the initial stage, it is quite true that I felt very lonesome, I felt being alone, even if I was sold nobody was dancing behind me. That's where I find myself today. I wouldn't say everybody or all of us, but there are so many people who are dancing to my tunes. And increasingly, more and more people are dancing to my tunes or dancing with us.
So for a little longer, as I look back at history not just looking back the history of past for the top management and the next generation, I want to make sure that they can move forward, looking at the future. So I would like to hand the baton over in that manner. So I hope you'll continue to support us in that.
Hiroshi Shimizu
Based upon the history, you're now trying to steer and forge the future. I once again heard from you the determination and perseverance. Thank you very much.
Unidentified Company Representative
Thank you, Mr. Shimizu, for your question.
Operator
Going on to the next question from [Indiscernible]. We will now be switching the screen. When you see yourself on the screen, please start your question. I'm now switching the screen.
Mr. [Indiscernible], please. It seems that your microphone is on mute, can you turn on your microphone.
Unidentified Analyst
I'm from [Indiscernible]. My name is [Indiscernible]. Thank you. Hi, I have a question to President Toyoda. For electrification, we're seeing an acceleration of the flow of electrification and Tesla's performances is quite steady. And currently, the battery cells for the vehicle batteries, they're moving in house and trying to improve the competitiveness on costs. So I'd like to ask how you view the company Tesla, President Toyota. And based on your view, can you talk about your outlook for Toyota's electrification plans?
Akio Toyoda
Thank you for your questions. And I will be talking about how I view Tesla. And for electrification strategy, I will like to ask Mr. Terashi here to respond.
So first of all, in the stock market Tesla's market capitalization is around ¥40 trillion, and this amount ¥40 trillion, for example, if you take Toyota and add the seven Japanese car companies will be the total of looking at all of these automobile companies, it's ¥33 trillion. So it means that just with one company, one Tesla, adding all the seven automobile companies of Japan, they have a more market value than the seven Japanese automakers. And this company, Tesla, they have made profit from base EVs and also with software updates, they have been generating profits. So that is the business model that they have.
And also, they've been adding renewable energies and looking at LCS LCA, also reducing CO2, all these activities that they're doing, there are for us many points to learn. Many points to learn from.
But I also like to say that for Toyota as well, we have been taking measures to deal with the case areas. For the past three years, we have been making advanced investments in these areas. And in 2019, looking at the trend in the stock market I think you will be able to see this reflected into the trend. For Toyota as a stock price compared with other car companies, Toyota's share prices making a different move starting to move a different move.
In 2019, the press releases regarding the case and the decisions that we made around case in the companies that are working with the real industry, I think we have been making significant investments and that has been acknowledged by the market. And in addition, we have established TRI and TRI-AD. And in these companies win software development it's been worked on, and that will be the core for hyper focus not just in hardware but to employ the idea, the approach of software first. And it will be realized utilizing a win that's been developed right now.
And so what we have and what Tesla doesn't have is the units and operation, more than 100 million vehicles out in the world in this real world that we have in the business, that we are in. So without being hesitant to say this, Tesla's business if I can say, is like you can use analogy of kitchen and a chef, I think. So the kitchen and the chef, they have not created a real business yet or a real world yet, but they're trying to trade the recipes.
And the chef is saying that well our recipe is going to become the standard of the world and the future. I think that is the kind of business they have. But for Toyota, we have a kitchen a real kitchen, and we have a real chef too. And we are creating real dishes and there are customers who are very picky about what they like to eat. And they are sitting in front of us and eating our dishes.
So with all these people, we can say we see that the energy situation is different according to which region we talk about in the world. And also, we holding the menu and the recipe probably will be selected because we have the full menu line-up.
And of course in looking at the current share price, we are losing against their evaluation as a share price, but we will always be watching and learning from them. And we will always be determined to be the electrification full line-up vehicle maker. And I think we will be one step ahead and to be able to be selected from our customers because of the situation it has.
And now for electrification strategy I'd like Mr. Terashi to respond.
Shigeki Terashi
This is Terashi speaking. I'd like to talk a little bit about our electrification strategy. So, Prime Minister, Suga said that Japan is going to target becoming carbon neutral by 2050, at 2050. So, this means in other words in 2050 in the mobility world, you need to have a zero-emission vehicle in order to achieve a 2050 carbon neutral Japan. So in this situation in this environment around the globe, the environmental regulations are becoming ever more tougher. Therefore towards 2050 in order to achieve that target various types of technologies will become important.
For example hydrogen, there are research in regions that have excess hydrogen supplies. Those regions should utilize the hydrogen. And then renewable energy, if they have a lot of electricity that can be created from renewable energy then they can use that.
So I think there's a lot of options according to the regions that talk about. And like our President said, who selects mobility, who selects the cars, at the end it's the customers. So whatever the regulation is, the customer will select what they want. And we will be trying to achieve carbon neutral with what the customer is selecting.
So from those two perspectives, we need to advance our technology in order achieve that target. We can't just look at one side of these two. We need to look at the division, the customer, the regulation level. So the environment that we are, all these factors will be a factor to select the type of mobility. And at that time, we want to be able to provide a mobility that customers can select from in each of those respective situations.
So we as a full line-up maker will be working on the fuel cell vehicle, and also with the electric vehicles, there is five vehicles too. But among the electrified vehicles, the most practical solution will be hybrid probably next we will be talking hybrid. So having those multiple options and every year the distribution will be different on how much will be supplied. And at the end, we will be achieving zero emission by utilizing all of these types of vehicles. And that we want always to be [Indiscernible] those people who are going to [Indiscernible]. Thank you, Mr. [Indiscernible]. Thank you.
Operator
Now let us move onto the next question. From Chunichi Shimbun, Ms. Osada, please. I'll switch the screen so once you find yourself on the screen, please start your question. Ms. Osada, could you start your question, please?
Hiromi Osada
Thank you. Osada, Chunichi Newspaper. Mr. Toyoda, thank you for your message and the presentation. And in your presentation, you mentioned that and I was about ask the question relating to that, relating to the Toyota's care making. As you said, talked about the importance of producing and selling each vehicle one by one, and at the same time, people working for Toyota they have grown stronger, you mentioned that in your presentation as well.
Looking at the first-half and the new car sales in Japan for fiscal year 2021, amongst the top 10 best-selling vehicles, the Toyota made cars number six models. Six Toyota models are including amongst top 10. So even if you are able to produce those vehicles, but the list there appealing and attractive customers don't choose them. The fact that your cars are chosen by customers' needs that you have been able to deliver and provide attractive cars in a timely manner, that I think led to the recovery that you have achieved to-date.
In terms of the evolution of car making, has there been any important evolution or important factor in car making? Is there anything that you have personally felt about the important factors in car making under the COVID-19 crisis? And to the last part of your presentation, you refer to Toyota philosophy and I just wanted to ask about that since this is a very good opportunity, stemming from big Toyota precept you refer to Toyota philosophy in which you propose as the company mission to produce happiness for all.
Now, why now? Why have you defined Toyota philosophy in this current context? Going back to Toyota precepts starting with the Sakichi and after his passage in order to achieve this automotive industry to determine the determination Kiichiro the founding father of this company compile these Toyota precepts. And stemming conduct as a new integration for that, you announced and the qualified this Toyota philosophy now. So could you refer to the reason behind that?
Akio Toyoda
Thank you for your question. It is the customers and market that determined whether our car is attractive and the feeling. We are trying to produce those cars make them feeling and make them attractive. But sometimes some models are not regarded as such by customers. And therefore, the fact that we have been reduced large number of new models and that's how I analyze the situation. One of the reasons relates to the establishment of so-called company system within Toyota.
We produce and sell close to 10 million vehicles in the full line basis. Burt in the past within TMC we did have a system under which what is called a global master plan was used. What sort of model is produced to what sort of volume and the different models were prioritized based upon global master plan, that's how we did our business. And under such plan those cars that's well produce large amount of the profit, we see as high priority.
And some years ago, I don't exactly remember when, but we had decided to introduce company system. And under that company system in Toyota Motor Corporation each company would play a certain role amounts 10 million units and each company would have the hardest efforts to make, so that vehicles produced in that company will become most attractive in the period, so that they will be given higher platform.
So sometimes just based upon platform or the vehicles used for daily life or poster to Land Cruiser, which was not redesigned for over decades or centuries another model. And for many decades it's difficult any redesigns. And we didn't have a hybrid version for a century. So that's how we stood.
And in that general context, we wanted to introduce a system where somebody within the company wanted to produce and sell a certain types of models. And that I think produced the past results. And in the most recent period at the time of great global financial crisis we saw Great East Japan Earthquake. We wondered what we should be doing with different projects, and we applied the decelerating break at the time of the global financial crisis, covering all the new project we decided to stop and discontinue those projects once.
But this time facing the crisis, instead of suppressing or discontinuing those activities, we simply tried to continue producing and continued doing business, especially in April and May, when we were not able to operate plants, in those plants what happened in different production plants, once the COVID-19 crisis is over, retailers starts selling [Indiscernible]. We are able to restart the production of vehicles and ensure that many customers are looking to buy new models. And therefore, maximum of 50 units per day need to be added or increased in production.
What do we have to do now, and many our workers at the frontline thought of what need to be done at this point in order to add the production about 50 units per day, and in order to achieve that the speed of the production line had to be shortened by four seconds with [Indiscernible] Toyota?
It's not easy to shorten the production line time by four seconds. Some can be done when the production line is stopped. If that is the case the production line operating in daytime or night, either those lines stop using that [Indiscernible], based upon [Indiscernible] efforts. They're trying to achieve four second shortening of production line. And while doing so, if the production had to be increased all of a sudden, those increased production then was achieved without increasing people assigned to those production lines.
So, by doing so, without stopping any of the new projects, that allowed us to introduce new models as have been planned initially.
At the same time, about your question on the Toyota philosophy, why now, why did we decide to make a statutory framework for that. Actually, inside Toyota, when I have discussion with many employees, we talk about [Indiscernible] and fight. I seem to have been using that word very often in my discussion.
But at the same time, I say we shouldn't discuss in terms of the confrontation context, so people ask, who are you fighting against. And once I was asked by one of the employees, who are you fighting against? And I wondered, who am I fighting against, myself. And the person I am fighting against was actually for the purpose of regaining what it is that makes Toyota, Toyota.
And when I was thinking, what is really making Toyota, a Toyota. And when I had that in mind, I just faced with this COVID-19 crisis and during that crisis time I stayed in the training center of Toyota Group. And there are many historical documents and the materials. And one of the employees found that cone that showed the Toyota precepts, and we really thought that this must be the good thing for us to think about the philosophy.
So based upon that conical shape, we established this Toyota philosophy, adding a new vision and also new missions. But earlier one of the members of the corporate auditing board mentioned, that Toyota seems that if job is done so wrong as whether is necessary is reduced. We used to have [Indiscernible] within the seconds, but you now see the [Indiscernible] disappearing. We know the reason why. The former seconds we survived despite the fact that [Indiscernible] didn't survive. [Indiscernible] produced what they needed solidly. That's about the people.
In the case of homo sapiens, in addition to that they added beauty, the enjoyment and those other aspect, in addition to producing whether is needed. And that's what one of the members of the board said, so that is to say based upon vision or those drivings to describe what is needed. And even if we can reflect that in those visions, that doesn't ensure your survival. You also need the ability or enjoyment going back over the issue of Toyota production systems.
Toyota is not necessarily almost at their highest efficiency. We always wanted to make things easier. And that's what I continue to say over the years. And according to that person, and also listening to his advice, not just making things easier I have decided to make things enjoyable, that is to say to produce or add the element of homo sapiens.
Of course, this is and also the enjoyment is the same Chinese character. But enjoyment and also their work. Because of these factors people choosing their vehicles and allows us to survive over the years.
So in that sense, that's one of the reasons why we have decided to create and as stated before, the Toyota philosophy. But by creating this, we will be able to invite those advice growing into the confidence. What is important is by having a such vision, we can continue discussing what it is that makes Toyota, Toyota. And all this, we have been able to reflect ourselves in response to environmental changes.
It's important to use that as a tool for doing this. In that sense, AGM is very close to what factor that makes Toyota, Toyota. And comparing the two, we will make sure that we will be able to chosen by many partners and giving a credit as compared with their strategies. And we will continue to make efforts to that end.
So I hope I can continue asking for myself, going forward. I feel as if I'm speaking at the AGM. I have many major shareholders right in front of me so that somehow makes me to respond as if this is an AGM. Thank you very much.
Operator
We'd like go on to the next question. Mr. Yasuhisa Shimashita, please. We will be switching the screen. When you find yourself on the screen, you begin your question please.
We are switching the screen now. Mr. Shimashita can you begin?
Yasuhisa Shimashita
Thank you. I am motor journalist, my name is Shimashita. Thank you very much for this opportunity. So under COVID, your performance is quite good. And President you always say that you don't like to win, or you don't like to lose. And I'm feeling how Toyota is becoming stronger.
And my question is about the Mirai. The next generation Mirai had a test drive recently. And very simply, I thought it was cool. That's my impression. And also, I was very impressed with the very good driving performance. So 30,000 units globally and more than 10,000 units in Japan and growing this Mirai volume is going to be very key for Toyota.
And for the previous generation, I've used Mirai for four years. And from that experience, we heard a question about Tesla but in the similar timing these two vehicles coming out Tesla vehicle and also Mirai, there were people around me also who was wondering which they should buy. And Tesla they have been updating, using those updating opportunities with new technologies. And Elon Musk was a strong character, who appeals with strong messages. But Mirai on the other hand didn't have that kind of strong message.
But for Toyota Mirai is important. The hydrogen society in the future is important. And what is the advantages? What is necessary for the future? That kind of message was not really heard easily from Toyota side. And that's what the people around me were saying and I felt that way too.
So for the people who like the advanced technologies, I think those people quite resonate with those messages and then they decide to make their purchase. So for the new generation Mirai or if as you are going to be spreading out popularizing the other CV commercial vehicles, FCVs, sorry, excuse me the fuel cell vehicles further. What is your idea on it? And how you will be doing that or any your plans about the fuel cell vehicles?
Unidentified Company Representative
Well, rather than a message I think it's a story that we try to tell. So we want to introduce our vehicles with a story. We want our models to be understood together with story that it brings. For us, when we launch a new vehicle we talk about the new features. I think there is a tendency to focus on the new features in the past.
But now what we want to focus on is by using or having this model what kind of story will be brought to you, what kind of story that you will be able to participate in as a main character. I think that should be added to the explanation that we provide when we present a new model. And for the new generation Mirai as well, it's not that just by launching the new Mirai the FCV vehicle start to be seen on the road. It's that for pure EVs and also the FCVs, it always has to be thought together with the infrastructure. So it's not about which future comes either comes first. What I always say is, it's like the flower and the honey bee. So you need both.
Infrastructure and the vehicles is like the relationship between the flower and the honeybee. And now in the environment, we're seeing the wave electrification along these two. So that will be the trigger. With that trigger, the electrification will be going in the direction of electrification and as a full lineup maker, we want to provide multiple options to the customers. That is what we're thinking. And I hope that Mr. Shimashita you will always be sharply looking at what we do. And if you have any criticisms about our story, you should post that anytime. So we're looking forward to your very sharp comments. Thank you.
Unidentified Company Representative
So for those kinds of I hope that can be done in a continuous way. I think for us to give a story, it's important to have a continuation. But give us those sharp comments with love, please. We want you to have with your love and emotion, please. Thank you.
So it seems that there are more questions, but because of time we would like to limit the question to one more.
Operator
Thank you very much. [Indiscernible], please. So switch the screen, so if you find yourself on the screen, please start your question.
So we are switching the screen. Mr. [Indiscernible] thank you for waiting. Could you start your question please?
Unidentified Analyst
[Indiscernible] is my name. Thank you for this opportunity for asking a question. About the Toyota philosophy or the company that mass produces the vehicles for the market that's very good to define your company and such. But the important thing is whether you can sustain that. And if you can remain such a company over a long period of time, looking at the Japanese companies in the past, of course, the founder spirit talks about a very lucky idea. But companies tend to change over the years focusing on profit, and thinking about revenues numerous companies and such.
And Toyota does have this Toyota precept, but there may have been some less emphasis placed on that. And I really think it's a very good thing that they have decided to have this Toyota philosophy, but I don't know how long and until when we will continue to be in the current position.
And you never know when Toyota's performance deteriorates in the future. So when those things happen, for this to be remain the unwavering value of the company to make sure that that is going to be the case. Is it safe whether having in the current situation to make sure that the philosophy lingers upon? Or if the environment changes or conditions change do you think that things could in the company, the values and focuses may change? Is that how you think?
So you're still thinking what is further needed to make sure, by focusing on this Toyota percept which is on due to the philosophy. And one of the questions which is addressed Mr. [Indiscernible] and you'll note [Indiscernible]. And I saw is real smile right now when you're calling [Indiscernible]. What is the definition of [Indiscernible]? And what is a real Banco? Or what is that Banco should never do? What is your view on that? Could you share both on that? Sorry for asking tough questions at a time.
Unidentified Company Representative
So let us start with the answer on Banto. [Indiscernible] Banto. Now actually existed until fourth year of a show that is 1929. And it disappeared because of the change of the commercial code, because it may be considered as [Indiscernible].
And when I wanted to introduce Banto and the HR people restricted that. I used to be the [Indiscernible] and myself seem to be a very difficult superior to present. Therefore he didn't want to call us, it was the Vice President, because he is the President, he may be looking down on those Investor Vice President. So we eliminated the system of the EVPs. And once the EVP position are eliminated our President started calling us Banto and [indiscernible].
So this will just be the system for my own generation. And Banto's role is to help an assist the President. And to convey the philosophy of President to employees in easy to understand manner. And whatever employees are thinking about to make sure that those ideas of the employees are reflected and embedded in the strategy. And those I think are the most important revolve of our platform. So in that sense, I make sure, when I have a lunch, whenever, I make sure that I have lunch with executive employees.
And this leads to your first question. To have good and correct understanding of the top executive is the key ensuring good running of the company, that's most important.
I joined Toyota once again at the higher age. And there are numerous people who are capable and with great ability with great caliber. But whether you have the same factor at the top executive, the idea is online with the top executive. Actually the alignment of philosophy is very important, and I personally feel very strongly about that. I mean, whether one is performing well or not is up to others to evaluate, but to have online the value is different.
So, in the general context, I wanted to communicate what the President is thinking to younger employees or younger executives. So by doing so and we talked about the philosophy and we said we may only be focused on job within the future, the company stand can be changed. We refer to that enquiry. But including other members of the society as the company itself has an in-depth understanding of that, that will ensure sustainable factors of this philosophy itself in our company.
And actually in the past, we created many questions for philosophies. We had Toyota way qualified, but none of that had really permitted throughout the company, because once those are qualified and printed and distributed to employees that was the end of those Toyota way and other documents. But we wanted to use a new philosophy in a different manner, reconsidering our own happiness and what we should be doing. I mean Toyota precept is the backbone which reflect the thinking now you do of the company. And we wanted to translate that Toyota precept, which is written in the rather [indiscernible] Japanese into easier to understand Japanese. So in translating that, the role that I play is very important.
So in that sense, I recommend and scored all the executives almost every day, and that raise my blood pressure significantly. The younger employees have nothing to be blamed, but when I discuss those things with the employees, I think, I now for the first time understand what the President had in mind.
So I'm not quite sure I'm responding to Mr. [indiscernible] question, but that I think is the role of our Banto. Whether the point which relates to the philosophy, this is not in gold, the philosophy is not in gold itself, it's only a starting point with my view.
As I mentioned earlier, Toyota in the extent going forward any conditions and environmental change, and when those changes take place for the next generation top executive and they face difficult challenges and probably to have some guiding post, when they find themselves in difficult situation. This Toyota philosophy could serve, for purpose it could be used in that matter, I think, which is good.
Mr. [indiscernible] talked about focus on profit. I don't think, it's wrong and it's a bad thing to pursue profit. Being a company means to make profit and pay tax, that I think it's very important actually. And that's the best way to contribute to whole society in our view. So seeking only profit that would be the company's loss, the important thing is what that profit is used for, for firm that profit is going to be used. And having people have full understanding of the importance of for whom the profit is used and how the profit is used to generate such people as many as possible is very important.
Generally speaking, in the society that making profit is something wrong, but company not making profit cannot make any investment for its future and for culture in general.
When I became President, our transition was staged, the company was booking deficits. We were a loss-making company at the time. And when we're still making profits, we have to start and put break until everything we think engaged in. And in that general context, we went through that but today we find ourselves capable of making investment to the future. We can secure our employees and we can shift those works and jobs so that people can fully enjoy.
Unless we're making profit, you want to be able to do all those, simply continue putting your foot on to break. So Mr. [indiscernible] and all those stakeholders, I'd like to ask all of you not to criticize or put on break on Toyota trying to save profit or making profit.
[indiscernible] question now so what those profit used for, for what purpose and what sort of determination and intention that you are making so much profits. You can be critic on that, but please look at this I feel that the right [Indiscernible] we are willing to [indiscernible] times. And over the long-term, if we say that decision, we made at that time is now paying off, and although, everybody was against that decision made at that time but looking back that will be represented a turning point.
I would like to continue making decisions day-in, day-out that this can we make today could be [indiscernible] in that perspective. So I hope you will continue to give us rather strict note also very encouraging support.
Unidentified Company Representative
Thank you very much Mr. [indiscernible] for your questions. We would like to conclude this financial result announcement. Thank you very much for your participation and your attention.
