Toyota to Update its Organization Structure to Boost Business Innovation

Toyota City, Japan, March 1, 2017―Toyota Motor Corporation (TMC) intends to alter its organization structure in April to further accelerate decision-making, strengthen management oversight, and boost business innovation.

To promote its overarching goal of making ever-better cars by continuing the development of a talented workforce, TMC made substantial changes to its structure in April 2016 to create a company built around a product-based, rather than function-based, organization. It has since continued business innovation, for example by establishing the EV Business Planning Dept. (an in-house venture business responsible for planning and developing electric vehicles) last December, and establishing the Emerging-market Compact Car Company (an in-house company responsible for compact vehicles with the greatest priority placed on emerging markets), in January this year.

These changes were spurred by the vital realization that sustainable growth cannot be achieved without tackling two major challenges the company is facing as it continues to grow. The first is how to develop a sufficient number of people who can lead with quick judgment, quick decisions and quick action through genchi genbutsu (on-site learning and problem-solving), because the changes the company faces require a different way to think and act. The second is how to reduce the time and effort consumed by cross-functional coordination and establish work processes that allow the company to focus on making ever-better cars for its customers.

Taking into consideration additional issues that have surfaced as company-wide efforts have been made over the past year since last April to proceed with business innovation, TMC plans to implement the changes described below in April this year.

"This structural change is not an answer but an opportunity," said TMC President Akio Toyoda. "With everyone's efforts and minds as one, I would like to make this an opportunity to strengthen our workforce and further promote making ever-better cars. Let us come together to create work processes that will allow us to remain viable in an era in which we are producing and selling 10 million vehicles a year, constantly being aware that there is always a better way," he added.

1. To further accelerate decision-making and strengthen management oversight
   • Further clarify that members of the board of directors are responsible for decision-making and management oversight and that operating officers are responsible for operational execution.
   • Further reduce the number of members of the board of directors, from a total of 11 to nine directors^*, including three outside board members.
     ^*Following the next general shareholders meeting.
2. To boost business innovation
   • Establish GAZOO Racing Company (an in-house company)
     Set up a structure capable of accumulating technologies and techniques gained through motorsports, as first-hand knowledge for "driving seasoning" of vehicles, as well as developing and introducing vehicles that provide genuine "heart-pumping excitement".
   • Reorganize and integrate region-based business units
     Unite the region-based business units by reorganizing and integrating Toyota NO.1 and Toyota NO.2 into a business unit "Business Planning & Operation" to coordinate as a united regional function with the product-based in-house companies.
   • Partially revise the roles of the Head Office and the region-based and product-based business units
     To enable product-based in-house companies to complete work from planning through production, revise the structures for functions including product concept planning, production planning and production engineering.

The formal appointment of board members and audit and supervisory board members will be made pending approval at the 113^th General Shareholders Meeting. The formal assignment of board members with specific titles, and the appointment of board members with the legal status to represent TMC (representative directors), will be made at the board of directors meeting following the 113^th General Shareholders Meeting. The resignation of board members leaving their current posts will become official on the day of the 113^th General Shareholders Meeting.

2. Organizational changes effective April 1, 2017

3. Personnel Changes

1. Executive general manager changes effective April 1, 2017