[Toyota Times] A Yardstick for the Mobility Transformation – Why Toyota Places Such Importance on ROE

Chief Officer Yamamoto

I believe our most important objective is to complete Toyota’s transformation into a mobility company.

ROE is an important financial indicator, and a yardstick for checking how well we are progressing toward that goal.

At one point in the past, Toyota fell into the red and was on the verge of collapsing.

President Akio Toyoda (at the time) vowed that “we must survive at all costs” and “restore Toyota once again.” He set about establishing solid financial foundations that would enable us to make “ever-better cars.”

At the time, the company had little cash on hand, a very high break-even volume, and a structure that struggled to deal with change.

From that point, we were determined not to fall into the red again and brought the company to where it is today.

We were able to establish the financial foundations for sustainable growth, which I believe was thanks to our genba’s tremendous ability to get the job done.

I also believe that consistently delivering an ROE above 10% is extremely important.

With these foundations in place, our next challenge is to transform Toyota into a mobility company.

While we do not yet have the right answers, I believe that this financial footing is what allows us to tackle challenges without fear of failure, to say, “It’s okay to fail.”

Our duty as a carmaker is to continue striving to produce happiness for all and to ensure that cars enhance our customers’ lives and the value of mobility for society as a whole.

These new changes will be intertwined with challenges such as Woven City.

At its core, I believe the E (denominator) in ROE is about human resources, us, the people of Toyota.

It is also connected to the TPS (Toyota Production System) mindset: using knowledge and ingenuity to make improvements, raise productivity, spark innovation, and take on new challenges.

People are not a “cost,” but rather the source of a company’s earnings, and I feel that this is the “E” component to which we should turn our attention.

Redistributing our assets within our various new businesses will serve to improve ROE, which I consider to be like a mirror that allows us to see whether we are transforming into a mobility company.

In this sense, we regard ROE as an extremely important indicator.