Achieving our Mid-term Business Plan for FY2020 November 1, 2018 - PowerPoint PPT Presentation

Achieving our Mid-term Business Plan for FY2020 November 1, 2018

Contents 1. Next Mobility Strategy P.4 P.11 2. African growth strategy 2

Mid-Term Business Plan ～ Priority Areas ～ Life & Resources & Next Mobility Strategy African growth strategy Community Environment 【 Business Environment 】 【 Business Environment 】 Once in a century The last frontier of the transformational period planet Toyotsu Core Values 【 Main companies 】 【 Main companies 】 NEXTY, TTC CFAO, TTC Mobility Aiming to be No. 1 in fields where we can capitalize on our strengths 3

1. Next Mobility Strategy 4

Next Mobility Strategy ～ Major Initiative in this Term ～ ★ : Covered in subsequent slides Replacement of materials Next-generation services Energy management 【 V2G virtual power plants 】★ 【 Aluminum processing to begin 】★ 【 Expansion of NEXTY operations 】★ Launched electric vehicle battery Development of lighter-weight Highest Sales in the world in charging/discharging demonstration automotive materials in preparation automotive electronics market project for wider adoption of electric vehicle technologies Finding solutions to renewable energy generation issues using automotive storage batteries 【 Truck platooning 】 【 Lithium resource development 】★ Proof-of-concept testing of autonomous truck platooning Preparation for future Li-ion systems underway battery demand growth 5

Replacement of materials Weight Saving Efforts (Aluminum) Inevitability of weight reduction urgent improvement of fuel efficiency ■ Reduce greenhouse gas emissions (CO 2 ) Weight Saving  Protection of the ■ Exhaust gas regulation (SO X , NO X , PM) global environment ■ Enhancement of safety standards  Improvement of Increasing component (collision safety) mass due to installation vehicle performance ■ Improvement of of safety equipment steering stability and electronic devices (Improved comfort) Features of aluminum processing < Advantages > < Hurdles > ① Improved vehicle handling due to weight reduction ① Advanced processing technologies required ・ Aluminum easily buckles and fractures during (1/3 the weight of steel) press processing ② Greater shape design freedom and variation ・ Aluminum tends to thermally deform during ③ Formable into complex shapes machining and adhere to tools ④ Highly recyclable, more eco-friendly We will expand in North America, starting in Kentucky, as well as in Asia and elsewhere 6

Replacement of materials Securing Lithium Resources Forecast global lithium carbonate demand 500 (1) FY2017 (2) Demand (1,000t/yr) 400 352 TTC secured approx. 8% of global (1) 311 277 300 demand volume 229 200 (TTC production: 17,500t/yr) (2) FY2020 100 0 TTC plans to secure approx. 12% of 2017 2018 2019 2020 global demand volume Source: CRU Lithium Marketing Outlook (TTC’s production: 42,500t/yr) Lithium business’s status Expansion of Ownership Lithium hydroxide production capacity Positive terminal Negative Positive Negative terminal Separator TTC Group owns 35% of lithium Aiming to increase Under development as a high-nickel operation co.’s shares, 100% of sales production to 25,000t/yr battery material for future large- capacity automotive batteries rights by FY2020 Pursuing further high added value in the lithium business 7

Next-generation Service Next-Generation Service (Electronics Field) 2025 Automotive systems market E-mobility components (3.4 times larger than CY2017) Components underpinning 2017 electric vehicle development Existing area Autonomous technologies (3.2 times larger than CY2017) About 18 About 30 Advanced safety devices, trillion yen trillion yen software development Connectivity (2.5 times larger than CY2017) The e-mobility components, autonomous Onboard networks, technologies & connectivity market segments other communication technologies are projected to collectively more than triple in size by 2025 relative to 2017 Source: TTC, based on Fuji Chimera Research Institute data About 600 NEXTY sales billion yen About 500 billion yen * Of which, approx. 70-80% will be for automotive applications FY2018 FY2020 We will work steadfastly to capture business opportunities by leveraging our expertise in automotive electronics markets with promising growth prospects 8

Next-generation Service Next-generation Service (Electronics Field) １ Function Development Design Manufacturing Storage Quality Logistics 2 3 Electronic Global Technology EMS Embedded TAQS parts sales software solutions services development warehouses network  About 250 diverse supplier network １ Business relationships with world-class suppliers to offer advanced solutions to automotive and electronic component makers  Automotive-specific embedded software development capabilities 2 Proprietary technologies: Core partner companies (8 in Japan and overseas) Current software development workforce of Mass-production technologies: Offshore plants (Bangkok, Dalian) 1,700 (offshore: 800; partner companies: 900), Industry trends: JASPAR standardization organization to be expanded to 2,500  Reliable support to ensure quality for customers Providing value-added inspection services 3 based on a longstanding track record and aaccumulated knowhow ※ Sphere of activity not limited to trading Diverse quality inspection functions company functions Leveraging diverse business functions and relationships with suppliers to serve the automotive electronics field 9

Energy management Storage Battery Demonstration Project Addressing renewable energy issues with Utilizing storage batteries in renewable energy generation electric vehicle batteries 【 Charging/discharging demonstration project using 【 Deploying grid demonstration project in the North- automotive batteries 】 Hokkaido Area 】 Wind power plant Electricity Transmission lines + storage batteries[720MWh] Electricity Electric power company Periods of excess power supply will arise as Generate power from wind power plant renewable energy grows in prevalence Supply power to electric power companies, using Electric vehicle batteries used to temporally storage batteries to stabilize supply shift supply capacity ＜ Future plans ＞ ＜ Future plans ＞ Report on test results slated for February 2019 Operations slated to commence in FY2023 Contributing to realization of a low-carbon society and stable power supplies 10

2. African growth strategy 11

Africa Business Operation Transfer from TOYOTA Toyota Motor plans to begin transferring operations in Africa to TTC from January 2019 ※ Excludes local operations of Toyota South Africa Motors (Pty) Ltd. <Overview of transfer> Morocco Cape Verde  Operations outside of existing TTC sales territories to be Algeria transferred to TTC Libya  Countries where TTC sells Toyota vehicles Egypt - Currently: 41 countries (21 with TTC-owned dealerships, 20 with affiliated dealerships) - Post-transfer: 54 countries ( all countries in Africa ) ＜ Operations to be transferred ＞ Ghana  All sales and marketing operations Nigeria - Product planning, alliances Gabon - Revenue management Southern Africa - Pan-African supply-demand management (5 countries) - Pan-African after-sales (servicing, parts) etc. New TTC territories Existing TTC territories We will achieve dramatic growth in African Toyota sales by capitalizing on our front-line strengths (home & away) in Africa and implementing policies and measures with an entrepreneurial spirit 12

Africa Business Operation Transfer from TOYOTA － Sales Impact － Impact on TTC Group’s auto sales and FY2017 Actual Breakdown units: thousand units future challenge ・ North Africa （ 7countries ） ・ Unit sales impact TOYOTA New car Share( ％ ) (based on actual FY2017 sales) Market sales (Current) (Post-transfer) 513 23 4 ％ ・ Sub-Saharan Africa （ 42 countries) TOYOTA New car Share( ％ ) Approx. 36,000 Approx. 191,000 Market sales vehicles vehicles 152 34 22 ％ (41 countries) (54 countries) ・ Southern Africa （ 5 countries ） ・ TOYOTA vehicle sales challenge TOYOTA New car Share( ％ ) Market sales （ Units ： thousand units ） 558 125 22 ％ Natural growth TOYOTA UN, Others Ambitious growth sales (direct sales) target 9 191 < Total for Africa > TOYOTA New car Share( ％ ) Market sales FY2017 FY2021 FY2025 FY2030 1,223 191 16 ％ We will establish a pan-African TOYOTA related business network and our TOYOTA vehicle sales volume will increase over 5 times 13

Growth Potential from Capturing Demand from Middle-income Earners Main strategic partners 6％ $20 or more per day Target customer layer Upstream layer 5％ Upper intermediate layer $10 or more per day (Target ： 60 million persons) Lower intermediate layer 9％ $4 or more per day (Target ： 108 million people) 20％ Floating intermediate layer $2 or more per day 60％ Bottom of the pyramid Less than $2 a day Total population of Africa ： About 1.2 billion people Source: TTC based on BearingPoint based on African Development data (2015) We will focus on B2C businesses targeting upper and middle classes 14