New Year's Greetings from Toyota President Fujio Cho

First of all, allow me to wish everyone a Happy New Year.

Looking back on the previous year, the slowdown in the Japanese and American economies and other events have made the environment rather difficult for Toyota as well. But in the face of these difficult conditions, we took positive action, vigorously introducing new models in the domestic market, commencing ― as an example of our overseas efforts ― production at our French plant, and pursuing tie-ups with other manufacturers, such as our joint venture with PSA, among other endeavors.

Taking a broad look at the automotive industry as a whole, strengthened bonds between industry players ― in the form of various alliances ― have begun to bear fruit. As other automakers enhance their competitiveness in this way, we too must, I believe and as I have said repeatedly in the past, intensify our efforts toward comprehensive reinforcement of the Toyota Group.

Our activities for the future will be based on this assessment of the situation.

To begin with, we will continue to steadily implement and promote CCC21 (Construction of Cost Competitiveness 21) ― a comprehensive and unified cost-reduction activity that aims to achieve world-leading competitiveness. Other efforts aimed at reducing costs will also move forward.

In the domestic market, we will strive to augment the profitability of our dealers by boosting sales of used vehicles and parts and by reinforcing other links in the value chain, such as servicing and insurance. At the same time, we will follow an active program of new model launches and hope that this will stimulate the recovery of the domestic economy to some extent.

In overseas markets, the city of Kolin in the Czech Republic has been chosen as the location for our joint venture with PSA. This spring will see the start of transmission production in Poland, and, in the second half of the year, passenger car production will start in China at Tianjin.

While the deceleration in the United States economy is expected to adversely affect the market there, we are determined to do all we can to increase unit sales by as much as possible.

Coming to our environmental policy, Toyota has always considered this a vital management issue and has made concerted efforts toward the conservation of the environment.

In the area of hybrid vehicles in particular, last year we launched the Estima Hybrid and Crown mild hybrid ― new types of hybrid vehicles following the road opened by the Prius. These three hybrid vehicles together have so far achieved worldwide cumulative sales of more than 85,000 units. Of the three, the Prius in particular has been very enthusiastically received in the United States and our sales plans for next year have been revised upward by more than 40% from an initial 12,000 units to 17,000 units. As for the future, we are committed to a steady development pace toward our idea of "producing 300,000 hybrid vehicles in 2005".

Regarding fuel cell vehicles, we began field evaluation tests in Japan and the United States in the middle of last year and have now covered a total test distance of nearly 50,000 kilometers in these two countries. This places our testing program on a much larger scale than those of our competitors. The data obtained from these tests will be fed back into the development process, and we hope to undertake a limited sales release in the Japanese market by the end of 2003.

To guide the continuing evolution of Toyota's worldwide operations, earlier this year we compiled a set of common values, beliefs and business methods ― known as the "Toyota Way" ― into a brochure and distributed it worldwide.

Furthermore, this year will also see the beginning of the Toyota Institute, an internal organization that will act to nurture the growth of a global workforce, and I will serve as the Institute's president.

As you are probably aware, we will participate in Formula 1 racing this March under the eagerly awaited Panasonic Toyota Racing banner. We will, without doubt, have to endure many tough battles in the initial rounds, but I hope that you will all be watching us as we courageously take on the challenge of the world's most daring racing competition. In our overall corporate activity, as in our Formula 1 participation, we intend to move forward aggressively, spurred by our challenger mindset.

Given that business conditions are not expected to present a more optimistic outlook in the near future, we are currently forming a forward-looking strategy called the Post-2005 Vision, in order to continue to grow and live up to the expectations placed on us.

I look forward to your continued guidance and support in the future.

Thank you.