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As filed with the U.S. Securities and Exchange Commission on June 30, 2023

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-14948

TOYOTA JIDOSHA KABUSHIKI KAISHA

(Exact name of registrant as specified in its charter)

TOYOTA MOTOR CORPORATION

(Translation of registrant’s name into English)
Japan
(Jurisdiction of incorporation or organization)

1 Toyota-cho, Toyota City

Aichi Prefecture 471-8571
Japan
+81 565 28-2121
(Address of principal executive offices)
Yoshihide Moriyama
Telephone number: +81 565 28-2121
Facsimile number: +81 565 23-5800
Address: 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan
(Name, telephone, e-mail and/or facsimile number and address of registrant’s contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
American Depositary Shares* TM The New York Stock Exchange
Common Stock**
* Each American Depositary Share representing ten shares of the registrant’s Common Stock.
** No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the U.S. Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 13,565,179,729 shares of common
stock (including 292,036,035 shares of common stock in the form of American Depositary Shares) as of March 31, 2023
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,”
“accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act: ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

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TABLE OF CONTENTS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 1

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1
ITEM 3. KEY INFORMATION 1
3.A [RESERVED] 1
3.B CAPITALIZATION AND INDEBTEDNESS 1
3.C REASONS FOR THE OFFER AND USE OF PROCEEDS 1
3.D RISK FACTORS 1
ITEM 4. INFORMATION ON THE COMPANY 7
4.A HISTORY AND DEVELOPMENT OF THE COMPANY 7
4.B BUSINESS OVERVIEW 7
4.C ORGANIZATIONAL STRUCTURE 65
4.D PROPERTY, PLANTS AND EQUIPMENT 66
ITEM 4A. UNRESOLVED STAFF COMMENTS 67
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 67
5.A OPERATING RESULTS 67
5.B LIQUIDITY AND CAPITAL RESOURCES 91
5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 94
5.D TREND INFORMATION 97
5.E CRITICAL ACCOUNTING ESTIMATES 97
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 97
6.A DIRECTORS AND SENIOR MANAGEMENT 97
6.B COMPENSATION 105
6.C BOARD PRACTICES 109
6.D EMPLOYEES 111
6.E SHARE OWNERSHIP 111
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 113
7.A MAJOR SHAREHOLDERS 113
7.B RELATED PARTY TRANSACTIONS 114
7.C INTERESTS OF EXPERTS AND COUNSEL 114
ITEM 8. FINANCIAL INFORMATION 114
8.A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION 114
8.B SIGNIFICANT CHANGES 116
ITEM 9. THE OFFER AND LISTING 116
9.A LISTING DETAILS 116
9.B PLAN OF DISTRIBUTION 117
9.C MARKETS 117
9.D SELLING SHAREHOLDERS 117
9.E DILUTION 117
9.F EXPENSES OF THE ISSUE 117
ITEM 10. ADDITIONAL INFORMATION 117
10.A SHARE CAPITAL 117
10.B MEMORANDUM AND ARTICLES OF ASSOCIATION 117
10.C MATERIAL CONTRACTS 124
10.D EXCHANGE CONTROLS 124
10.E TAXATION 128

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10.F DIVIDENDS AND PAYING AGENTS 134

10.G STATEMENT BY EXPERTS 134
10.H DOCUMENTS ON DISPLAY 134
10.I SUBSIDIARY INFORMATION 135
10.J ANNUAL REPORT TO SECURITY HOLDERS 135
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 135
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 135
12.A DEBT SECURITIES 135
12.B WARRANTS AND RIGHTS 135
12.C OTHER SECURITIES 135
12.D AMERICAN DEPOSITARY SHARES 135
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 137
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 137
ITEM 15. CONTROLS AND PROCEDURES 137
ITEM 16. [RESERVED] 138
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 138
ITEM 16B. CODE OF ETHICS 138
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 139
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 140
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 140
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT 141
ITEM 16G. CORPORATE GOVERNANCE 141
ITEM 16H. MINE SAFETY DISCLOSURE 144
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 144
ITEM 17. FINANCIAL STATEMENTS 145
ITEM 18. FINANCIAL STATEMENTS 145
ITEM 19. EXHIBITS 146

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As used in this annual report, the term “fiscal” preceding a year means the twelve-month period ended March 31 of the year referred to. All other
references to years refer to the applicable calendar year unless the context otherwise requires. Unless the context otherwise requires or as otherwise
expressly stated, references in this prospectus supplement to “Toyota,” “TMC,” “we,” “us,” “our” and similar terms refer to Toyota Motor Corporation
and its consolidated subsidiaries, as a group.

Toyota’s consolidated financial statements in this annual report have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The term “IFRS” also includes International Accounting
Standards (“IASs”) and the related interpretations of the interpretations committees (SIC and IFRIC).

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS

Written forward-looking statements may appear in documents filed with the SEC, including this annual report, documents incorporated by
reference, reports to shareholders and other communications.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to
provide prospective information about themselves without fear of litigation so long as the information is identified as forward-looking and is
accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected
in the information. Toyota relies on this safe harbor in making forward-looking statements.

Forward-looking statements appear in a number of places in this annual report and include statements regarding Toyota’s current intent, belief,
targets or expectations or those of its management. In many, but not all cases, words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,”
“hope,” “intend,” “may,” “plan,” “predict,” “probability,” “risk,” “should,” “will,” “would,” and similar expressions, are used as they relate to Toyota or
its management, to identify forward-looking statements. These statements reflect Toyota’s current views with respect to future events and are subject to
risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect,
actual results may vary materially from those which are anticipated, aimed at, believed, estimated, expected, intended or planned.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ from those in
forward-looking statements as a result of various factors. Important factors that could cause actual results to differ materially from estimates or forecasts
contained in the forward-looking statements are identified in “Risk Factors” and elsewhere in this annual report, and include, among others:
(i) changes in economic conditions, market demand, and the competitive environment affecting the automotive markets in Japan, North
America, Europe, Asia and other markets in which Toyota operates;
(ii) fluctuations in currency exchange rates (particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro, the
Australian dollar, the Canadian dollar and the British pound), stock prices and interest rates;
(iii) changes in funding environment in financial markets and increased competition in the financial services industry;
(iv) Toyota’s ability to market and distribute effectively;
(v) Toyota’s ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management;
(vi) changes in the laws, regulations and government policies in the markets in which Toyota operates that affect Toyota’s automotive
operations, particularly laws, regulations and government policies relating to vehicle safety including remedial measures such as recalls, trade,
environmental protection, vehicle emissions and vehicle fuel economy, as well as changes in laws, regulations and government policies that affect
Toyota’s other operations, including the outcome of current and future litigation and other legal proceedings, government proceedings and
investigations;

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(vii) political and economic instability in the markets in which Toyota operates;
(viii) Toyota’s ability to timely develop and achieve market acceptance of new products that meet customer demand;
(ix) any damage to Toyota’s brand image;
(x) Toyota’s reliance on various suppliers for the provision of supplies;
(xi) increases in prices of raw materials;
(xii) Toyota’s reliance on various digital and information technologies, as well as information security;
(xiii) fuel shortages or interruptions in electricity, transportation systems, labor strikes, work stoppages or other interruptions to, or
difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its
products or where its products are produced, distributed or sold;
(xiv) the impact of natural calamities, epidemics, political and economic instability, fuel shortages or interruptions in social infrastructure,
wars, terrorism and labor strikes, including their negative effect on Toyota’s vehicle production and sales;
(xv) the impact of climate change and the transition towards a low-carbon economy; and
(xvi) the ability of Toyota to hire or retain sufficient human resources.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A [RESERVED]

3.B CAPITALIZATION AND INDEBTEDNESS

Not applicable.

3.C REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

3.D RISK FACTORS

Industry and Business Risks
The worldwide automotive market is highly competitive.
The worldwide automotive market is highly competitive. Toyota faces intense competition from automotive manufacturers in the markets in which
it operates. In recent years, competition in the automotive industry has further intensified amidst difficult overall market conditions. In addition,
competition is likely to further intensify as technological advances in areas such as Connected, Autonomous / Automated, Shared, and Electric
(“CASE”) technologies progress in the worldwide automotive industry, possibly resulting in industry reorganizations. Factors affecting competition
include product quality and features, safety, reliability, fuel economy, the amount of time required for innovation and development, pricing, customer
service, financing terms and tax credits or other government policies in various countries. Increased competition may lead to lower vehicle unit sales,
which may result in a further downward price pressure and adversely affect Toyota’s financial condition and results of operations. Toyota’s ability to
adequately respond to the recent rapid changes in the automotive market, particularly shifts in consumer preferences to electrified vehicles, and to
maintain its competitiveness will be fundamental to its future success in existing and new markets and to maintain its market share. There can be no
assurances that Toyota will be able to compete successfully in the future.

The worldwide automotive industry is highly volatile.

Each of the markets in which Toyota competes has been subject to considerable volatility in demand. Demand for vehicles depends to a large
extent on economic, social and political conditions in a given market and the introduction of new vehicles and technologies. As Toyota’s revenues are
derived from sales in markets worldwide, economic conditions in such markets are particularly important to Toyota.

Reviewing the world economy for fiscal 2023, energy prices soared due to geopolitical tensions, and the rise in consumer prices accelerated in
both advanced and emerging countries. From August onward, demand declined because of concerns regarding a slowdown in the global economy due to
the acceleration of monetary tightening by central banks around the world. Although the automotive market continued to be subjected to global
production constraints due to the tightening of global supply of, and increasing demand for, semiconductors as well as components shortages, the
production cuts eased toward the second half of the fiscal year.

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Changes in demand for automobiles are continuing, and it is unclear how this situation will transition in the future. Toyota’s financial condition
and results of operations may be adversely affected if the changes in demand for automobiles continues or progresses further beyond Toyota’s
expectations. Demand may also be affected by factors directly impacting vehicle price or the cost of purchasing and operating vehicles such as sales and
financing incentives, prices of raw materials and parts and components, cost of fuel and governmental regulations (including tariffs, import regulation
and other taxes). Volatility in demand may lead to lower vehicle unit sales, which may result in downward price pressure and adversely affect Toyota’s
financial condition and results of operations.

Toyota’s future success depends on its ability to offer new, innovative and competitively priced products that meet customer demand on a timely
basis.
Meeting customer demand by introducing attractive new vehicles and reducing the amount of time required for product development are critical to
automotive manufacturers. In particular, it is critical to meet customer demand with respect to quality, safety, reliability and sustainability. The timely
introduction of new vehicle models, at competitive prices, meeting rapidly changing customer preferences and demand is more fundamental to Toyota’s
success than ever, as the automotive market is rapidly transforming in light of the changing global economy and technological advances. There is no
assurance, however, that Toyota will adequately and appropriately respond to changing customer preferences and demand with respect to quality, safety,
reliability, styling, sustainability and other features in a timely manner. Even if Toyota succeeds in perceiving customer preferences and demand, there is
no assurance that Toyota will be capable of developing and manufacturing new, price competitive products in a timely manner with its available
technology, intellectual property, sources of raw materials and parts and components, and production capacity, including cost reduction capacity. Further,
there is no assurance that Toyota will be able to offer new products or implement capital expenditures at the level and times planned by management,
including as described in targets or goals that we have disclosed publicly. Toyota’s inability to develop and offer products that meet customers’
preferences and demand with respect to quality, safety, reliability, styling, sustainability and other features in a timely manner could result in a lower
market share and reduced sales volumes and margins, and may adversely affect Toyota’s financial condition and results of operations.

Toyota’s ability to market and distribute effectively is an integral part of Toyota’s successful sales.
Toyota’s success in the sale of vehicles depends on its ability to market and distribute effectively based on distribution networks and sales
techniques tailored to the needs of its customers. There is no assurance that Toyota will be able to develop sales techniques and distribution networks
that effectively adapt to changing customer preferences or changes in the geopolitical and regulatory environment in the major markets in which it
operates. Toyota’s inability to maintain well-developed sales techniques and distribution networks may result in decreased sales and market share and
may adversely affect its financial condition and results of operations.

Toyota’s success is significantly impacted by its ability to maintain and develop its brand image and reputation.
In the highly competitive automotive industry, it is critical to maintain and develop a brand image and reputation. In order to do so, it is necessary
to further increase stakeholders’ confidence by ensuring that the Toyota group and its suppliers thoroughly comply with laws and regulations, provide
safe, high-quality products that meet customer preferences and demand, as well as timely and appropriately disseminate information to stakeholders. It
is also becoming increasingly important for companies to contribute to sustainability.

However, the Toyota group may not be able to ensure that it or its suppliers do so in all cases. Concerns regarding product safety or our product
safety validation processes, whether raised internally, by regulators, or consumer advocates, can lead to product delays, recalls, lost sales, regulatory
investigations, legal claims that cause reputational damage. For example, on March 4, 2022, Hino Motors, Ltd. (“Hino”), a consolidated

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subsidiary of Toyota, confirmed and announced misconduct in relation to its applications for certification concerning the emissions and the fuel
economy performance of certain of its engines for the Japanese market. Additionally, Daihatsu Motor Co., Ltd. (“Daihatsu”), a consolidated subsidiary
of Toyota, confirmed and announced misconduct in relation to its applications for certification concerning safety tests of certain of its vehicles for the
overseas market on April 28, 2023 for vehicles developed by Daihatsu. See “Item 4. Information on the Company — 4.B Business Overview —
Selected Initiatives” for further discussion of these and related matters. In addition, actual or perceived failures on the part of Toyota or its suppliers to
contribute to sustainability or to meet certain sustainability-related goals or objectives, including those relating to climate change or the protection of
human rights in Toyota’s supply chain, may also harm Toyota’s reputation. Any insufficient measures taken by the Toyota group or its suppliers to
maintain and develop Toyota’s brand image and reputation may have an adverse effect on Toyota’s financial condition and results of operations.

Toyota relies on suppliers for the provision of certain supplies including parts, components and raw materials.
Toyota purchases supplies including parts, components and raw materials from a number of external suppliers located around the world. For some
supplies, Toyota relies on a single supplier or a limited number of suppliers, whose replacement with another supplier may be difficult. Inability to
obtain supplies from a single or limited source supplier may result in difficulty obtaining supplies and may restrict Toyota’s ability to produce vehicles.
Furthermore, even if Toyota were to rely on a large number of suppliers, first-tier suppliers with whom Toyota directly transacts may in turn rely on a
single second-tier supplier or limited second-tier suppliers.

Irrespective of the number of suppliers, Toyota’s ability to continue to obtain supplies from its suppliers in a timely and cost-effective manner is
subject to a number of factors, some of which are not within Toyota’s control. These factors include the ability of Toyota’s suppliers to provide a
continued source of supply, and Toyota’s ability to effectively compete and obtain competitive prices from suppliers. Circumstances that may adversely
affect such abilities include geopolitical tensions as well as related governmental actions such as economic sanctions.

A loss of any single or limited source supplier, or inability to obtain supplies from suppliers in a timely and cost-effective manner, could lead to
increased costs or delays or suspensions in Toyota’s production and deliveries, which could have an adverse effect on Toyota’s financial condition and
results of operations.

The worldwide financial services industry is highly competitive.

The worldwide financial services industry is highly competitive. Increased competition in automobile financing may lead to decreased margins. A
decline in Toyota’s vehicle unit sales, an increase in residual value risk due to lower used vehicle prices, an increase in the ratio of credit losses and
increased funding costs are additional factors which may impact Toyota’s financial services operations. If Toyota is unable to adequately respond to the
changes and competition in automobile financing, Toyota’s financial services operations may adversely affect its financial condition and results of
operations.

Toyota’s operations and vehicles rely on various digital and information technologies, as well as information security, which are subject to frequent
attack.
Toyota depends on various information technology networks and systems, some of which are managed by third parties, to process, transmit and
store electronic information, including sensitive data, and to manage or support a variety of business processes and activities, including manufacturing,
research and development, supply chain management, sales and accounting. In addition, Toyota vehicles may rely on various digital and information
technologies, including information service and driving assistance functions.

Despite security measures, Toyota’s digital and information technology networks and systems may be vulnerable to damage, disruptions,
shutdowns due to unauthorized access or attacks by hackers, computer

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viruses, breaches due to unauthorized use, errors or malfeasance by employees and others who have or gain access to the networks and systems Toyota
depends on or otherwise uses, service failures or bankruptcy of third parties such as software development or cloud computing vendors, power shortages
and outages, and utility failures or other catastrophic events like natural disasters. In particular, cyber-attacks or other intentional malfeasance are
increasing in terms of intensity, sophistication and frequency, and Toyota has been and expects to continue to be the subject of such attacks. Such attacks
have, in some cases, and could again disrupt critical operations, disclose sensitive data, interfere with information services and driving assistance
functions in Toyota’s vehicles, and/or give rise to legal claims or proceedings, liability or regulatory penalties under applicable laws, which could have
an adverse effect on Toyota’s brand image and its financial condition and results of operations. Moreover, similar attacks on Toyota’s suppliers and
business partners have had, and may in the future have, a similar negative impact on Toyota.

Toyota is exposed to risks associated with climate change, including the physical risks of climate change and risks from the transition to a lower-
carbon economy.
Risks associated with climate change are subject to increasing societal, regulatory and political focus in Japan and globally. These risks include the
physical risks of climate change and risks from the transition to a lower-carbon economy.

The physical risks of climate change include both acute, event-driven risks such as those relating to hurricanes, floods and tornadoes, as well as
longer-term weather patterns and related effects, such as sustained higher temperatures, sea level rise, drought and increased wildfires. Despite Toyota’s
contingency planning, large-scale disasters due to extreme weather conditions have in the past harmed, and may in the future again harm, Toyota’s
employees or its facilities and other assets, as well as those of Toyota’s suppliers and other business partners, thereby adversely affecting Toyota’s
production, sales or other operational capacities. Large-scale disasters may also adversely affect the financial condition of Toyota’s customers, and
thereby demand for its products and services.

Transition risks are those attributable to regulatory, technological and market changes to address the mitigation of, or adaptation to, climate-related
risks. For example, Toyota is subject to the risk of changes in customer demand for vehicles due to such factors as changes in laws, regulations and
government policies relating to climate change, technological innovation to address climate change, and new entrants into the automobile industry that
seek to capitalize on changing market dynamics. Changes in customer demand may pose ancillary risks and challenges, such as Toyota’s having to
establish new, or enhance existing, supply networks in order to source the raw materials, parts and components necessary for it to manufacture the
products then in demand at desired volumes and at competitive costs. Toyota may incur significant costs and expenses as a result of the materialization
of such risks, or in its efforts to mitigate or adapt to such risks. Toyota’s inability to develop and offer products that meet customers’ preferences and
demand in a timely manner could result in a lower market share and reduced sales revenues and margins, and may adversely affect Toyota’s financial
condition and results of operations. For a further discussion of risks associated with climate change, see “Item 4. Information on the Company — 4B.
Business Overview — Climate Change-related Disclosures.”

Furthermore, Toyota has published disclosures on climate-change related matters relating to its business and its partners. Such disclosures include
forward-looking statements based on Toyota’s expectations and assumptions, involving substantial discretion and forecasts about costs and future
circumstances, which may prove to be incorrect. In addition, Toyota’s initiatives relating to climate change may not have the intended results, and
estimates concerning the timing and cost of implementing, and ability to meet, stated goals are subject to risks and uncertainties. As a result, Toyota may
not be able to meet its goals, including those set forth in this annual report, on expected timing or at all, or within expected costs.

In particular, progress toward achieving Toyota’s climate-related targets requires significant investment of resources and management time, as
well as implementation of new compliance and risk management systems,

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internal controls and other internal procedures. Toyota’s ability to achieve its climate-related goals, which are to be pursued over the long-term and are
inherently aspirational, is subject to numerous risks and uncertainties, many of which are outside of Toyota’s control, such as changes in environmental
and energy regulation and policy, the pace of technological change and innovation, and the actions of Toyota’s customers and competitors. Any failure,
or perceived failure, by Toyota to achieve its climate-change related goals, including those set forth in this annual report, could adversely impact its
reputation, financial condition and results of operations.

Toyota’s operations are dependent on securing, retaining and developing talented, diverse employees.
Given in particular the rapid changes in its business environment and its efforts to transform into a mobility company, Toyota’s success depends
on its ability to continue to recruit, retain and develop talented and diverse employees. However, competition for such employees is intense and if
Toyota cannot recruit and retain diverse employees with a high level of expertise and extensive experience as planned, or it is unable to provide its
employees with the opportunities, training and resources they need to develop themselves further, it may reduce Toyota’s competitiveness, and its
financial condition, results of operations and cashflow could be adversely affected.

Financial Market and Economic Risks

Toyota’s operations are subject to currency and interest rate fluctuations.
Toyota is sensitive to fluctuations in foreign currency exchange rates and is principally exposed to fluctuations in the value of the Japanese yen,
the U.S. dollar and the euro and, to a lesser extent, the Australian dollar, the Canadian dollar and the British pound. Toyota’s consolidated financial
statements, which are presented in Japanese yen, are affected by foreign currency exchange fluctuations through translation risk, and changes in foreign
currency exchange rates may also affect the price of products sold and materials purchased by Toyota in foreign currencies through transaction risk. In
particular, strengthening of the Japanese yen against the U.S. dollar can have an adverse effect on Toyota’s operating results.

Toyota believes that its use of certain derivative financial instruments including foreign exchange forward contracts and interest rate swaps and
increased localized production of its products have reduced, but not eliminated, the effects of interest rate and foreign currency exchange rate
fluctuations. Nonetheless, a negative impact resulting from fluctuations in foreign currency exchange rates and changes in interest rates may adversely
affect Toyota’s financial condition and results of operations. For a further discussion of currency and interest rate fluctuations and the use of derivative
financial instruments, see “Item 5. Operating and Financial Review and Prospects — Operating Results — 5.A Operating Results — Overview —
Currency Fluctuations,” “Item 11. Quantitative and Qualitative Disclosures About Market Risk,” and notes 19 and 20 to Toyota’s consolidated financial
statements.

High prices of raw materials and strong pressure on Toyota’s suppliers has and could continue to negatively impact Toyota’s profitability.
Increases in raw materials prices that Toyota and Toyota’s suppliers use in manufacturing their products or parts and components such as steel,
precious metals, non-ferrous alloys including aluminum, and plastic parts, may lead to higher production costs for parts and components. This could, in
turn, negatively impact Toyota’s profitability because Toyota may not be able to pass all those costs on to its customers or require its suppliers to absorb
such costs. For example, Toyota believes that the surge in materials costs has had a significant negative impact on its business performance in fiscal
2023, and expects the impact to continue in fiscal 2024.

A downturn in the financial markets could adversely affect Toyota’s ability to raise capital.
Should the world economy suddenly deteriorate, a number of financial institutions and investors will face difficulties in providing capital to the
financial markets at levels corresponding to their own financial capacity,

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and, as a result, there is a risk that companies may not be able to raise capital under terms that they would expect to receive with their creditworthiness.
If Toyota is unable to raise the necessary capital under appropriate conditions on a timely basis, Toyota’s financial condition and results of operations
may be adversely affected.

Regulatory, Legal, Political and Other Risks

The automotive industry is subject to various governmental regulations and actions.
The worldwide automotive industry is subject to various laws and governmental regulations including those related to vehicle safety and
environmental matters such as emission levels, fuel economy, noise and pollution. In particular, automotive manufacturers such as Toyota are required to
implement safety measures such as recalls for vehicles that do not or may not comply with the safety standards of laws and governmental regulations. In
addition, Toyota may, in order to reassure its customers of the safety of Toyota’s vehicles, decide to voluntarily implement sales suspensions, recalls or
other safety measures even if the vehicle complies with the safety standards of relevant laws and governmental regulations. If Toyota launches products
that result in safety measures such as recalls (including where parts related to recalls or other measures were procured by Toyota from a third party),
Toyota may incur various costs including significant costs for free repairs. Similarly, many governments also impose tariffs and other trade barriers,
taxes and levies, or enact price or exchange controls. Furthermore, the failure to comply with such regulations could result in legal proceedings, recalls,
negotiated remedial actions, fines, revocations of government approvals and the imposition of other government sanctions, restricted product offerings,
compensatory payments or adverse consequences, such as those that have ensued in connection with the misconduct that Hino engaged in relating to
emissions and fuel efficiency testing. See “Item 4. Information on the Company — 4.B Business Overview — Selected Initiatives.” Toyota has incurred
significant costs in response to governmental regulations and actions, including costs relating to changes in global trade dynamics and policies, and
expects to incur such costs in the future. Furthermore, new legislation or regulations or changes in existing legislation or regulations may also subject
Toyota to additional costs in the future. If Toyota incurs significant costs related to implementing safety measures or responding to laws, regulations and
governmental actions, Toyota’s financial condition and results of operations may be adversely affected.

Toyota may become subject to various legal proceedings.

Toyota may become subject to legal proceedings in respect of various issues, including issues relating to the topics discussed in “— The
automotive industry is subject to various governmental regulations and actions,” as well as product liability and infringement of intellectual property.
Toyota may also be subject to legal proceedings brought by its shareholders and governmental proceedings and investigations. Toyota is in fact currently
subject to a number of pending legal proceedings and government investigations. A negative outcome in one or more of these pending legal proceedings
could adversely affect Toyota’s reputation, brand image, financial condition and results of operations. For a further discussion of governmental
regulations, see “Item 4. Information on the Company — 4B. Business Overview — Governmental Regulation, Environmental and Safety Standards”
and for legal proceedings, please see “Item 4. Information on the Company — 4B. Business Overview — Legal Proceedings.”

Toyota may be adversely affected by natural calamities, epidemics, political and economic instability, fuel shortages or interruptions in social
infrastructure, wars, terrorism and labor strikes.
Toyota is subject to various risks associated with conducting business worldwide. These risks include natural calamities; epidemics; political and
economic instability; fuel shortages; interruption in social infrastructure including energy supply, transportation systems, gas, water, or communication
systems resulting from natural hazards or technological hazards; wars; terrorism; labor strikes and work stoppages. Disruptions, delays and other
adverse changes in the operations of Toyota’s business have ensued from such risks materializing in the past. Should the major markets in which Toyota
purchases materials, parts and components

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and supplies for the manufacture of Toyota products or in which Toyota’s products are produced, distributed or sold be affected by any of these events, it
may result in future disruptions, delays and other adverse changes in the operations of Toyota’s business.

ITEM 4. INFORMATION ON THE COMPANY

4.A HISTORY AND DEVELOPMENT OF THE COMPANY
Toyota Motor Corporation is a limited liability, joint-stock company incorporated under the Commercial Code of Japan and continues to exist
under the Companies Act of Japan (the “Companies Act”). Toyota commenced operations in 1933 as the automobile division of Toyota Industries
Corporation (formerly Toyoda Automatic Loom Works, Ltd.). Toyota became a separate company in August 1937. In 1982, the Toyota Motor Company
and Toyota Motor Sales merged into one company, the Toyota Motor Corporation of today. As of March 31, 2023, Toyota operated through 569
consolidated subsidiaries (including structured entities) and 168 associates and joint ventures accounted for by the equity method.

See “Item 4. Information on the Company — 4.B Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s
principal capital expenditures and divestitures between April 1, 2020 and March 31, 2023 and information concerning Toyota’s principal capital
expenditures and divestitures currently in progress.

Toyota’s principal executive offices are located at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571, Japan. Toyota’s telephone number in
Japan is +81-565-28-2121.

The SEC maintains a website (https://www.sec.gov/) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. Toyota also maintains a website (https://global.toyota/en/) through which its annual reports on Form 20-F
and certain of its other SEC filings may be accessed. Information contained on or accessible through Toyota’s website is not part of this annual report on
Form 20-F.

4.B BUSINESS OVERVIEW

Toyota primarily conducts business in the automotive industry. Toyota also conducts business in finance and other industries. Toyota sold
8,822 thousand vehicles in fiscal 2023 on a consolidated basis. Toyota had sales revenues of ¥37,154.2 billion and net income attributable to Toyota
Motor Corporation of ¥2,492.9 billion in fiscal 2023.

Toyota’s business segments are automotive operations, financial services operations and all other operations. The following table sets forth
Toyota’s sales to external customers in each of its business segments for each of the past three fiscal years.

Yen in millions
Year Ended March 31,
2021 2022 2023
Automotive 24,597,846 28,531,993 33,776,870
Financial Services 2,137,195 2,306,079 2,786,679
All Other 479,553 541,436 590,749

Toyota’s automotive operations include the design, manufacture, assembly and sale of passenger vehicles, minivans and commercial vehicles such
as trucks and related parts and accessories. Toyota’s financial services business consists primarily of providing financing to dealers and their customers
for the purchase or lease of Toyota vehicles. Toyota’s financial services business also provides mainly retail installment credit and leasing

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through the purchase of installment and lease contracts originated by Toyota dealers. Related to Toyota’s automotive operations, Toyota is working
towards having all of its vehicles become connected vehicles, creating new value and reforming businesses by utilizing big data obtained from those
connected vehicles, and establishing new mobility services. Toyota’s all other operations business segment includes the information technology related
businesses including a web portal for automobile information called GAZOO.com.

Toyota sells its vehicles in approximately 200 countries and regions. Toyota’s primary markets for its automobiles are Japan, North America,
Europe and Asia. The following table sets forth Toyota’s sales to external customers in each of its geographical markets for each of the past three fiscal
years.

Yen in millions
Year Ended March 31,
2021 2022 2023
Japan 8,587,193 8,214,740 9,122,282
North America 9,325,950 10,897,946 13,509,027
Europe 2,968,289 3,692,214 4,097,537
Asia 4,555,897 5,778,115 7,076,922
Other* 1,777,266 2,796,493 3,348,530

* “Other” consists of Central and South America, Oceania, Africa and the Middle East.

During fiscal 2023, 23.5% of Toyota’s automobile unit sales on a consolidated basis were in Japan, 27.3% were in North America, 11.7% were in
Europe and 19.8% were in Asia. The remaining 17.7% of consolidated unit sales were in other markets.

The Worldwide Automotive Market

Toyota estimates that annual worldwide vehicle sales totaled approximately 81 million units in 2022.

Automobile sales are affected by a number of factors including:

• social, political and economic conditions;
• introduction of new vehicles and technologies;
• costs incurred by customers to purchase and operate automobiles; and
• the availability of parts and components that Toyota needs to manufacture its products.

These factors can cause consumer demand to vary substantially from year to year in different geographic markets and in individual categories of
automobiles.

Looking at the global economy in fiscal 2023, the global economy turned toward recovery from the impact of COVID-19, but the pace of
recovery remained slow due to downward pressure on the economy resulting from high resource prices and rising interest rates stemming from the
Ukraine crisis and other factors.

In the automobile market, the global strains in supply and demand for semiconductors and the supply shortage of parts continued to force
production constraints on a worldwide scale. However, the impact of the production cuts eased toward the second half of the fiscal year.

Looking at the economies of major countries, in the United States, domestic demand continued to be firm due to a favorable employment and
income environment and economic stimulus measures, but decelerated due to a shift to monetary tightening in order to control overheating inflation.
Europe was most affected by the heightened geopolitical tensions since February 2022, and inflation and high interest rates continued against the

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backdrop of high energy prices and labor shortages. As a consequence, the economy was sluggish. In Japan, the economy has been steady due to the
normalization from the economic effects of the COVID-19 pandemic, as well as the effects of wage increases. In China, economic activity stagnated due
to the zero-coronavirus policy accompanying the resurgence of COVID-19; China’s economic growth slowed in 2022. In Emerging countries, the
economy has started to recover, following those in developed countries, but some emerging countries, such as Brazil, saw some slowdown in
consumption due to rising interest rates and increased inflation.

Amid this environment, the automobile market faced a global year-on-year decline in 2022, making it a difficult year.

In North America, new vehicle sales were approximately 16.60 million units, a decrease from the previous year. In Europe, new vehicle sales also
decreased from the previous year at approximately 14.90 million units. Sanctions from Western nations and their withdrawal from Russian-related
businesses progressed, causing the Russian market to fall sharply year-on-year. In Asia (including India but excluding Japan and China), new vehicle
unit sales increased from the previous year to approximately 10.80 million units. The share of each market across the globe, which Toyota estimates
based on the available automobile sales data in each country and region information, was 30% for China, 21% for North America (20% excluding
Mexico and Puerto Rico), 19% for Europe and 13% for Asia. In China, new vehicle sales decreased from the previous year to approximately
24.70 million units.

In the medium- to long-term, Toyota expects the automotive market to continue growing driven principally by growth in China and other
emerging countries. However, global competition is expected to be severe, as the pace of technological advancement and development of new products,
particularly related to electrification, quickens further, including in response to a heightened global awareness of the environment with a view to carbon
neutrality and the strengthening of various regulations in line with such awareness.

The worldwide automotive industry is affected significantly by government regulations aimed at reducing harmful effects on the environment,
enhancing vehicle safety and improving fuel economy. These regulations have added to the cost of manufacturing vehicles. Many governments also
mandate local procurement of parts and components and impose tariffs and other trade barriers, as well as price or exchange controls as a means of
creating jobs, protecting domestic producers or influencing their balance of payments. Changes in regulatory requirements and other government-
imposed restrictions can limit or otherwise burden an automaker’s operations. Government laws and regulations can also make it difficult to repatriate
profits to an automaker’s home country.

The development of the worldwide automotive market includes the continuing globalization of automotive operations. Manufacturers seek to
achieve globalization by localizing the design and manufacture of automobiles and their parts and components in the markets in which they are sold. By
expanding production capabilities beyond their home markets, automotive manufacturers are able to reduce their exposure to fluctuations in foreign
exchange rates, as well as to trade restrictions and tariffs.

Over the years, there have been many global business alliances and investments entered into between manufacturers in the global automotive
industry. There are various reasons behind these transactions including the need to address excessive global capacity in the production of automobiles,
and the need to reduce costs and improve efficiency by increasing the number of automobiles produced using common vehicle platforms and by sharing
research and development expenses for environmental and other technology, the desire to expand a company’s global presence through increased size;
and the desire to expand into particular segments or geographic markets.

Toyota believes that its research and development initiatives, particularly the development of environmentally friendly new vehicle technologies,
vehicle safety and information technology, provide it with a strategic advantage.

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Toyota Philosophy
The automotive industry is experiencing a once-in-a-century transformation. We are now striving to transform ourselves into a mobility company.
In an era which it is hard to predict the future, Toyota has reflected on the path it has taken thus far and has formulated the “Toyota Philosophy” as a
roadmap for the future.

Toyota’s mission is “Producing Happiness for All” by expanding the possibilities of people, companies and communities through addressing the
challenges of mobility as a mobility company. In order to do so, Toyota will continue to create new and unique value with various partners by
relentlessly committing towards monozukuri (manufacturing), and by fostering imagination for people and society.

Producing Happiness for All

MISSION Using our technology, we work towards a future of convenience and
happiness, available to all

Creating Mobility for All

Toyota strives to raise the quality and availability of mobility so that
VISION
individuals, businesses, municipalities and communities can do more,
while achieving a sustainable relationship with our planet

We unite our three strengths (Software, Hardware and Partnerships) to

VALUE
create new and unique value that comes from the Toyota Way

Toyota Production System (“TPS”)

TPS is imbued with the desire of Sakichi Toyoda, the founder of the Toyota family of companies, and Kiichiro Toyoda, the founder, “to make
someone’s work easier.”

TPS was established based on two concepts: Jidoka, which can be loosely translated as “automation with a human touch,” — an idea of stopping
equipment immediately when a problem occurs, in order to prevent defective products from being produced — and “Just in Time” (“JIT”), a concept
based on the idea that “each process produces only what is needed for the next process in a continuous flow.” Based on the basic philosophies of jidoka
and JIT, through TPS, Toyota aims to efficiently and quickly produce vehicles of sound quality, one at a time, to fully satisfy customer requirements.

Toyota believes that improving upon TPS is essential to its future survival. Currently, TPS is being introduced into development departments and
administrative departments. Toyota intends to apply TPS to its development departments so that it can be used not only to shorten development times
and reduce costs, but also to develop our human resources, thus leading to the manufacturing of ever-better cars that customers will love.

Selected Initiatives
We made a New Management Policy & Direction Announcement on April 7, 2023. Our new management structure’s theme is “inheritance and
evolution.” The most important value we have cultivated is “Let’s make

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ever-better cars!” While talking about cars on the front lines and striving hard to bring smiles to customers’ faces, we continue to pursue ever-better cars.
Together with the 370,000 employees of the Toyota group around the world, our suppliers, and our dealers, we all make cars together. Car-making is a
team effort. We will accelerate the taking on of challenges for the future, with a new management style of “simultaneously and organically working as a
team.”

Aiming for the Future

We aim to transform into a mobility company. Toyota’s mission is “Producing happiness for all.” For cars to continue being a necessary part of
society, we need to change the future of the car. For that, there are two major themes, “carbon neutrality” and “expanding the value of mobility.”

Carbon Neutrality
We are fully committed to achieving carbon neutrality in 2050 over the entire life cycle of our vehicles. When it comes to car manufacturing, we
will continue to pursue a variety of options, based on a multi-pathway solutions, to stay close to the future of energy and the realities of each region.

First, we will thoroughly implement whatever electrification we can do immediately. We will strengthen sales of hybrid electric vehicles
(“HEVs”), including in emerging markets, and increase our number of plug-in hybrid electric vehicle options (“PHEVs”). We will expand our lineup of
battery electric vehicles (“BEVs”), which represent one important option, over the next several years. We will do our utmost to develop BEVs and create
new business models.

We will also accelerate projects for the realization of the hydrogen society that we believe lies just beyond the BEV era. With partners across
industries and countries, we will advance the expansion of the realm of hydrogen usage by such means as social implementation in Thailand and
Fukushima, the mass production of commercial fuel cell electric vehicles (“FCEVs”), and the development of hydrogen engine technologies in the arena
of motorsports. Furthermore, we will work with the energy industry to develop technologies for carbon-neutral fuels, including next-generation biofuels
and synthetic fuels.

We will work to promote electrified vehicles and reduce CO2 emissions while leaving no one behind, including in emerging markets. Through this
all-direction approach, we aim to reduce average CO2 emissions for vehicles we sell worldwide by 33% or greater by 2030 and by 50% or greater by
2035 compared to 2019. We will continue to promote decarbonization globally and steadily toward 2050.

Expanding the Value of Mobility

The cars of the future will become more connected to society as they become more electrified, intelligent, and diversified. In addition to moving
people’s hearts and emotions and moving people and goods, we will gather the movements of energy and information and link them together as one
through data. By doing so, we will be able to provide seamless mobility experiences that are connected with other mobilities, as well as provide new
value for cars as part of the social infrastructure. Cars connected to society will also be closely connected to various services that support people’s daily
lives, such as telecommunications and finance, expanding the circle of new value-added services centered on mobility.

Toyota Mobility Concept

We have developed “Toyota Mobility Concept” as our vision of the mobility society that we are aiming for. Evolving the car to be more useful to
society based on its essential values that have been cultivated over time, such as safety, security, and being fun to drive — to strive toward such a future,
we will continue our transformation into a mobility company in following three domains.

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The first is “Mobility 1.0.” What we aim for in this is to expand the value of the car by connecting various types of movement. For example,
BEVs offer new mobility possibilities for the transport of electricity. Collectively serving as an energy grid, BEVs can enhance the energy security of
society. That is the kind of role that BEVs can also fulfill. Also, intelligence can evolve cars even further by utilizing information gathered from cars and
customers. Our software platform Arene holds the key to this new kind of car-making. Connecting the latest hardware and software will enable cars and
various software applications to freely connect. Arene will fulfill an important role as a platform to support this kind of evolution. We will do our utmost
to develop a next-generation BEV for 2026 together with Woven by Toyota, Inc.

What we aim for in the second domain, “Mobility 2.0,” is to expand mobility into new realms. There are many people whose mobility we are
currently not able to support as we would like, such as the elderly, people living in depopulated areas, and people in emerging markets in which the car
market has yet to mature. New mobility possibilities, such as mobility in the sky, are also expanding. Toyota, in addition to having a full lineup of
vehicles, has new forms of mobility, such as the e-Palette, as well as a network of colleagues across industries, such as those in the Mobility as a Service
(“MaaS”) space. Leveraging these strengths, we would like to go beyond our current scope of business to provide greater mobility support to our
customers around the world.

“Mobility 3.0” is about integration with social systems. We aim to create mobility ecosystems integrated with cities and society that tie into energy
and transportation systems, logistics, as well as the way we live, and a future that realizes well-being. To do this, we will proceed with our
demonstration experiments in Woven City. For example, we will advance our development of new logistics systems and the development of city-
integrated autonomous mobility, as well as demonstrations that start from Woven City of a CO2-free hydrogen supply chain and of expanding the
potential of hydrogen use in our daily lives. In addition to these demonstrations to date, which have utilized digital technologies, from 2025 we will
accelerate comprehensive demonstrations in real cities, leading to social implementation together with our partners.

The most important message we want to convey through our mobility concept is that mobility lies beyond the evolution of the car. Cars lie at the
center of our transformation into a mobility company. In order to expand the possibilities of cars, it is necessary to evolve based on the concepts of
“Best-in-Town” and “ever-better cars,” which we have long cultivated. We will change the future of cars based on our products and regions.

Product-centered Management
Toyota Mobility Concept is centered on enhancing the value of the car, expanding new mobility and freedom of movement, and providing new
services and energy solutions as part of social systems. The three approaches that hold the key to realizing this vision are electrification, intelligence,
and diversification.

Electrification will be based on a multi-pathway approach. We will continue to tailor electrification to the needs of customers and individual
regions by drawing on the strengths and characteristics of each vehicle type. We will expand our current lineup of BEVs, aiming to release ten new
models by 2026 and set a pace to sell 1.5 million units annually by then. Further, we expect to launch a new generation of BEVs in 2026 that would
double the driving range compared to that of the current bZ4X by using batteries with far greater efficiency, while also offering designs and driving
performance to set hearts racing.

In addition, by drawing on the strengths of our Toyota Production System (“TPS”), we will change the way we work to reduce the number of
processes for the BEV production line by half. This will entail a shift to more efficient lines, including autonomous inspections and unmanned transport
powered by connected technology. We also aim to achieve carbon neutrality at all of our global plants by 2035. Also, we will overhaul existing supply
chains by working with suppliers to procure superior quality parts at lower prices.

To realize these transformations, we are creating a new specialized unit to develop BEVs. This specialized unit will work under a single leader
entrusted with full authority to handle every function, from development to

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production and business operation. We will take part in a wide range of business opportunities through our polished competitiveness as demonstrated by
the Toyota New Global Architecture (“TNGA”) having the effect of halving our development intensity and in-house investment as compared to those
before the adoption of TNGA, and our 10-million unit vehicle sales value chain.

For PHEVs, by increasing battery efficiency to extend the EV-mode driving range beyond 200 km, we will reposition PHEVs as “the practical
BEV” and will work harder on developing this as another BEV option.

For FCEVs, we will pursue mass production centered on commercial vehicles. One feature of FCEVs is that the energy source, hydrogen, is
lightweight, so even when traveling longer distances the vehicle will not be as heavy as a comparable BEV, and less space for storage of the energy
source is required. Refueling is also much quicker. We plan to promote FCEVs by starting with commercial vehicles, which permit us to take advantage
of these strengths.

The second approach is intelligence. Intelligence will expand connectivity between cars, services, and society. The shift to intelligent cars will
involve expanding advanced safety technology, multimedia, and other constantly evolving feature updates to all of our vehicles. At the same time,
alongside advances in the onboard operating system, our next-generation BEVs will enable users to customize “ride feel” according to their preferences
for how the vehicle runs, turns, and stops. By also honing the vehicles’ essential attributes, we will create cars that are more fun to drive in terms of both
hardware and software.

Intelligent services will include new services that connect cars to cities and infrastructure. This year, we plan to commence social implementation
of logistics systems that use real-time traffic information to boost transport efficiency, and systems that provide optimal energy management. Partnering
with cities and public facilities, we will also expand our BEV charging network, while providing a variety of services that support the energy grid and
people’s lives. These efforts are already underway at Lexus.

With respect to intelligence in society, we will conduct demonstration experiments regarding various ways of connecting people, cars, and society
in Woven City, which we have positioned as our “mobility test course.” We will use Woven City to address issues that come to light through social
implementation of connected logistics services, before implementing these services in society. By repeating this process, we will accelerate the
realization of an intelligent society.

Finally, we come to diversification. Our approach to diversification goes beyond cars to mobility itself, and even the energy sector. The
diversification of cars will involve expanding our product lineup, services that utilize connected technology, as well as parts and accessories businesses
in collaboration with new partners.

With respect to diversification of mobility, we have developed an easy-lock system for securing wheelchairs with a single motion, utilizing the
know-how we have accumulated over many years of developing welfare vehicles, and we plan to start installing this system in vehicles.

As for energy diversification, we have started demonstration experiments using hydrogen made from water, food loss and other waste, as well as
carbon-neutral fuels made from biomass and other resources, in Japan and Thailand. Our energy use technology will also be strengthened in the field of
motorsports with an aim to promoting widespread adoption in society.

Region-centered Management
We have refined the performance and cost of hybrid vehicles with each successive generation. As a result, we have been able to enhance greatly
their earning power while investing in the future, growing with stakeholders, and reducing CO2 emissions. This is precisely an achievement of our
region-centered management, which is based on our efforts to make ever-better cars. We will continue to deepen our region-centered management and
further solidify our business foundation.

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To do so, the first thing that we must address is how to achieve carbon neutrality. Carbon knows no borders, and CO2 emission is an issue that
cannot wait. We need to immediately start with what we can do. Therefore, to spread the use of electrified vehicles as quickly as possible and as much as
possible, we need to be very attentive to the needs of our customers by taking into account local conditions and the diverse ways of using cars. Thus,
along with enhancement of the BEV lineup, we will continue to enhance the attractiveness and competitiveness of all powertrains, including HEVs and
PHEVs.

In developed countries, in parallel with the preparation of BEVs, we will expand our product lineup, with a focus on the bZ series. In the U.S., we
will start the local production of a three-row SUV in 2025 that will be equipped with batteries to be produced in North Carolina, and we seek to increase
our battery production capacity.

In China, we will launch two models of locally developed BEVs in 2024, fit to the local needs, and we plan to continue to increase the number of
models in the following years. In Asia and other emerging markets, we will make sure to respond to the growing demand for BEVs, starting with local
production of BEV pickup trucks, and also by launching a compact BEV model by the end of the year.

In developed countries, the switch to BEVs is moving forward as the market matures, while in emerging markets, the market is expected to
expand due to demand for new and additional vehicles. Toyota, with its full lineup and profitable HEVs and PHEVs, along with its diverse options of
BEVs that it will be strengthening, will make sure to meet a wide range of global demand and is committed to further growth. For growth in emerging
markets, profitable HEVs will be used as a source of income, and with a value chain supporting the sale of approximately 10 million units per year, we
will also take part in a wide range of business opportunities. In addition, we will achieve cost reductions and Kaizen (continuous improvement) by
leveraging the strengths of the Toyota Production System (TPS), and thereby enhance our future investment capacity for the expansion of growth in
BEVs and mobility areas, as well as establish a strong business foundation whereby carbon neutrality and growth can both be achieved.

While the technological innovations of electrification, intelligence and diversification are progressing, we would like to take on the challenge of
contributing to regions in which we operate and to the overall good. For example, in the United States, the automotive industry is at a critical juncture,
with people moving away from manufacturing and with structural costs increasing. By combining worksite-honed craftsman skills with intelligence to
propose new ways of manufacturing and new “automation with human intelligence” processes, we want to do our part in preserving manufacturing in
the United States while solving the country’s labor shortage problem. We also plan to start collaborations with Charoen Pokphand and the Siam Cement
Group in Thailand. This is the start of an implementation that uses electrification and connected technologies to connect vehicles, people and
information, and utilize mobility as part of the social infrastructure. Through these initiatives, we will take on the challenge of solving regional problems
such as serious traffic congestion, air pollution and frequent road accidents.

Let’s Change the Future of Cars!

No matter how times change, Toyota is a company that manages by way of its products. And we are a company that intends to produce happiness
for all by responding to the diversification of its customers and societies around the world. There is a future mobility society that Toyota in particular can
aim for because it has refined the strength of its full lineups worldwide.

In an uncharted era, we believe that it is action based on strong will and passion that will change the future. Together with our colleagues, we will
challenge ourselves to think outside the box. We believe that a future of mobility, one that is unique to carmakers and to Toyota, lies ahead. Let’s change
the future of cars! This is our theme as we aim to become a mobility company.

Based on our unshakable motives, we will take on challenges with strong will and passion.

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Misconduct of Hino and Daihatsu in Relation to Their Applications for Certification

On March 4, 2022, Hino, a consolidated subsidiary of Toyota, announced that it identified past misconduct in relation to its applications for
certification concerning emissions and the fuel economy performance of its vehicle engines for the Japanese market. Hino subsequently received an
investigation report from a special investigation committee consisting of outside experts concerning this matter. Hino also was subject to an on-site
inspection from the Ministry of Land, Infrastructure, Transport and Tourism (“MLIT”), and received a corrective action order from it. On October 7,
2022, Hino submitted a recurrence prevention report to MLIT. To clarify management responsibility regarding this matter, Hino decided to have four
persons who were directors or senior managing officers resign, reduce the remuneration of directors, and request the voluntary return of part of the
remuneration of certain past representative directors. Further, Hino formulated and announced “Three Reforms,” namely reforms to management,
corporate culture and vehicle manufacturing, to prevent future misconduct. Hino is committed to addressing this issue head on and living out with
renewed intent its corporate mission: “We make a better world and future by helping people and goods get where they need to go.” See “Item 4.
Information on the Company — 4.B Business Overview — Legal Proceedings” for a discussion of related legal proceedings, including government
investigations and actions.

Furthermore, on April 28, 2023, Daihatsu announced and disclosed that it had committed procedural irregularities in approval applications for side
collision tests for vehicles developed by Daihatsu destined for overseas markets. During the subsequent in-house inspection, it was newly discovered
and announced that Daihatsu identified irregularities in the certification procedures for the side impact collision tests of Daihatsu ROCKY HEVs and
Toyota RAIZE HEVs. The irregularities were promptly reported to, and consultations were undertaken, with the inspection and certification authorities
after they were discovered, and shipments and sales of the vehicles at issue were suspended in the countries in which approval had been granted. In
addition, Daihatsu has confirmed and reported that the vehicles at issue conform to laws and regulations in in-house re-tests using proper parts. Daihatsu
has established a third-party committee consisting of external experts in legal and technical matters to fully clarify the nature of the irregularities and
identify their root cause; it has also asked the committee to recommend measures to prevent the recurrence of similar irregularities by examining the
company’s organization and development processes.

In the wake of the large-scale recalls that occurred in 2009, Toyota promised its customers around the world that it would not “run away, hide, or
lie.” Given this, we take very seriously the fact that these problems nevertheless occurred in our group. For this matter, as the chief executive officer,
Toyota’s President will further strive to improve the car manufacturing operations of Toyota and the group companies, while the Chairman of the Board
of Toyota will lead initiatives to strengthen governance and compliance.

On May 12, 2023, the top management of each group company gathered to discuss Toyota’s commitment to facing manufacturing with sincerity
and renewed our recognition of this goal. We are currently working with all of our group companies to re-examine our past governance structure,
including our own, and have begun a thorough review. We view this case not as an individual or workplace issue, but rather a company-wide issue
where an individual or workplace was forced to commit a wrongdoing. Together with Daihatsu, we are committed to listening to the voices of those on
the front lines and carefully responding to the situation.

At Toyota worksites, everyone is committed to making better cars. Toyota is a company where, when a problem occurs, everyone always stops,
pursues the root cause by going and seeing the location or process where the problem exists, makes improvements, and works to prevent recurrence.
This is the Toyota philosophy that has been cherished since the company’s founding. We believe that there is no other way to regain the trust of our
customers than for all of Toyota and its group companies to return to this philosophy once again, for each group company’s top management to confront
the problems at their respective workplaces, uncover them, and make improvements one by one, and continue this steady effort. The entire Toyota group
will work together to regain trust of our customers as soon as possible.

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Memorandum of Understanding concerning conducting a business combination of Mitsubishi Fuso and Hino Motors
On May 30, 2023, Toyota, Daimler Truck Holding AG (“Daimler Truck”), Mitsubishi Fuso Truck and Bus Corporation (“MFTBC”) and Hino
entered into a Memorandum of Understanding (MoU) on accelerating the development of advanced technologies and conducting a business combination
of MFTBC and Hino. Daimler Truck, MFTBC, Hino, and Toyota intend to collaborate toward achieving carbon neutrality and creating a prosperous
mobility society by developing CASE technologies and strengthening the commercial vehicle business on a global scale.

The MoU contemplates that MFTBC and Hino will integrate on an equal footing and collaborate in the areas of commercial vehicle development,
procurement, and production, and that they will seek to build a globally competitive Japanese commercial vehicle manufacturer. The MoU further
contemplates that Daimler Truck and Toyota will equally invest in the (listed) holding company of the integrated MFTBC and Hino, and that they will
seek to collaborate on the development of hydrogen and other CASE technologies to support the competitiveness of the new company.

Details on the scope and nature of the collaboration, including the name, location and corporate structure of the new holding company will be
discussed. The parties envisage signing of definitive agreements regarding the business combination in the first quarter of 2024 and aim to close the
transaction by the end of 2024.

Automotive Operations
Toyota’s sales revenues from its automotive operations were ¥33,820.0 billion in fiscal 2023, ¥28,605.7 billion in fiscal 2022, and
¥24,651.5 billion in fiscal 2021.

Toyota produces and sells passenger vehicles, minivans and commercial vehicles such as trucks. Toyota Motor Corporation’s subsidiary, Daihatsu,
produces and sells mini-vehicles and compact cars. Hino, also a subsidiary of Toyota Motor Corporation, produces and sells commercial vehicles such
as trucks and buses. Toyota also manufactures automotive parts, components and accessories for its own use and for sale to others.

Vehicle Models and Product Development

Toyota’s vehicles (produced by Toyota, Daihatsu and Hino) can be classified largely into electrified vehicles and conventional engine vehicles.
Toyota’s product line-up includes subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and specialty cars, recreational and sport-utility
vehicles, pickup trucks, minivans, trucks and buses. Toyota’s luxury cars are sold in North America, Europe, Japan and other regions, primarily under
the Lexus brand name.

In fiscal 2021, despite the suspension of operations at factories and the suspension of business at dealers due to the impact of COVID-19, Toyota
launched various new models as planned. The new Harrier, an SUV for the new era, was designed to resonate with the heart of the driver, with a focus
on sensory quality from the first moment of seeing, riding and driving off in it, rather than relying on utility or numerical performance. The new Mirai
featured a design that appeals to the senses, a distinctive driving experience, industry-leading innovation, and cruising range that gives peace of mind as
its concept, while generating zero emissions, and will serve as a new departure point for creating a hydrogen-based society of the future. In the Lexus
brand, we launched the UX 300e, which offers the high-quality driving performance and excellent quietness unique to Lexus BEVs, the high reliability
and convenience of the electrification technology cultivated in the manufacture of hybrid models, and the distinctive design and high functionality of the
Lexus UX. GR Yaris is the first Toyota vehicle developed with the reversed concept of turning a motorsports car into a production car. The car was
evaluated by Master Driver Morizo (the racing driver name for Akio Toyoda) and non-Toyota professional drivers from the early stages of development,
and even after it was unveiled at the Tokyo Auto Salon 2020, it underwent repeated

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cycles of evaluation and improvement at the circuit before it was finally launched. As a result of our efforts to further streamline costs following the
Lehman Brothers bankruptcy and the “ever better cars manufacturing” initiative, the compact car, Yaris, won the Car of the Year in Europe, a place
where people have continued to have strong passion for cars in its long automotive history. The award recognized Yaris’s fun-to-drive features and fuel
efficiency as a HEV.

In fiscal 2022, Toyota launched the first-ever SUV Corolla model, Corolla Cross. Since the launch of the first-generation in 1966, the Corolla
series has continued to evolve and embrace new challenges and has sold more than 50 million units worldwide. The Noah and Voxy, cars supported and
loved by many customers, including families among others, were completely redesigned as minivans with the further increased ease of use and
enhanced advanced fixtures. In pursuit of a suite of features designed to enable customers to drive their vehicles every day with joy, safety, peace of
mind, and comfort, while also realizing superior environmental performance, Toyota launched the HEV Aqua, which is the world’s first vehicle to use a
high-output bipolar nickel-hydrogen battery as an electric drive battery. With elevated levels of driving performance, design, and advanced technology,
the all-new NX, which is the first model to introduce the next generation of Lexus, is accelerating the proliferation of electrified models by being Lexus’
first-ever PHEV also offered as a HEV. In addition, the new Toyota bZ series of BEVs that are easy to use and highly appealing, and the introduction of
this series is a part of Toyota’s efforts to reduce CO2 emissions. Toyota launched the bZ4X, the first of the bZ series, which offers, in addition to a
comfortable cabin, a new lifestyle and the opportunity to spend precious time with family and friends as well as the BEV’s unique joy of driving. For
motorsports cars, Toyota developed the GRMN Yaris as “embodiments of making ever-better motorsports-bred cars.”

In fiscal 2023, Toyota launched the all-new Crown. While inheriting the Crown’s DNA of innovation and limit-pushing, it has been renewed as a
flagship for a new era with four variations to meet the diverse values and lifestyles of customers. In addition to the “Crossover type,” a new style that
combines a sedan and an SUV, the “Sport” offers a sporty driving experience with an enticing atmosphere and an easy-to-drive package. The “Sedan” is
a new formal design that meets the needs of chauffeurs, whereas the “Estate” is a functional SUV with a mature atmosphere and ample driving space.
The new series will be rolled out in about 40 countries and regions. Launched in 1997 as the world’s first mass-produced hybrid car, the Prius has driven
uptake of HEVs as a new-generation eco-car with outstanding fuel efficiency; under the “Hybrid Reborn” concept, the Prius was renewed as an
exhilarating package that adds a design inspiring love at first sight and captivating driving performance to its core strength as an environmentally
friendly car. For sportscars, the development of the GR Corolla, including a hydrogen engine-equipped GR Corolla designed to participate in the Super
Taikyu endurance race series, has carried forth the torch of making ever-better motorsports-bred cars. In addition, the Lexus brand announced its first
globally-available pure BEV model, the all-new RZ. The new RZ marks Lexus’ transition into a BEV-centered brand, and embodies the unique Lexus
vehicle design and driving experience brought on by advanced electrification technology.

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Markets, Sales and Competition

Toyota’s primary markets are Japan, North America, Europe and Asia. The following table sets forth Toyota’s consolidated vehicle unit sales by
geographic market for the periods shown. The vehicle unit sales below reflect vehicle sales made by Toyota to unconsolidated entities (recognized as
sales under Toyota’s revenue recognition policy), including sales to unconsolidated distributors and dealers. Vehicles sold by Daihatsu and Hino are
included in the vehicle unit sales figures set forth below.

Thousands of Units
Year Ended March 31,
2021 2022 2023
Market Units % Units % Units %
Japan 2,125 27.8% 1,924 23.4% 2,069 23.5%
North America 2,313 30.3 2,394 29.1 2,407 27.3
Europe 959 12.5 1,017 12.4 1,030 11.7
Asia 1,222 16.0 1,543 18.7 1,751 19.8
Other* 1,027 13.4 1,352 16.4 1,565 17.8
Total 7,646 100.0% 8,230 100.0% 8,822 100.0%

* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

The following table sets forth Toyota’s vehicle unit sales and market share in Japan, North America, Europe and Asia on a retail basis for the
periods shown. Each market’s total sales and Toyota’s sales represent new vehicle registrations in the relevant year (except for the Asia market where
vehicle registration does not necessarily apply). All information on Japan excludes mini-vehicles. The sales information contained below excludes unit
sales by Daihatsu and Hino, each a consolidated subsidiary of Toyota. Vehicle unit sales in Asia do not include sales in China.

Thousands of Units
Year Ended March 31,
2021 2022 2023
Japan:
Total market sales (excluding mini-vehicles) 2,901 2,664 2,696
Toyota sales (retail basis, excluding mini-vehicles) 1,505 1,361 1,377
Toyota market share 51.9% 51.1% 51.1%

Thousands of Units
Year Ended December 31,
2020 2021 2022
North America:
Total market sales 17,157 17,861 16,597
Toyota sales (retail basis) 2,408 2,681 2,445
Toyota market share 14.0% 15.0% 14.7%
Europe:
Total market sales 16,638 16,870 14,897
Toyota sales (retail basis) 993 1,076 1,081
Toyota market share 6.0% 6.4% 7.3%
Asia (excluding China):
Total market sales 8,181 9,224 10,757
Toyota sales (retail basis) 969 1,189 1,382
Toyota market share 11.8% 12.9% 12.8%

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Japan
Japan is one of the leading countries with respect to technological advancements and improvements in the automotive industry and will continue
to demonstrate such strength. Toyota strives to earn customer satisfaction by introducing products distinctive of Japan’s manufacturing ability such as
value-added products including Lexus models, FCEVs, PHEVs and HEVs, vehicles with three-seat rows and mini-vehicles. Toyota endeavors to secure
and maintain its significant share of and position atop, the Japanese market. Toyota held a domestic market share (excluding mini-vehicles) on a retail
basis of 51.9% in fiscal 2021, 51.1% in fiscal 2022 and 51.1% in fiscal 2023.

Although Toyota’s principle is to conduct production in regions where it enjoys true competitiveness, it considers Japan to be the source of its
good manufacturing practices. Having 16 production sites in Japan, Toyota supports its operations worldwide through measures such as the development
of new technologies and products, low-volume vehicles to complement local production, production of global vehicle models which straddle multiple
regions and supporting overseas factories.

North America
The North American region is one of Toyota’s most significant markets. The United States, in particular, is the largest market in the North
American region, accounting for 86% of Toyota’s retail sales in the region. In the region, Toyota has in recent years reorganized its production structure
and made improvements to its product lineup. In addition, Toyota has a wide product lineup in every segment (excluding large trucks and buses).

Toyota’s North American production capacities include the production of vehicle models such as the RAV4, Camry, Tacoma and Highlander
through 13 manufacturing entities.

In November 2021, Toyota created Toyota Battery Manufacturing, North Carolina (“TBMNC”) as the first plant to produce automotive batteries
for Toyota in North America. When it comes online in 2025, it is expected that TBMNC will have four production lines, each capable of delivering
enough lithium-ion batteries for 200,000 vehicles — with the intention to expand to at least six production lines for a combined total of up to 1.2 million
vehicles per year.

In June 2023, Toyota decided to assemble an all-new, three-row battery electric SUV at Toyota Motor Manufacturing Kentucky, Inc. (“TMMK”)
starting in 2025. The BEV will be powered by batteries from TBMNC.

Toyota has five research and development centers in North America. As for vehicle development, the Toyota Technical Center spearheads the
design, planning, and evaluation of vehicles and parts as to their ability to meet customer needs.

Europe
Toyota’s principal European markets are Germany, France, the United Kingdom, Italy and Spain. In the European markets, as a full-lineup car
manufacturer, Toyota aims to increase its global vehicle sales with a focus on electrified vehicles (HEVs, PHEVs, FCEVs and BEVs) that suit the needs
of customers and the circumstances of each region.

In terms of production, to strengthen its business setup so that it is less likely to be affected by exchange rates, Toyota produces models such as the
Corolla, Yaris and C-HR locally through six entities in Europe. In addition, Toyota is actively promoting production and sales measures that meet local
demand by strengthening its value chain including used car dealerships, after-sales services and finance and insurance services.

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Asia
Toyota’s principal Asian markets are Thailand, India, Indonesia and Taiwan.

In light of the importance of the Asian market that is further expected to grow in the long term, Toyota aims to build an operational framework that
is efficient and self-reliant, as well as a predominant position in the automotive market in Asia. Toyota has responded to increasing competition in Asia
by making strategic investments in the market and developing relationships with local suppliers. Toyota believes that its existing local presence in the
market provides it with an advantage over new entrants to the market and expects to be able to promptly respond to demand for vehicles in the region.

In terms of production, Toyota manufactures models such as the Hilux, Hiace, Corolla, Camry and Vios through 15 entities. Toyota’s plants in
Thailand, not only to meet domestic demand but also to serve as a production base for locations inside and outside of the ASEAN region.

China
Toyota has been conducting operations in China in large part through joint ventures, and its success in producing products that meet local demands
and in establishing its sales and service network has significantly contributed to Toyota’s profits. Based on the firm business foundation that it has
established, Toyota is conducting its operations with the aim of promoting further growth and increasing profitability through further development of its
sales and service network and expansion of its product lineup.

In terms of production, Toyota has been conducting a significant portion of its China business, including in relation to the production and sales of
vehicles, through joint ventures. Toyota has two major joint venture partners in China, namely, China FAW Group Corporation and Guangzhou
Automobile Group Co., Ltd. The joint venture with China FAW Group manufactures models such as the Corolla, Vios, RAV4, bZ4X and bZ3 and the
joint venture with Guangzhou Automobile Group Co., Ltd. manufactures models such as the Camry, Yaris, Highlander and bZ4X.

Total vehicle sales in the Chinese market were 24.62 million vehicles in 2022, 97.8% of that of 2021, and 25.17 million vehicles in 2021,
approximately the same as the 25.21 million vehicles in 2020. In this market, Toyota’s sales were 1.94 million vehicles in 2022, 100.0% of that of 2021,
and 1.94 million vehicles in 2021, 107.8% of that of 2020. In the domestically produced passenger vehicle market in mainland China (21.89 million
vehicles), Toyota had a market share of 8.8%. Toyota has been expanding the distribution network for locally produced vehicles in cooperation with
China FAW Group and Guangzhou Automobile Group under the names Tianjin FAW Toyota Motor Co., Ltd. and Guanqi Toyota Motor Co., Ltd.,
respectively, and for imported vehicles, Toyota has also been expanding primarily the Lexus brand sales network. Toyota plans to further increase sales
by expanding the number of dealers and its product lineup. In addition, as the market in China develops and becomes more sophisticated, Toyota plans
to promote so-called “Value Chain” businesses, such as used car sales, services, financing and insurance, so as to contribute to the development of a
mobility society.

South and Central America, Oceania, Africa and the Middle East
Toyota’s consolidated vehicle sales in South and Central America, Oceania, Africa and the Middle East (collectively, the “Four Regions”) in fiscal
2022 were 1,352 thousand units, 131.7% of that of the prior fiscal year. Toyota’s principal markets in the Four Regions are Brazil and Argentina in South
and Central America, Australia in Oceania, South Africa in Africa and Saudi Arabia in the Middle East. The core models in the Four Regions are global
models such as the Corolla, IMV (the Hilux) and Camry.

Toyota has seven production bases in the Four Regions. In these regions, which are expected to become increasingly important to Toyota’s
business strategy, Toyota aims to continue developing new products which meet the specific demands of each region, increasing production and
promoting sales.

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Production
Toyota and its affiliated companies produce automobiles and related components through more than 50 overseas manufacturing organizations in
26 countries and regions aside from Japan. Facilities are located principally in Japan, the United States, Canada, the United Kingdom, France, Turkey,
Czech Republic, Poland, Thailand, China, Taiwan, India, Indonesia, South Africa, Argentina and Brazil. See “Item 4. Information on the Company —
4D. Property, Plants and Equipment” for a description of Toyota’s principal production facilities.

In promoting a sustainable growth strategy, establishing a system capable of providing optimal supply of products in the global market is integral
to Toyota’s strategy.

In line with its basic policy of manufacturing in countries or regions where there is demand and where Toyota is truly competitive, Toyota will
make efficient use of and maximize capacity utilization at its existing plants to respond to the expanding market and will continue to focus on making
efficient capital investments as necessary.

Furthermore, Toyota will continue to place top priority on safety and quality in strengthening true competitiveness with the aim of achieving
sustainable growth.

The following table shows Toyota’s worldwide vehicle unit production by geographic market for the periods shown. These production figures do
not include vehicles produced by Toyota’s unconsolidated affiliated companies. The sales unit information elsewhere in this annual report includes sales
of vehicle units produced by these affiliated companies. Vehicle units produced by Daihatsu and Hino are included in the vehicle unit production figures
set forth below.

Thousands of Units
Year Ended March 31,
2021 2022 2023
Japan 3,948 3,738 3,789
North America 1,641 1,751 1,768
Europe 642 707 771
Asia 1,015 1,499 1,859
Other* 306 463 507
Total 7,553 8,158 8,694

* “Other” consists of Central and South America and Africa.

Toyota closely monitors its actual units of sale, market share and units of production data and uses this information to allocate resources to
existing manufacturing facilities and to plan for future expansions.

See “Item 4. Information on the Company — 4B. Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s
recent investments in completed plant constructions and for a description of Toyota’s current investments in ongoing plant constructions.

Distribution
Toyota’s automotive sales distribution network is the largest in Japan. As of March 31, 2023, this network consisted of 244 dealers employing
approximately 110 thousand personnel and operating approximately 4.6 thousand sales and service outlets. TOYOTA Mobility Tokyo Inc. is the only
dealer owned by Toyota and the rest are independent.

Toyota believes that this extensive sales network of independent local interests has been an important factor in its success in the Japanese market.
A large number of the cars sold in Japan are purchased from salespersons

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who visit customers in their homes or offices. In recent years, however, the traditional method of sales through home visits is being replaced by
showroom sales, and the percentage of automobile purchases through showrooms has been gradually increasing. Toyota expects this trend to continue
even after the COVID-19 related crisis, and accordingly is working to improve its sales activities such as customer reception and meticulous service at
showrooms, as well as online sales, to increase customer satisfaction.

Sales of Toyota vehicles in Japan had been conducted through four sales channels until April 2020, but from May 2020 shifted to a framework
where all of its Japanese-market vehicle models are made available through all sales outlets in Japan. In addition, Toyota introduced the Lexus brand to
the Japanese market in August 2005, and currently distributes the Lexus brand vehicles through a network of 183 new-vehicle sales outlets dedicated to
the Lexus brand in order to enhance its competitiveness in the domestic luxury automotive market. The following table provides information on the
dealer network as of March 31, 2023.

Dealers
Channel Toyota Owned Independent Outlets
Toyota brand 1 company 240 companies 4,419 outlets
Lexus brand 22 outlets 161 outlets 183 outlets

Outside Japan, Toyota vehicles are sold through approximately 168 distributors in approximately 204 countries and regions. Through these
distributors, Toyota maintains networks of dealers. The chart below shows the number of Toyota distributors as of March 31, 2023 by country and
region:

Country/Region Number of Countries Number of Distributors

North America 3 5
Europe 53 29
China 1 4
Asia (excluding China) 19 13
Oceania 17 15
Middle East 16 14
Africa 56 48
Central and South America 39 40

BEV Strategies
On December 14, 2021, Toyota held a briefing on its BEV strategy where it announced that it would be boosting its plans for BEV sales in 2030
from 2 million to 3.5 million units, and that Lexus was aiming for BEVs to account for 100 percent of its sales in Europe, North America, and China by
the same year, followed by BEVs accounting for 100 percent of its sales globally starting in 2035.

Toyota believes that achieving carbon neutrality means realizing a world in which all people living on this planet continue to live happily. We
want to help realize such a world. This has been and will continue to be Toyota’s wish and our mission as a global company. For that challenge, we need
to reduce CO2 emissions as much as possible, as soon as possible.

Energy plays a critical role in achieving carbon neutrality. At present, the energy situation varies greatly from region to region. That is exactly why
Toyota is committed to providing a diversified range of carbon-neutral options to meet whatever the needs and situations might be in every country and
region. In this diversified and uncharted era, it is important to flexibly change the type and quantity of products produced while keeping an eye on
market trends. We believe that the reduction in lead times and high-mix, low-volume production methods that we have cultivated through the TPS, along
with the steady efforts of Japanese manufacturing, will enable us to be competitive going forward.

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In terms of vehicle production, we believe that all electrified vehicles can be divided into two categories, depending on the energy that they use.
One category is that of “carbon-reducing vehicles.” If the energy that powers vehicles is not clean, the use of an electrified vehicle, no matter what type
it might be, would not result in zero CO2 emissions. The other category is that of “carbon-neutral vehicles.” Vehicles in this category run on clean energy
and achieve zero CO2 emissions in the whole process of their use. We at Toyota will strive to realize such vehicles.

The Toyota brand now offers more than 100 models of engine-only vehicles, HEVs, PHEVs, and FCEVs in more than 170 countries and regions.
The Lexus brand has introduced more than 30 models of engine-only vehicles, HEVs, and PHEVs in more than 90 countries and regions. Furthermore,
we plan to expand the options for carbon neutral vehicles by offering a full lineup of BEVs. Specifically, we plan to roll out 30 Toyota and Lexus brand
BEV models by 2030, offering a full lineup of BEVs globally in both the passenger and commercial vehicle segments.

In August 2022, Toyota announced that it will invest up to 730 billion yen in Japan and the United States toward supplying automotive batteries
for BEVs, aiming to begin battery production between 2024 and 2026. Through this investment, we aim to boost production capacity by up to 40 GWh.
In May 2023, Toyota also announced its plan to further invest $2.1 billion in its battery manufacturing plant in the United States for new infrastructure to
support future expansion. Toyota will continue working to build a supply system that can steadily meet the growing demand for BEVs around the world.

At the New Management Policy & Direction Announcement held on April 7, 2023, Toyota announced that it will expand its current BEV lineup,
aim to introduce ten new BEV models by 2026, and set a pace for annual sales of 1.5 million Toyota and Lexus brand BEV units by 2026. In addition,
Toyota has plans to release next-generation BEVs in 2026 that will double the driving range compared to that of the current bZ4X by using batteries
with greater efficiency.

Plans for the release of BEVs in each region are as follows.

Developed countries In parallel with the preparation of new models scheduled for launch in 2026, with a focus on the bZ series and with
further refined performance, Toyota plans to greatly expand its product lineup.

The United States In 2025, Toyota plans to start the local production of a 3-row SUV equipped with batteries to be produced in North
Carolina.

China In addition to the bZ4X and bZ3, Toyota plans to launch two models of locally developed BEVs in 2024 that will fit
the local needs, and to continue increase the number of models in the following years.

Asia and other emerging In order to respond to the growing demand for BEVs, Toyota plans to start local production of BEV pickup trucks
markets (Global South) by the end of 2023 and also launch a small BEV model.

In May 2023, we launched the BEV Factory, a business unit dedicated to BEVs. What we hope to achieve with BEV Factory is to change the
future with BEVs through transformation on multiple axes: cars, manufacturing and the way we work.

On the car axis, through technologies such as the integration of next-generation batteries and sonic technology, we aim to achieve a vehicle
cruising range of 1,000 km. To bring more stylish design, we will use AI to increase aerodynamic performance, while our designers will focus on
expressing natural sensibility. We believe Arene OS and full over-the-air updates will vastly expand the possibilities for enjoying cars. Like our manual
transmission EVs, we plan to deliver exciting surprises and fun to our customers with technologies achievable only by a carmaker.

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On the manufacturing axis, the car body will be constructed from three main components in a new modular structure. Adopting giga casting will
allow significant component integration, which contributes to the reduction of vehicle development costs and factory investment. In addition, with our
self-propelling production technology, we aim to reduce our manufacturing procedures and plant investment by half.

Under the way we work axis, the BEV Factory is based on the concept of “ALL in ONE TEAM,” a team under one leader that unifies functions
and regions beyond the framework of a carmaker, such as Woven by Toyota and external partners. This ONE TEAM will revolutionize the way work is
done, with everyone on the same site and with the same awareness of the same issues, to achieve quick decision-making and initial response.

We plan to roll out next-generation BEVs globally and as a full lineup to be launched in 2026. By 2030, we expect 1.7 million units out of our
planned 3.5 million overall BEV unit target will be provided by BEV Factory. We expect that our next-generation BEVs will adopt our new batteries,
through which we are determined to become a world leader in battery EV energy consumption. With the resources we earn, we will improve our product
appeal to exceed customer expectations and secure earnings.

The Development and Supply of Batteries

While promoting a full lineup of electrified vehicles, we have also been developing and manufacturing a full lineup of batteries. These
development efforts are organized by type of electrified vehicle. For HEVs, our focus is on power output, or in other words, instantaneous power, while,
when it comes to PHEVs and BEVs, our focus is on capacity or what can be called “endurance.”

In the area of batteries, Toyota has continued to research, develop, and produce batteries in-house for many years. In 1996, we established what is
today Prime Earth EV Energy Co., Ltd. While refining our technologies related to nickel-metal hydride batteries, we started accelerating the
development of lithium-ion batteries in 2003. Furthermore, since establishing our Battery Research Division in 2008, we have been advancing research
on solid-state batteries and other next-generation batteries. In 2020, we established Prime Planet Energy & Solutions, Inc. to accelerate integrated efforts
in the battery business. Over the past 28 years, Toyota has made approximately 1 trillion yen in capital expenditures, research and development expenses
and other investments to produce more than 23 million batteries. We believe that our accumulated experience is an asset that gives us a competitive
edge. Going forward, we intend to make a total of 5 trillion yen in new capital expenditures, research and development expenses and other investments
relating to BEVs and batteries, with the aim of realizing even more-advanced, high-quality, and affordable batteries.

As for batteries for HEVs, we have been continuously upgrading nickel-metal hydride batteries and lithium-ion batteries, taking advantage of their
respective characteristics. In particular, we took on the challenge of developing a bipolar structure in the course of creating a nickel-metal hydride
battery to be installed in the Aqua, which underwent a full-scale redesign completed in July 2021, and have become the first in the world to
commercialize a battery of this kind as an onboard battery for driving. Compared to the batteries used in the previous generation of the Aqua, the output
density has been doubled, giving the car a powerful acceleration sensation. We are currently engaged in development aimed at creating more-advanced
lithium-ion batteries by the second half of the 2020s.

To develop batteries that our customers can use with peace of mind, we focus on producing batteries that balances five factors, which stand out for
their “safety,” have “long service life,” boast “high-level quality,” and are “good yet affordable” as well as capable of “outstanding performance.” For
example, a longer service life affects a vehicle’s residual value. In terms of cruising range, high energy density and high-level performance are also
necessary. On the other hand, over-emphasis on a fast charging speed may increase the danger of overheating or even fire and thus decrease battery
safety. This concept has remained unchanged since batteries were installed in the first-generation Prius, and it applied to all the batteries in all of our
electrified vehicles. Although Toyota is committed to balancing the five factors, too much emphasis on one could be detrimental to

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the others. That is why we believe that the integrated development of batteries and vehicles is essential. How batteries are used depends on how the
vehicles in which they are installed are used. For example, the environments in which vehicles are operated differ according to each vehicle’s mode of
use — for example, if it is being used as a taxi or for commuting — as well as geographic location, and these factors will affect such conditions as
charging frequency and battery temperature. Accordingly, we carry out mock driving tests that assume a diverse range of vehicle usage in order to obtain
data on actual usage environments and provide feedback to inform the evaluation and design of batteries. To determine the balancing point of the five
factors discussed above, it is necessary to obtain driving data that includes driving conditions and usage environments, find out what the conditions
would be like if batteries were used instead, and repeatedly verify what is happening inside the batteries. Such steady and earnest efforts for both
batteries and vehicles are the secret behind Toyota’s advantages.

To popularize BEVs, we strive to reduce costs via the integrated development of vehicles and batteries to provide BEVs at a reasonable price. To
start with, we aim to reduce the costs of batteries themselves by 30% or more by developing materials and structures. Then, for the vehicle, we aim to
improve power consumption, which is an indicator of the amount of electricity used per unit of distance, by 30%, starting with the Toyota bZ4X.
Improved power efficiency leads to reduced requirements for battery capacity, which will result in a cost reduction. Through this integrated development
of vehicles and batteries, we aim to reduce the battery cost per vehicle by 50% compared to the Toyota bZ4X in the second half of the 2020s.

In the near future, the energy density of conventional lithium-ion batteries per unit of weight is expected to see its peak. Accordingly, vigorous
efforts are now under way to develop next-generation lithium-ion batteries, aiming to achieve longer service life, greater energy density, more compact
size, and lower costs. At Toyota, we push ahead with the development of such batteries by employing the following three approaches. For liquid
batteries, which use liquid electrolyte, we are taking on the challenge of realizing “material evolution” and “structural innovation.” At the same time, we
are aiming to commercialize all-solid-state batteries that employ solid electrolyte instead of liquid electrolyte. As such, our wide-ranging development
efforts are aimed at creating three types of batteries, and by the second half of the 2020s, we hope to improve the characteristics of each type so that we
can provide batteries that can be used with peace of mind. With regard to all-solid-state batteries, we promote development aimed at achieving higher
output, longer cruising range, and shorter charging times. In June 2020, we built a vehicle equipped with all-solid-state batteries and conducted test runs
on a test course to obtain driving data. Based on that data, we continued to make improvements, and in August 2020, we obtained license plate
registration for vehicles equipped with all-solid-state batteries and conducted test drives. In the course of the development process, we discovered that
the fast movement of ions within all-solid-state batteries could possibly enable them to achieve higher output. On the other hand, one of the challenges
has been the short service life of batteries. Toyota believes it has discovered a new technology that will improve battery service life. In the future, we
will work on developing a mass production system to address one of the other challenges, namely cost. Furthermore, although Toyota announced in
2021 that the introduction of all-solid-state batteries would start with HEVs, we will instead take on the challenge of practical application in batteries for
BEVs in between 2027 and 2028.

With the rapid expansion of EV usage, we are working to build a flexible system that can stably supply the required volume of batteries at the
required time while meeting the needs of various customers in each region around the world. To this end, we intend to establish needed technologies by
conducting a certain amount of in-house production in the pursuit of our battery development concept of achieving batteries that can be used with peace
of mind. We will then cooperate and collaborate with partners who understand and will put into practice our concept. We will also proceed with
discussions with new partners in some regions. Our approach to production can be described as “starting up using small basic units.” This approach
draws on lessons learned from the global financial crisis. It is difficult to notice latent risks when production is growing. Because of this, we have to take
a risk-controlled approach to growth based on Toyota’s philosophy of “making only what is needed, when it is needed, and only in the amount needed.”
Moreover, Toyota’s strategy of “starting up using small basic units” is also

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meant to enable the company to swiftly respond to changes arising from the arrival of a new technology, which often occurs in the course of a product
cycle when the manufacturing costs for the old model come down and stabilize.

Hydrogen Business
The hydrogen markets in Europe, China, and North America are expected to be among the largest in the near future, and the fuel cell market is
also expected to expand rapidly toward that point. We are promoting external sales of fuel cells using the Mirai’s hydrogen units and have received
offers from third parties to purchase 100,000 units of fuel cells annually by 2030. Most of them are for commercial vehicles.

To respond to the rapid changes in the market, we will establish in July 2023 a new business unit called Hydrogen Factory, which will be able to
make rapid decisions under one leader, from sales to development and production, all at once. The Hydrogen Factory will promote business on three
axes. The first is localizing R&D and production in countries within the major markets. We will accelerate our efforts by establishing local bases, mainly
in Europe and China. The second is strengthening alliances with leading partners. We will do our best to deliver affordable fuel cells to our customers by
consolidating sufficient quantities through alliances. The third is competitiveness and technology. We will work on “innovative evolution of competitive
next-generation fuel cell technologies,” such as next-generation cell technologies and fuel cell systems.

We will work toward full-scale commercialization as we move forward with these initiatives. We expect that our next-generation system will
achieve significant FCEV production cost reduction through technological progress, volume efficiency, and localization. Furthermore, in collaboration
with partners, if we are able to significantly increase the volume of purchase offers for units, we believe we will be able to reduce our costs further and
generate solid profit while meeting the expectations of governments and our many customers. We will work together in development, production, and
sales to achieve this goal.

In addition, the price of hydrogen is still very high. In order to promote the widespread use of hydrogen, Toyota will continue to work with its
partners to contribute to the production, transportation, and usage of hydrogen. The relationships we have built with strong partners will be used as
opportunities to accelerate our efforts to commercialize hydrogen by establishing customer-oriented bases in major markets and by offering affordable
products in sufficient quantities.

As for current FCEVs, we released the completely redesigned Mirai in December 2020. Premised on the use of an FCEV system, the development
of the second generation Mirai was promoted to deliver a futuristic premium car that will be genuinely appreciated and sought after by our customers.
Specifically, we strove to deliver a vehicle that can win drivers’ hearts during and after driving, if not from the moment when they first catch sight of it.
Moreover, Toyota aims to become a fuel cell (“FC”) system supplier supporting the realization of a hydrogen-powered society. In line with this aim, we
provide a variety of business operators with a compact FC system module package that we have developed. This package consists of FC stacks for the
second-generation Mirai, which boast higher performance, as well as air supply, hydrogen supply, cooling, power control and other FC system-related
parts. In North America, we have unveiled a new prototype for an FC commercial heavy-duty truck that uses the second-generation FC system installed
on the new Mirai. This truck boasts considerably improved performance, including more powerful acceleration and flexible driving response.
Furthermore, having attained a maximum loaded weight of 80,000 pounds (approximately 36 tons) and cruising range of 300 miles (more than 480
kilometers), the truck is designed to accommodate a range of commercial truck needs. We intend to conduct the verification testing of this new FC truck
in actual cargo transport operations.

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Development of Hydrogen Engines

Toyota Motor Corporation announced in April 2021 that it is working on the technological development of a hydrogen engine.

Hydrogen engines work like modified versions of conventional gasoline engines, powered by burning hydrogen directly as fuel. The fuel is 100%
pure hydrogen, unmixed with gasoline. As no fossil fuels are burned, except for the combustion of minute amounts of engine oil during driving,
hydrogen-engine vehicles emit nearly no CO2 when in operation. We believe that hydrogen engine technology is thus one option that offers great
potential to contribute to carbon neutrality while making use of technologies for internal combustion engines built up over the decades and also
protecting engine-related employment in the automotive industry.

In late 2020, after taking a test drive in a hydrogen engine prototype car, Master Driver Morizo (Akio Toyoda, then President) decided on the spot
to enter a hydrogen engine car in Super Taikyu Series races. The development of race vehicles is dramatically faster and more agile than that of mass-
production vehicles. We decided that racing would provide the ideal environment for honing our hydrogen engines being developed with the goal of
achieving carbon neutrality.

Looking at the overall route to the market release of a hydrogen engine car, we are currently a little less than halfway there. The finish line is still
far ahead, and there are still many issues to be figured out, but we are steadily moving forward. Over the course of a year of racing with hydrogen
engines, our hydrogen engine technologies and initiatives to use hydrogen have evolved. At the same time, the number of our partners who have joined
our efforts to produce, transport, and use hydrogen has expanded from eight at the starting line to 25 as of August 2022.

With regard to hydrogen production, the range of available energy sources for producing hydrogen has expanded to include solar power from
Yamanashi Prefecture and Namie Town, Fukushima Prefecture; geothermal energy from Obayashi Corporation; lignite from Kawasaki Heavy
Industries, Ltd., Iwatani Corporation, and Electric Power Development Co., Ltd. (“J-Power”); and sewage biogas from Fukuoka City.

To transport hydrogen, Commercial Japan Partnership Technologies Corporation has improved its FC light-duty trucks, changing from a metal
tank to a lightweight resin liner tank that can transport hydrogen at higher pressure, achieving an approximately four-fold increase, as of June 2022, in
the amount of hydrogen transported annually. In addition, as a first step in procuring hydrogen from overseas, hydrogen transported by air to Japan by
Kawasaki Heavy Industries, Iwatani Corporation, and J-Power on a trial basis was used as fuel in Toyota’s hydrogen-powered vehicles.

As for using hydrogen, we are working to improve cars and engines through agile development in the demanding environment of motorsports.
Over a year of racing, our hydrogen engines have evolved significantly, increasing power output by 20%, torque by 30%*, and cruising range by 20%*,
while hydrogen filling time has been reduced from approximately five minutes to 90 seconds* (*figures as of June 30, 2022). We have also raced with a
GR86 modified to use another, nonhydrogen carbon-neutral fuel. The partners who joined us through racing in the Super Taikyu Series are now
accelerating initiatives outside of racing to achieve carbon neutrality. Our efforts to develop hydrogen engine cars are extending beyond Japan. In
August 2022, Morizo put a hydrogen engine car (a GR Yaris) through its paces in a demonstration run during the ninth round of the World Rally
Championship in Belgium. This enabled us to highlight the potential of hydrogen as an option for achieving carbon neutrality in Europe. We also
entered a hydrogen engine car in an endurance race in Thailand in December 2022. Through our efforts to use hydrogen that began with hydrogen
engine vehicles in the Super Taikyu Series races in Japan, and gradual growth in understanding of our assertion that carbon is our enemy, not internal
combustion engines, hydrogen has come to be seen as an option for the future. Going beyond national, regional, and industry borders, we will continue
to push forward with our partners.

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Software and Connected Initiatives

Amid this era identified by CASE, automobile manufacturing requires technological development in such new fields as “electrification,”
“automated driving,” and “connectivity.” Among these fields, software is becoming an important factor in determining product appeal. Today’s cars are
equipped with more than 50 electronic control units, or ECUs, and use as many as 1,000 chips. Furthermore, society has entered the age of the internet
of things, and things being connected has become the norm. Cars are also equipped with communication devices, further advancing their
electronification, and the volume of software (lines of code) used in cars is thus growing ever larger. Facing this major transformation in the automobile
industry, Toyota is paying particular attention to how cellular phones have changed over time. As the shoulder phone evolved into the feature phone and
then into the smartphone, the phone, which had become commoditized, became linked with information, creating new value through new experiences
and quickly spread around the world. This change was supported by software and connected technologies. Due to the CASE revolution, cars are
becoming more deeply connected to communities and people’s lives through information, becoming a more integral part of social systems. At the same
time, Toyota will aim to have cars be more linked to information, and through the movement of people, goods, and things, provide new value through
new experiences and by bringing excitement to customers.

When it comes to the manufacturing of cars, Toyota has a basic stance that has been handed down internally over the years: we stick to our
principles and internalize important elements by attempting to first achieve them on our own. We also continue to introduce improvements on the front
lines to enhance our competitive advantage. Since its founding, Toyota has been producing various production equipment in-house as necessary. In the
1990s, we pursued the in-house design of ECUs and established an electronics plant, a chip plant, and a battery plant. These efforts eventually led to the
commercialization of the Prius, the world’s first mass-produced HEV. Toyota has always maintained a strong awareness of the real world regardless of
the era at hand, pursued our principles, and promoted internalization. That is why in the area of software and connected technologies, we established the
Toyota Research Institute (“TRI”), Woven by Toyota, Inc. (“Woven by Toyota”), and Toyota Connected, and it is why we are working on the
development of the e-Palette, the construction of Woven City as a town for pilot testing, and the development of the Arene platform and other
technologies.

To date, Toyota has sold 20 million Lexus and Toyota vehicles that are connected cars, mainly in Japan, the United States, Europe, and China.
Toyota’s vision of the connected car is not simply one of connecting the car to the internet. Rather, it is about providing customers with emotional
experiences through the movement of people, goods, and activities — a vision centered on people that we call “human connected.” To achieve this, we
are operating a call center as a point of contact with customers; the Toyota Smart Center, which provides a variety of services; and the Toyota Big Data
Center, which utilizes vehicle information gathered from cars. In addition, we have established the Mobility Service Platform (“MSPF”) to provide
mobility services and are promoting collaboration with service providers. Connected cars and connected technologies will be applied to a variety of
areas, and we anticipate that which is to be connected will expand to include people, cars, communities, and society (business-to-society, or BtoS).
Toyota will handle the information gathered from customers and vehicles with care, utilizing it for the happiness of customers and the development of
society while creating new value from experiences centered on mobility.

With the e-Palette BEV used in the Olympic Village for the Olympic and Paralympic Games Tokyo 2020, our goal was to create mobility that
integrates cars and information and that coordinates with the community. During the Games, 49,000 athletes, staff, and volunteers used e-Palette. We
also developed a fleet management system for e-Palettes based on the principles of the TPS to ensure effective, efficient, and accurate operation. The
system monitors the vehicles remotely and operates them in a just-in-time fashion according to the conditions of the surrounding environment and the
number of passengers. All of this was realized via the MSPF that Toyota has been building and refining. In the future, we expect that these technologies
will be applied to the Sienna Autono-MaaS minivan being developed in the United States for use as a robotaxi, and that the MSPF will be used not only
for automated vehicles, but also for regular commercial vehicles and logistics.

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In this way, software has the power to promptly turn ideas into products. The aim of Arene, the vehicle development platform that Toyota and
Woven by Toyota are focused on, is to continue fundamentally changing the development of software for vehicles. The most notable characteristics of
Arene are that it absorbs the differences in vehicle hardware specifications (abstraction) and employs hardware abstraction layers that enable hardware
to be controlled with universal methods. This, in turn, enables the independent development of hardware and software as well as the reuse of software.
Arene leverages the strengths of hardware cultivated by Toyota to achieve the development of safe, high-quality, and advanced software.

Because increasingly complicated software development is becoming a bottleneck for cars, too, there is a need for a revolutionary vehicle
operating system that can solve these issues. The vehicle operating system will achieve TPS in software development as well, and we must continue to
realize combinations of good hardware and software. For example, when developing automated driving software, the on-board software needed for
automated driving actually makes up only a small portion of it; the rest comprises various tools, such as data processing by the machine learning system,
mounting, code review, software updates, log analyses, and simulations. Basically, most of the software we develop is used “off-board” (that is, outside
vehicles) or through the cloud. Arene is used to develop frameworks for vehicle development and development environments based on those
frameworks as well as to build ecosystems for mobility development. Using industry-leading software technologies, we will strive to continue providing
privacy-conscious, secure, and safe cars.

Furthermore, application development on Arene is also easy. We believe partner companies will be able to program applications more efficiently
using Arene’s application programming interface (a mechanism that can share software functions) and software development kit, which includes
simulation environments. In this way, we believe development on Arene will swiftly realize commercialization and enables users to share the fun of
providing new ideas that appeal to customers while meeting the expectations of worldwide partners and developers as well as the Toyota brand’s high-
quality standards.

The portion of a car’s value attributable to software is growing. By internalizing the parts central to Toyota’s future, we will strategically ensure
the strengths of our hardware and software through internal production, compartmentalize development undertaken with partners, and accelerate the
speed of mass production. For these initiatives, we are building a software development structure on a 3,000-person scale for Woven by Toyota, and
Toyota Connected and on a 18,000-person scale when including associates accounted for by the equity method. We are also strengthening the teams
responsible for the internal production and development of software.

Through connected technologies, we can contribute to carbon neutrality by gaining a better understanding of the characteristics of each region in
the form of data and combining this knowledge with realized technologies. For example, according to market data, in Japan, the engine is turned off for
half of all driving time in hybrid electric vehicles, or HEVs, while for plug-in hybrid electric vehicles, or PHEVs, the engine is turned off for as much as
80 percent. We believe HEVs and PHEVs can evolve into environment-friendly vehicles to an even higher degree by upgrading the switching control of
engines and electric motors. In other words, there is room to expand the possibilities of both HEVs and PHEVs.

One mechanism that we believe will enable this is geofencing technology. A portmanteau of geography and fence, geofencing refers to the
combination of navigation and cloud technologies to enable the automatic switching of engine and motor functions in real time to reflect driving
locations and driving times based on geographic data. For example, in zero-emission regulation regions that limit vehicle operation to only BEVs during
certain time periods, geofencing would automatically control the functions of HEVs and PHEVs to ensure compliance with regulations.

Furthermore, geofencing would enable anticipatory eco-driving that switches over to BEV driving as appropriate by predicting the driving burden
based on the driving environment up to the destination. We believe utilizing connected technologies to control HEVs and PHEVs more intelligently will
make it possible to further

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promote energy saving in cars. The new NX features a mechanism that switches to HEV control. We expect that in the near future we will be able to
conduct an over-the-air (“OTA”) update of its software so that it will be able to use geofencing technology.

In October 2021, in advance of introducing geofencing technology that is under development with an eye toward practical application, we
introduced anticipatory eco-driving (anticipatory EV/HEV mode switching control) in the Japanese market. It realizes highly efficient driving by
automatically switching between EV and HEV modes depending on the charge left in the battery and the road conditions and characteristics.

OTA refers to using wireless connections to keep the software (control software and high-precision mapping software) updated to the latest
versions. This means that after a car’s purchase, new functions continue to be added and its performance continues to be enhanced, thereby continuing
the vehicle’s evolution into a safer and more secure car that has the latest driving assistance technology.

For the LS and Mirai launched in Japan in April 2021, we have included cars that feature the latest Advanced Drive function of the newest
sophisticated driving assistance technologies developed by Toyota Teammate/Lexus Teammate, and they are eligible for related software updates on an
ongoing basis. The GR Yaris “Morizo Selection” is a new initiative based on GR Yaris that combines the ROOKIE Racing privateer team run by Morizo
(the racing driver name for Akio Toyoda, our Chairman) and Toyota’s KINTO car subscription. We will continue to evolve each car to best match each
customer by reflecting updates (which are based on feedback and data gained in races participated in by Morizo and ROOKIE Racing) and
personalization (which is based on customer driving data) in the software in GR Garage shops through wired connections (not OTA). Furthermore, we
offer better driving methods and support the enhancement of driving skills. Through this, we strive to realize cars that evolve to suit people by updating
to the latest software in line with each customer.

Cars have a wide range of applications, from passenger cars to MaaS and commercial vehicles, and we will continue to expand the regions where
we operate going forward. Needs are increasingly diversifying, and cars can be used in a myriad of ways to meet them. Our efforts thus encompass
people’s problems and social issues, smiles and joy, and needed technological development.

The automobile industry must move people while also achieving coexistence with local communities. For the future and for children, the Toyota
family of companies is working on producing happiness for all through freedom of movement for all and the provision of exciting experiences. We will
continue to enhance the excitement that can be experienced by being able to move by combining real cars and the power of software. If we combine
innovation with technology, we expect that the value of cars will be enhanced further. We will also contribute to the further development of society by
going beyond the borders of cars and contributing to community building and the creation of society-wide platforms.

Efforts in Realizing a Safe Mobility Society

For Toyota to achieve its ultimate goal of eliminating traffic accident causalities, the development of safe vehicles is of course important, but it is
also essential to educate people, including drivers and pedestrians, and to ensure safe traffic infrastructure, including traffic signals and roads. To achieve
a safe mobility society, Toyota believes it will be important to implement an integrated three-part initiative involving people, vehicles, and the traffic
environment, as well as to pursue real-world safety by learning from actual accidents and incorporating that knowledge into vehicle development.
“Integrated Safety Management Concept” is Toyota’s basic philosophy behind its technologies for eliminating traffic casualties and is moving forward
with development.

Toyota provides optimized driver support at every stage of driving, from parking to normal operation, the moment before a collision, during a
collision, and post-collision emergency response. We also aim to enhance safety by strengthening inter-system coordination, rather than considering
each system separately. These are the approaches behind our Integrated Safety Management Concept.

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With regards to active safety, the Toyota Safety Sense system packages multiple active safety functions based around three major functions
considered effective in reducing serious traffic accidents causing death or injury. These are Pre-Collision Safety, which helps avoid and mitigate damage
from collisions with cars ahead or pedestrians; Lane Departure Alert, which contributes to preventing accidents caused by leaving the lane of travel; and
Automatic High Beam, which helps ensure clear sight in front of the vehicle at night. Since its market launch in 2015, Toyota Safety Sense has been
installed in more than 38 million vehicles globally as of March 2023. Toyota Safety Sense is now available on nearly all passenger car models (as
standard or an option) in the Japanese, United States, and European markets. It has also been introduced in a total of 120 countries and regions,
including such key markets as China, other select Asian countries, the Middle East and Australia.

Another important concept is passive safety. In the context of automobiles, passive safety combines a body structure that absorbs collision energy
with support to protect vehicle occupants to minimize collision damage. In 1995, in the pursuit of world-leading safety, Toyota created its own stringent
internal target related to passive safety performance called “Global Outstanding Assessment (“GOA”)” and developed a collision-safety body structure
and passenger protection devices. Since then, to maintain its leadership in this field, Toyota has continued to evolve GOA, striving to improve the real-
world safety performance of its vehicles in a wide variety of accidents.

In addition, to analyze vehicle-related injuries, Toyota collaborated with Toyota Central R&D Labs., Inc. to develop the Total Human Model for
Safety (“THUMS”), a virtual human body model. THUMS is being used in the research and development of a variety of safety technologies, including
seat belts, airbags, and other safety equipment, as well as vehicle structures that mitigate injuries in accidents involving pedestrians. Toyota made
THUMS freely available through its website in January 2021 in the hope that it will be used by more people across more applications.

Every minute counts in the response to an accident or medical emergency. In the event of an accident or medical emergency, Toyota’s HELPNET®
emergency reporting system service contacts a dedicated operator who will arrange for the rapid dispatch of emergency vehicles from police, fire
department, or emergency services. Specifically, HELPNET® automatically contacts an operator when the airbags deploy and supports D-Call Net®, a
service that makes quick deployment decisions for air ambulances. This service is provided by sending vehicle data to the HELPNET center from an
on-board data communication module.

Toyota has been engaged in the research and development of automated driving technologies since the 1990s. The Mobility Teammate Concept is
an automated driving concept unique to Toyota that seeks to enhance communication between drivers and their cars, enabling them to assist one another
in coordinated driving as companions. Rather than cars taking over driving from people and replacing them, we believe that drivers and cars can act as
partners to protect one another, so that drivers can enjoy the experience of driving while deferring to automated driving at times, and thereby achieving
truly safe, secure and unrestricted mobility.

The Lexus LS and Mirai models launched in April 2021 are equipped with “Toyota/Lexus Teammate state-of-the-art” driving assist technology,
with some grades including Advanced Drive, a system that assists driving on an expressways or other motor-vehicle-only roadways. The Advanced
Drive on-board system will appropriately detect the vehicle’s surroundings, make decisions, and assist driving under the driver’s supervision according
to actual traffic conditions. It can keep the vehicle in its lane, maintain the distance from other vehicles, navigate a lane split, change lanes, and overtake
other vehicles until leaving the roadway for the destination. The system achieves high levels of safety and peace of mind, reducing driver fatigue and
providing a pleasant journey to the driver’s destination.

Deep learning-focused AI technologies support driving by predicting and responding to a wide variety of situations that could occur when driving.
In addition, Advanced Drive is capable of Over-the-Air upgrades, and occasional software updates may be issued. The system continues to add features
and improve performance to enhance the driving experience and provide the latest safety technologies even after the vehicle has been delivered to the
customer.

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Cars have many uses, and customer needs continue to diversify. Accordingly, Toyota is advancing R&D into automated driving technologies not
only for personally owned vehicles (“POVs”), but also in the field of MaaS. Toyota is one of the first companies to launch advanced automated driving
technology for vehicles sold to corporate customers. Data collected from these vehicles will then be collected, analyzed, and fed back into development
to further evolve automated driving technologies for POVs.

Toyota carries out awareness-raising initiatives for drivers and pedestrians to help prevent traffic accidents. One such initiative for drivers is the
Toyota Driver Communication safe driving technique seminar held periodically at Toyota Safety Education Center Mobilitas, on the grounds of Fuji
Speedway. For pedestrians, in cooperation with Toyota dealers across Japan, Toyota has been donating traffic safety teaching materials to kindergartens
and nursery schools nationwide since 1969.

Commercial Sector Initiatives

Since the establishment together with other companies of the Commercial Japan Partnership Technologies (“CJPT”) joint venture in April 2021,
Toyota has been working to disseminate CASE technologies in the commercial sector and thereby contribute to the realization of carbon neutrality.

CASE technologies can only contribute to society once they become widespread. Commercial vehicles can play important roles in CASE
technology dissemination, as they travel long distances for extended periods of time to support the economy and society and can be easily linked with
infrastructure development. By combining the commercial vehicle foundations of the companies participating in CJPT with Toyota’s CASE
technologies, the companies aim to accelerate the societal implementation and adoption of CASE technologies and services and thereby help address
social issues and contribute to the realization of carbon neutrality.

Distribution by truck accounts for the vast majority of overland logistics in Japan, and the transportation sector (including buses and taxis)
involves a significant number of people. Commercial vehicles account for a significant amount of the total distance traveled by automobiles and CO2
emissions from automobiles in Japan. Furthermore, the logistics companies operating in Japan currently face numerous management issues, such as
high-frequency distribution, harsh work environments, labor shortages, and rising burdens on workers. The power of CASE, centered on connected
technologies and services, is a promising approach to effecting improvements that will help resolve these issues.

Solving these kinds of social issues is not something that one company can accomplish alone. It is necessary to seek a wide range of like-minded
partners, apply their different strengths, and work together for the sake of those supporting transportation and for society.

As many of Japan’s roads are so narrow that only mini-vehicles can easily use them, mini-vehicles are collectively a kind of “people’s car,” made
to suit the roads of Japan. They are a practical and sustainable lifeline for people across the country and have continued to evolve alongside changing
lifestyles. Similarly, commercial mini-vehicles are able to effectively cover areas that their small size makes accessible, supporting logistics operations
mainly in the last mile.

We expect that expanding the CJP project to include mini-vehicles will enable efficient, integrated logistics, linking the main arteries of logistics
(handled by trucks) with the capillaries of logistics (the domain of commercial mini-vehicles) while leveraging connected technologies and abundant
data. This new collaboration is also aimed at promoting the broader use of affordable advanced safety technologies and electrification by leveraging
Suzuki and Daihatsu’s strengths in high-quality, low-cost manufacturing and Toyota’s CASE technologies.

Our efforts to achieve carbon neutrality center on two pillars: electrification and improving logistics efficiency.

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Amid pressure to enhance cost competitiveness, maintaining a competitive edge in the area of commercial vehicle electrification is increasingly
challenging. Competitiveness increasingly hinges on connected technologies and uses of batteries and other technologies. Accordingly, manufacturers
must step up the unique added value that they offer.

We believe that improving transport efficiency will contribute greatly to realizing carbon neutrality. The companies that are participating in CJPT
will link their connected technology platforms to build a more comprehensive platform for commercial vehicles and leverage the TPS, one of Toyota’s
strengths, to realize JIT logistics and increase transport efficiency, thereby helping to reduce CO2 emissions. Using connected technologies to link
logistics from the major arteries to the fine capillaries, and from producers to consumers, using truck logistics and local mini-vehicle-based distribution,
JIT logistics have the potential to lower running costs for logistics vendors and sustainably improve logistics.

In collaboration with its partners, CJPT began the construction and social implementation of an energy management system (“EMS”) in
Fukushima Prefecture and Tokyo in January 2023 to promote the widespread use of electrified vehicles.

The introduction of commercial electric vehicles imposes an increasing burden on society as a whole, not only in terms of vehicle purchase, but
also in terms of downtime for cargo and vehicles due to recharging and hydrogen filling and an increase in peak electricity demand at business sites due
to the concentration of recharging at certain times.

A total of 580 commercial electrified vehicles will be used in this social implementation project, including heavy- and light-duty fuel cell electric
trucks, light-duty BEV trucks, and mini-commercial van BEVs, to comprehensively cover transportation from trunk lines to the last mile. In addition,
the use of an EMS that is integrated with commercial vehicle operation management will help reduce the overall burden on society and CO2 emissions.
At the project in Fukushima, we are working to create an implementation model focusing on hydrogen use in cities with populations of around 300,000,
a common city size for Japan, with the aim of applying the model to similar-sized cities nationwide.

In addition, CJPT is working with AEON KYUSHU Co., Ltd. and AEON GLOBAL SCM Co., Ltd. on a logistics improvement project for the
AEON Group in the Kyushu area that will solve problems faced by the logistics industry, such as soaring logistics costs and driver shortages.

By combining the logistics expertise built up by AEON KYUSHU and AEON GLOBAL SCM with the connected technologies of the companies
participating in CJPT, the project aims to (1) establish new operations to improve efficiency by linking each process in the supply chain, (2) improve
efficiency by minimizing logistics downtime through the use of big data and real-time processing on connected technology infrastructure and
(3) promote collaboration with a wide range of partners to achieve these initiatives.

Going forward, through the CJP project, the participating companies will deepen their collaboration while openly considering cooperation with
other like-minded partners, working to help fulfill the automotive industry’s mission of helping improve people’s lives and leave a better Japan and a
better planet for the next generation.

Woven City
The Woven City project, first announced in January 2020, officially broke ground on February 23, 2021. Woven City will demonstrate cutting
edge technologies in such areas as automated driving, MaaS, personal mobility, robotics, smart homes, and artificial intelligence in a real living
environment. By rapidly implementing development and demonstration cycles of technologies and services in this human-centered city, we aim to
continue to produce new value and business models by utilizing the mobility of “information,” “goods,” and “people” to support daily life.

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Woven City will be constructed on the site of Toyota Motor East Japan’s former Higashi-Fuji Plant, which was a pillar of production for Toyota
for 53 years, starting in 1967. At its peak, the plant had 2,000 employees, and a total of 7,000 individuals worked there over its history, producing such
vehicles as the Toyota Century, Toyota’s flagship chauffeur car infused with Toyota craftsmanship, and the JPN Taxi, a car that requires many times the
durability of an ordinary passenger car.

The concept for Woven City can be traced back to the Great East Japan Earthquake in 2011. As our President, Akio Toyoda sought to create jobs
for the region’s people, who were hit hardest by the disaster, by creating a third base of operations in the Tohoku region. Guided by his strong
leadership, Toyota established Toyota Motor East Japan, Inc. in 2012. However, this also led to the difficult decision to close the Higashi-Fuji Plant.
Looking for a way to carry on the Higashi-Fuji Plant’s legacy of manufacturing to help create future mobility for the next 50 years, he arrived at the idea
of transforming the site into a connected city as a large-scale demonstration experiment.

At Woven City, we aim to make people happy by expanding what mobility can do for human beings and building systems that will create novel
value. In addition to the mobility of people, goods, and information, we emphasize that mobility also has an emotional component and represents
feelings, such as being moved. Through mobility that connects human hearts, Woven City will help us invent the technologies and services that will
become the future fabric of life, constantly evolving alongside the inventors who live there and our partners.

Woven City is a test course for mobility, enabling us to rapidly implement development and demonstration cycles for diverse forms of mobility in
both the virtual and the real world. For example, to achieve safe mobility, Woven City will comprise three types of roads, woven together like warp and
weft: paths for people, roads shared by people and personal mobility devices, and roads for autonomous vehicles. We will use these roads to advance the
integrated three-part development of automated driving at the levels of people, vehicles, and the traffic environment. Guided by the three concepts of
“human-centered,” “a living laboratory,” and the “ever-evolving city,” Woven City will demonstrate technologies from logistics to energy, food, and
agriculture as it grows into a test course conducive to the timely generation of new inventions that address social issues.

One such initiative is the hydrogen refueling station to be built by ENEOS adjacent to Woven City. The station will produce CO2-free hydrogen
for supply to both FCEVs and to Woven City. Using Woven City as a living laboratory, we will demonstrate a supply chain across the production,
transportation, and use of hydrogen, taking new steps toward achieving carbon neutrality. The name “Woven City” comes from Toyota’s origins in
automatic looms. Sakichi Toyoda, the founder of the Toyota family of companies, was driven to invent an automatic loom out of a desire to make his
mother’s work easier. We have guarded and nurtured this spirit of service to others ever since. Woven City will take up this commitment from the
Higashi-Fuji Plant, growing and evolving as the foundation for a new era at Toyota.

Financial Services
Toyota’s financial services include loan programs and leasing programs for customers and dealers. Toyota believes that its ability to provide
financing to its customers is an important value-added service. In July 2000, Toyota established a wholly-owned subsidiary, Toyota Financial Services
Corporation, to oversee the management of Toyota’s finance companies worldwide, through which Toyota aims to strengthen the overall
competitiveness of its financial business, improve risk management and streamline decision-making processes. Toyota has expanded its network of
financial services, in accordance with its strategy of developing auto-related financing businesses in significant markets. Accordingly, Toyota currently
operates financial services companies in 43 countries and regions, which support its automotive operations globally.

Toyota’s sales revenues from its financial services operations were ¥2,809.6 billion in fiscal 2023, ¥2,324.0 billion in fiscal 2022 and
¥2,162.2 billion in fiscal 2021. While there were negative factors in fiscal 2023, such as supply constraints on new cars due to the ongoing tight global
semiconductor supply relative to

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demand, and increased competition with other financial institutions, Toyota’s business saw steady growth mainly due to the higher interest rates on
customer loans rate on the back of rising global interest rates and accumulated balance of earning assets resulting from enhanced used-vehicle financing.
Under such circumstances, as a result of Toyota’s continued collaboration with dealers in various countries and regions and efforts to expand products
and services that meet customer needs, Toyota’s share of financing provided for new car sales of Toyota and Lexus vehicles in regions where Toyota
Financial Services Corporation operates remained at a high level of approximately 30%, and the balance of earning assets continued to steadily increase.
In addition, Toyota is making efforts to provide both its customers and dealers with stable financial services by diversifying its funding methods through
direct financing from the market, such as ABCP (Asset Backed Commercial Paper) and ABS (Asset Backed Securities), in addition to using already
existing means as commercial paper, corporate bonds and bank borrowings. Furthermore, Toyota continued to perform detailed credit appraisals and
serve customers by monitoring bad debt and loan payment extensions, but the percentage of credit losses rose to 0.17% and 0.30% in fiscal 2022 and
2023, respectively, due to inflation and rising interest rates. Toyota continues to work towards improving its risk management measures in connection
with credit and residual value risks.

Toyota Motor Credit Corporation is Toyota’s principal financial services subsidiary in the United States. Toyota also provides financial services in
42 other countries and regions through various financial services subsidiaries, including:
• Toyota Finance Corporation in Japan;
• Toyota Credit Canada Inc. in Canada;
• Toyota Finance Australia Ltd. in Australia;
• Toyota Kreditbank GmbH in Germany;
• Toyota Financial Services (UK) PLC in the United Kingdom;
• Toyota Leasing (Thailand) Co., Ltd. in Thailand; and
• Toyota Motor Finance (China) Co., Ltd. in China.

Toyota Motor Credit Corporation provides a wide range of financial services, including retail financing, retail leasing, wholesale financing and
insurance. Toyota Finance Corporation also provides a range of financial services, including retail financing, retail leasing and credit cards. Toyota’s
other finance subsidiaries provide services including retail financing, retail leasing and wholesale financing.

The KINTO subscription service, which started in Japan in 2019 in response to the shift from “owning” cars to “using” cars, has been steadily
enhancing its service lineup and gaining brand awareness. In Europe, full service leasing is being made available in wider areas. Furthermore, Toyota
developed and provides customers with the payment application “TOYOTA Wallet” as a platform that contributes to improving the convenience of
customers’ daily payments and creating a foundation for a mobility society.

Finance receivables for all of Toyota’s dealer and customer financing operations were ¥24,770.8 billion as of March 31, 2023, representing an
increase of 13.8% as compared to the previous year. The majority of Toyota’s financial services are provided in North America. As of March 31, 2023,
56.9% of Toyota’s finance receivables were derived from financing operations in North America, 14.0% from Europe, 12.0% from Asia, 6.3% from
Japan and 10.8% from other areas.

Approximately 40% of Toyota’s unit sales in the United States during fiscal 2023 included a finance or lease arrangement with Toyota. Because
the majority of Toyota’s financial services operations are related to the sale of Toyota vehicles, a decrease in vehicle unit sales may lead to a contraction
of Toyota’s financial services operations.

The worldwide financial services market is highly competitive. Toyota’s competitors in retail financing and retail leasing include commercial
banks, credit unions and other finance companies. Commercial banks and other

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automobile finance subsidiary companies serving their parent automobile companies are competitors of Toyota’s wholesale financing activities.
Competitors in Toyota’s insurance operations are primarily national and regional insurance companies.

For information on Toyota’s finance receivables and operating leases, please see “Item 5. Operating and Financial Review and Prospects — 5.A
Operating Results — Financial Services Operations.”

Retail Financing
Toyota’s finance subsidiaries acquire new and used vehicle installment contracts primarily from Toyota dealers. Installment contracts acquired
must first meet specified credit standards. Thereafter, the finance company retains responsibility for installment payment collections and administration.
Toyota’s finance subsidiaries acquire security interests in the vehicles financed and can generally repossess vehicles if customers fail to meet their
contractual obligations. Almost all retail financings are non-recourse, which relieves the dealers from financial responsibility in the event of
repossession. In most cases, Toyota’s finance subsidiaries require their retail financing customers to carry automobile insurance on financed vehicles
covering the interests of both the finance company and the customer.

Toyota has historically sponsored, and continues to sponsor, special lease and retail programs by subsidizing below market lease and retail
contract rates.

Retail Leasing
In the area of retail leasing, Toyota’s finance subsidiaries acquire new vehicle lease contracts originated primarily through Toyota dealers. Lease
contracts acquired must first meet specified credit standards after which the finance company assumes ownership of the leased vehicle. The finance
company is generally permitted to take possession of the vehicle upon a default by the lessee. Toyota’s finance subsidiaries are responsible for contract
collection and administration during the lease period. The residual value is normally estimated at the time the vehicle is first leased. Vehicles returned to
the finance subsidiaries at the end of their leases are sold by auction. For example, in the United States, vehicles are sold through a network of auction
sites, as well as through the Internet. In most cases, Toyota’s finance subsidiaries require lessees to carry automobile insurance on leased vehicles
covering the interests of both the finance company and the lessee.

Wholesale Financing
Toyota’s finance subsidiaries also provide wholesale financing primarily to qualified Toyota dealers to finance inventories of new Toyota vehicles
and used vehicles of Toyota and others. The finance companies acquire security interests in vehicles financed at wholesale. In cases where additional
security interests would be required, the finance companies take dealership assets or personal assets, or both, as additional security. If a dealer defaults,
the finance companies have the right to liquidate any assets acquired and seek legal remedies.

Toyota’s finance subsidiaries also make term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working
capital requirements. These loans are typically secured with liens on real estate, other dealership assets and/or personal assets of the dealers.

Insurance
Toyota provides insurance services in the United States through Toyota Motor Credit Corporation’s wholly owned subsidiary, Toyota Motor
Insurance Services, Inc. (“TMIS”) and its wholly owned insurance company subsidiaries. Their principal activities include marketing, underwriting and
claims administration. TMIS also provides coverage related to vehicle service agreements through Toyota dealers to customers. In addition, TMIS also
provides coverage and related administrative services to affiliated companies of Toyota Motor Credit Corporation. Toyota dealers in Japan and in other
countries and regions also engage in vehicle insurance sales.

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Other Financial Services

Toyota Finance Corporation launched its credit card business in April 2001 and began issuing Lexus credit cards in 2005 when the Lexus brand
was introduced in Japan. As of March 31, 2023, Toyota Finance Corporation has 15.7 million card holders (including Lexus credit card holders).

All Other Operations

In addition to its automotive operations and financial services operations, Toyota is involved in a number of other non-automotive business
activities. Sales revenues for these activities totaled ¥1,224.9 billion in fiscal 2023, ¥1,129.8 billion in fiscal 2022, and ¥1,052.3 billion in fiscal 2021.

Governmental Regulation, Environmental and Safety Standards

Toyota is inevitably required to comply with the regulations applied to its products relating to the emission levels, fuel economy, noise, safety and
so on. In addition, Toyota is subject to laws in various jurisdictions regulating the levels of pollutants generated by its plants. Toyota has incurred
significant costs in complying with these laws and regulations and expects to incur significant compliance costs in the future. Toyota’s management
views leadership in environmental protection as an important competitive factor in the marketplace.

International Harmonization of Vehicle Regulations

The World Forum for Harmonization of Vehicle Regulations (“WP.29”) of the United Nations Economic Commission for Europe (“UNECE”) has
developed certain international rules and regulations such as the UN Regulations (“UNR”) under the 1958 Agreement and the Global Technical
Regulations (“GTR”) under the 1998 Agreement and has been working to promote international harmonization of the technical prescriptions for the
construction and approval of wheeled vehicles. The UNR has been adopted in jurisdictions such as Japan, EU and Russia, and each participating party’s
type approvals are mutually recognized under the 1958 Agreement. The parties to the 1998 Agreement include the U.S., China and India in addition to
Japan, the EU and Russia, and 23 Global Technical Regulations have been established to date. As the progress of the international harmonization of
technical prescriptions will lead to the reduction of the variations in product specifications from country to country, it is expected to lead to greater
efficiency in Toyota’s product development.

Vehicle Emissions
Japanese Standards
The Air Pollution Control Act of Japan and the Road Transport Vehicle Act and the Act Concerning Special Measures for Total Emission
Reduction of Nitrogen Oxides and Particulate Matter from Automobiles in Specified Areas regulate vehicle emissions in Japan. In recent years, in
addition to the strengthened regulations on particulate matters emitted from gasoline-fueled vehicles, as can be seen from the adoption of the Worldwide
Harmonized Light Vehicles Test Cycle (“WLTC”) driving cycles and the introduction of the Real Driving Emission (“RDE”), more stringent regulations
have been decided to be introduced to match the European Standards. Moreover, both the Noise Regulation Act and the Road Transport Vehicle Act
provide for noise reduction standards on automobiles in Japan.

U.S. Federal Standards

The federal Clean Air Act directs the Environmental Protection Agency (“EPA”) to establish and enforce air quality standards, including emission
control standards on passenger vehicles, light-duty trucks and heavy-duty vehicles. Manufacturers are not permitted to sell vehicles in the United States
that do not meet the standards. In March 2014, the EPA finalized new “Tier 3” tailpipe emission and evaporative emission standards for passenger
vehicles, light-duty trucks, medium-duty passenger vehicles and some heavy-duty vehicles. Under the rule,

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tailpipe emission standards for volatile organic compounds, carbon monoxide, nitrogen oxides, and particulate matter, as well as standards for
evaporative emissions and guaranteed useful life (which relates to a vehicle’s ability to meet emission limits over time), would become increasingly
stringent in phases from model years 2017 to 2025. The rule brought federal emission standards for these pollutants in line with California’s emission
standards. The new Tier 3 rule also required reductions in gasoline’s sulfur content beginning in model year 2017. In April 2023, new Tier 4 emission
standards were proposed for passenger vehicles, light-duty trucks, medium-duty passenger vehicles and some heavy-duty vehicles from model year
2027 onwards, including more stringent emissions standards than those for California.

California Standards
Under the federal Clean Air Act, the State of California has been permitted to establish its own vehicle emission control standards if it receives a
waiver from the EPA that allows the California standards to preempt less-stringent federal standards. The EPA granted such a preemption waiver to
California in January 2013. The waiver provides a legal basis for California’s Advanced Clean Cars (“ACC”) program.

In January 2012, the California Air Resources Board (“CARB”) adopted the ACC program. The ACC program, developed in coordination with the
EPA and the federal National Highway Traffic Safety Administration (“NHTSA”), includes Low-Emission Vehicle (“LEV”) regulations, known as the
LEV III regulations, that reduce emissions of smog-causing pollutants (volatile organic compounds, carbon monoxide, nitrogen oxides and particulate
matter) and greenhouse gases from passenger cars and light-duty trucks for model years 2015 to 2025. The regulations include standards for evaporative
emissions and guaranteed useful life as well.

The ACC program also includes a mandate for zero-emission vehicles. Pursuant to the mandate, CARB requires that a specified percentage of a
manufacturer’s passenger cars and light-duty trucks sold in California be “zero-emission vehicles” (vehicles producing no emissions of regulated
pollutants) (“ZEV”), as well as permits certain advanced technology vehicles such as PHEVs, and alternative fuel vehicles that meet “partial
zero-emission vehicles requirements,” to be granted partial qualification as BEVs or FCEVs. Toyota’s MIRAI qualifies as a zero-emission vehicle. The
current Prius Prime has been certified as a partial zero-emission vehicle. Toyota intends to continue to develop additional advanced technologies and
alternative fuel technologies that will allow other vehicles to qualify as zero-emission vehicles or partial-zero-emission vehicles.

The Advanced Clean Cars II (“ACC II”) regulations will go before the CARB on June 9, 2022. ACC II includes LEV IV regulations that would
further reduce emissions from light- and medium-duty vehicles, and an expanded mandate that would increase the percentage of ZEV vehicles that
manufacturers must sell in California. The new LEV IV regulations and expanded ZEV mandate would apply to model years 2026 – 2035.

California has adopted regulations that require that On-Board Diagnostics (“OBD”) systems be incorporated into the computers of vehicles sold in
California. OBD systems monitor components that can affect the emission performance of a vehicle and, if a problem with a component is detected,
illuminates a warning light on the vehicle’s instrument panel. The systems also store the malfunction information in the computer to facilitate repairs.
California’s OBD regulations are the most stringent in the world. In addition, in November 2022, the CARB adopted the ACC II program covering
model years 2026 to 2035. The ACC II program consists of two parts. The first is regulations on zero-emission vehicles. Under the California
Governor’s Order of 2020 (N-79-20), all new vehicles sold in California will be zero-emission vehicles by 2035. The second is the LEV (Low Emission
Vehicle) 4 regulation, which strengthens emission standards for volatile organic compounds, carbon monoxide, nitrogen oxide, and particulate matter
from passenger vehicles and light-duty trucks, except for ZEVs, and guaranteed service life, as well as evaporative emission standards.

Other States’ Standards

Seventeen states (Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Nevada,
Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and

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Washington) have adopted regulations substantially similar to California’s low-emission vehicle requirement, and 15 of these have adopted California’s
zero-emission vehicle requirement. As of November 2022, according to CARB, Minnesota, Nevada, New Mexico and Virginia are planning to introduce
California low-emission vehicle emissions regulations.

Canadian Standards
Canada has finalized vehicle emission standards equivalent to the federal standards in the United States in October 2014, in response to the
strengthening of the federal vehicle emission standards in the United States applicable to model years 2017 to 2025. Furthermore, certain Canadian
provinces are currently considering enacting their own regulations. On January 11, 2018, the Ministry of Sustainable Development, Environment and the
Fight against Climate Change of the Province of Quebec issued regulations on zero-emission vehicles including BEVs, FCVs and PHEVs, among
others. In November 2018, the premier of British Columbia announced that the government would introduce legislation concerning zero-emission
vehicles (indicating the phase-in introduction starting from model year 2020). Canada also adopted a more stringent fuel rule, which is based on the fuel
rule in the United States, that reduces refineries’ annual average sulfur concentration of gasoline to 10mg/kg from 2017 with a new addition of credit
system to secure compliance. In December 2022, Environment and Climate Change Canada submitted a proposal to regulate zero-emission vehicles
from model years 2026 to 2035. The proposal incorporates Transport Canada’s declaration in July 2021 that it will introduce 100% zero emissions for
light-duty passenger vehicles and light-duty trucks sold after 2035.

European Standards
In 2007, the European Parliament adopted more stringent emission standards for passenger vehicles and light commercial vehicles. The effective
date for phasing in these stricter standards for passenger vehicles was September 2014 for Euro 6. For light commercial vehicles, the effective date was
September 2015 for Euro 6.

The primary focus of Euro 6 is to limit further emissions of diesel-powered vehicles and bring them down to a level equivalent to gasoline-
powered vehicles. The EU is now implementing the RDE regulations, which require manufacturers to conduct on-road emissions tests using portable
emissions testers to demonstrate compliance. Since September 2017, manufacturers have been required to reduce the divergence between the regulatory
limit tested in laboratory conditions and the values of RDE tests, and this divergence factor was made more stringent for all new vehicles effective
January 2021. The EU is now also implementing the Worldwide harmonized Light vehicles Test Procedure (“WLTP”), which was introduced on
September 1, 2017. The OBD regulations have also been tightened in terms of both subject parts and regulatory values. Effective January 1, 2019, the
EU implemented an improved WLTP that purports to eliminate test flexibilities and introduces on-board fuel and energy consumption monitoring
devices.

Discussions are currently underway for Euro 7, which will be more stringent than Euro 6. The European Commission expects to publish the Euro
7 proposed limits in the third quarter of 2022.

Chinese Standards
The next-generation emissions regulations for passenger vehicles, or Level 6 Emissions Regulations (China 6), were issued as GB18352.6-2016 at
the end of 2016, pursuant to which tighter requirements will be implemented in two steps, depending on the regulated subjects and the implementation
timing. Specifically, China 6a will apply to all models to be sold or registered in July 2020 and beyond, and China 6b will apply to all models to be sold
or registered in July 2023 and beyond. China 6b will also introduce the RDE Regulations adopted under Euro 6. The OBD regulations have also been
tightened in terms of both subject parts and regulatory values. With respect to fuels in the market, the quality standards and the implementation from
January 2019 for China 6 gasoline fuel and China 6 diesel fuel have been provided in GB17930-2016 and GB19147-2016 so as to keep up with the
implementation timing of China 6 emissions regulations. Moreover, for some areas

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where the air quality improvement is an urgent necessity, China 6 was implemented ahead of the implementation throughout China. Discussions are
currently underway for Level 7 Emissions Regulations (“China 7”), which will be more stringent that the China 6 Emissions Regulations.

For heavy-duty diesel-powered commercial vehicles, pursuant to GB17691-2005, the China V Emissions Regulations are being implemented from
July 2017. With the establishment of GB17691-2018, which provides next-level China VI Emissions Regulations (“China VI”), it has been decided that
China Via will be implemented from July 2021 and China Vib from July 2023 (these regulations will apply to gas-fueled vehicles and public vehicles for
urban areas earlier than those dates). For heavy-duty gasoline-powered commercial vehicles, pursuant to GB14762-2008, Level IV Emissions
Regulations (“China IV”) apply to new models after July 2012. After the first day the regulation is implemented to a new model, all new models
released during the following one-year period also become subject to the regulation. Tightening of the next-generation emissions regulations (China V
and China VI) is currently considered for heavy-duty gasoline-powered commercial vehicles.

Standards of Other Countries or Regions

In particular, in India, given the worsening air pollution, in December 2015, the Supreme Court banned the registration of diesel cars with engines
that are two liters or larger in the National Capital Region, including the Delhi metropolitan area. In August 2016, the ban on registration was lifted on
the condition that a deposit equal to 1% of the vehicle’s retail price is to be paid to the Environment Pollution Control Authority. Furthermore, the
government accelerated the implementations of BS-6 (equivalent to EURO6) to 2020. Moreover, Thailand has also decided to introduce regulations
equivalent to Euro 5 and Euro 6.

Vehicle Fuel Economy

Japanese Standards
The Act on Rationalizing Energy Use and Shifting to Non-fossil Energy requires automobile manufacturers to improve their vehicles to meet
specified fuel economy standards. Fuel economy standards are established according to the types of vehicles, and are required to be met by either fiscal
2011 (April 2010-March 2011), fiscal 2016 (April 2015-March 2016), fiscal 2021 (April 2020-March 2021), fiscal 2023 (April 2022-March 2023),
fiscal 2026 (April 2025-March 2026) or fiscal 2031 (April 2030-March 2031). From 2020, if the WLTC mode is applied as a vehicle emissions test
cycle, fuel economy test must be also conducted based on the WLTC mode.

U.S. Standards
The Federal Motor Vehicle Information and Cost Savings Act requires automobile manufacturers to comply with CAFE standards. A manufacturer
is subject to substantial civil penalties if, in any model year, its vehicles do not meet the CAFE standards. Manufacturers that exceed the CAFE
standards earn credits determined by the difference between the average fuel economy performance of their vehicles and the CAFE standards. Credits
earned for the five model years preceding the current model year, and credits projected to be earned for the next three model years, can be used to meet
CAFE standards in a current model year.

In December 2011, the EPA and the NHTSA issued a joint proposed rule to further reduce greenhouse gas emissions and improve fuel economy
for passenger cars, light-duty trucks and medium-duty passenger vehicles for model years 2017 through 2025. Pursuant to the rule, which was finalized
in August 2012, these vehicles would be required to meet an estimated combined average emission level of 163 grams of carbon dioxide per mile in
model year 2025, equivalent to 54.5 miles per gallon if these requirements are met through improvements in fuel economy standards. At the same time,
the NHTSA issued CAFE standards for passenger vehicles and light-duty trucks that would require manufacturers to meet an industry average fuel
economy level of 49.6 miles per gallon in model year 2025.

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Under the Trump Administration, the EPA and the NHTSA proposed less stringent greenhouse gas emission standards and CAFE standards, and
the withdrawal of California’s waiver to issue its own, more stringent greenhouse gas emission standards under the LEV III program. However, under
the Biden Administration, the EPA and the NHTSA withdrew these proposed greenhouse gas emission standards and CAFE standards, and in March
2022, the EPA reinstated California’s authority to enforce its own greenhouse gas emissions standards.

On December 30, 2021, the EPA issued a final rule revising passenger car and light-duty truck greenhouse gas emissions standards for model
years 2023 through 2026. The new rule is based on Presidential Executive Order 13990 and is more stringent compared to the Safer Affordable Fuel
Efficient (“SAFE) Vehicles Rule issued in April 2020 which temporarily relaxed the greenhouse gas emissions rate to 1.5% per year. The new rule
reduces greenhouse gas emissions, year-over-year, by 10% for model year 2023, 5% for 2024, 6.6% for 2025, and more than 10% for 2026. Based on
these reductions, the industry-wide average emission targets for passenger cars and light-duty trucks is projected by the EPA to be 161 grams of carbon
dioxide per mile in model year 2026.

On March 31, 2022, the NHTSA issued a final rule revising passenger car and light-duty truck fuel economy standards for model years 2024
through 2026. As with the EPA’s greenhouse gas emission rule, this new rule is based on Presidential Executive Order 13990. The new rule establishes
standards that would require an industry-wide fleet of approximately 49 mpg for passenger cars and light duty trucks in model year 2026. This is to be
achieved by increasing fuel efficiency, year-over-year, by 8% for model year 2024, 8% for 2025, and 10% for 2026 which is more stringent than the
SAFE Vehicles Rule that temporarily relaxed the rate to 1.5% per year.

In April 2023, the EPA announced new proposed greenhouse gas emissions standards for light-duty vehicles from model years 2027 to 2032. The
proposal incorporates Executive Order 14037 which requires 50% of new vehicles sold in 2030 be zero-emission vehicles and that model year 2032
vehicles meet the industry average CO2 emission level of 82 grams per mile.

European Standards
In the EU, the average carbon dioxide emissions limit for light commercial vehicles is currently 147 grams per kilometer and for passenger
vehicles 95 grams per kilometer. Manufacturers failing to meet their targets incur penalties of €95 from the first gram of exceedance onwards in 2019
and beyond. Starting in 2021, these emissions targets are tested using the WLTP.

In April 2019, the European Parliament and the Council adopted new carbon dioxide standards for vehicles and light commercial vehicles for the
period after 2020. Average emissions of the EU fleet of new vehicles and light commercial vehicles in 2025 must be 15% lower than in 2021, and by
2030, emissions must be reduced further to 37.5% and 31% of 2021 levels for vehicles and light commercial vehicles, respectively. From 2025, a
crediting system will be introduced to relax a manufacturer’s specific carbon dioxide emissions targets where the manufacturer produces numbers of
“zero and low-emission vehicles” above specified benchmarks.

In March 2023, the European Parliament and the European Council approved new carbon dioxide standards applicable to automobiles and light-
duty commercial vehicles in 2030 and 2035. By 2030, it will be required to reduce emissions by 55% per automobile and 50% per van compared to
2021 levels, and by 2035, it will be required to reduce emissions by 100% per automobile and van compared to 2021 levels.

To achieve a climate-neutral EU by 2050 and an intermediate target of at least 55% net reduction in greenhouse gas emissions by 2030, the
European Commission proposed in July 2021 substantially more stringent carbon dioxide emissions targets for vehicles and light commercial vehicles,
as part of its “Fit for 55” package. The proposal strengthens the 2030 targets from 37.5% to a 55% reduction for new passenger cars and from 31% to a
50% reduction for new light commercial vehicles, both relative to the 2021 baseline discussed above. In addition, the proposal introduces a new 2035
carbon dioxide target set at a 100% reduction for new vehicles and

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vans, again relative to the 2021 baseline. The 2025 target remains unchanged at a 15% reduction for both new vehicles and vans. The proposal has not
yet been finalized.

An EU directive on motor vehicle air conditioning units requires manufacturers to replace the refrigerants with that having a lower global
warming impact for all newly registered vehicles starting in January 2017.

Chinese Standards
Fuel consumption regulations are being implemented pursuant to the Chinese National Standards (“GB”), and the manufacture and sale of vehicle
models not meeting these regulations are prohibited. For light-duty passenger vehicles, GB27999-2011 was issued. In these Level 3 Fuel Consumption
Regulations for passenger vehicles, the regulation framework was substantially revised, such as the introduction of new regulations requiring automobile
manufacturers to meet standards of corporate average fuel consumption across models in addition to existing regulations requiring each model to meet
consumption standards. Furthermore, in order to achieve the national target for average fuel efficiency for 2020, the following more stringent fuel
consumption regulations have been enforced. First, GB19578-2014, which has been enacted to strengthen regulations for each model, is being applied to
new models after January 2016. Second, GB27999-2014, which has been enacted as Level 4 Fuel Consumption Regulations for passenger vehicles to
strengthen corporate average regulations, has been in effect since 2016. In 2021, the fuel economy test mode was changed from NEDC to WLTC, and
the Level 5 Fuel Consumption Regulations for passenger vehicles to achieve the average fuel efficiency target by 2025, GB19578-2021 and GB27999-
2019, has been in effect since 2021. Currently, Level 6 Fuel Consumption Regulations for passenger vehicles are being considered as more stringent fuel
consumption regulations. For light-duty commercial vehicles, GB20997-2015 was enacted, which further applied Level 3 Fuel Consumption
Regulations to all new vehicles from January 2018 and is currently being enforced. Moreover, the implementation of the Life Cycle Assessment (LCA),
which comprehensively regulates the amount of carbon dioxide emitted during the vehicle manufacturing, use, and disposal processes, among others, is
being considered earlier than in the rest of the world.

With respect to large commercial vehicles, pursuant to GB30510-2018, Level 3 Fuel Consumption Regulations apply to new vehicles from July
2019 and are currently being enforced. In addition, in an effort to further strengthen fuel consumption regulations for the next generation, Level 4 Fuel
Consumption Regulations are currently being considered.

Standards of Other Countries or Regions

India, Saudi Arabia, Brazil, Chile, Mexico, New Zealand, South Korea and Taiwan have imposed regulations that require automobile
manufacturers to reduce fuel consumption and carbon dioxide emissions.

Vehicle Safety
Japanese Standards
Japan has been participating in the 1958 Agreement of the UN and has a number of technical standards that are harmonized with the UN
Regulations.

Furthermore, unique to Japan, the safety standards for automated driving systems were established in March 2020, requiring, in addition to a
certain level of performance of automated driving system, the installation of an event data recorder and cyber security measures against unauthorized
access. In addition, a certification program was introduced in April 2020 with respect to the system to control sudden acceleration by mixing up the gas
and brake pedals as well as the collision damage mitigation brake system.

In addition, the approvals required for fuel-cell vehicles using compressed hydrogen under the High Pressure Gas Safety Act and the Road
Vehicles Act were consolidated at the ordinary session of the Diet in 2022.

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U.S. Standards
In November 2021, the Bipartisan Infrastructure Bill was signed into law by President Biden. It requires the NHTSA create regulations that cover
a wide range of matters, including the application of preventive safety technology, the strengthening of USNCAP, and the prevention of drunk driving,
in order to improve road safety. In response to this, NHTSA sought public comments in 2022 regarding the strengthening of USNCAP and expansion of
the recording requirements regarding Event Data Recorders (EDR). Notices for further public comments on the USNCAP, pedestrian protection and
autonomous emergency braking are also expected to be issued in the future. With respect to automated driving vehicles, on January 8, 2020 the Trump
Administration and the U.S. Department of Transportation released Ensuring American Leadership in Automated Vehicle Technologies: Automated
Vehicles 4.0 (“AV 4.0”). AV 4.0 unified efforts across 38 Federal departments, independent agencies, commissions, and Presidential Executive Offices in
providing high level guidance to state and local governments and other stakeholders. AV 4.0 also established Federal principles for the development and
integration of automated vehicles. California and many other states, despite AV 4.0, have adopted different approval systems so that automated vehicles
must be compliant with regulations and systems that vary from state to state. On December 23, 2020, California issued its first autonomous vehicle
deployment permit.

European Standards
In December 2019, the EU issued the revised General Safety Regulation to tighten the requirements concerning safety and the protection of
vehicle occupants and vulnerable road users. This revised General Safety Regulation will make certain vehicle safety equipment mandatory in stages
starting 2022, including: automated emergency braking, emergency lane keeping systems, driver drowsiness and attention warning, intelligent speed
assistance, reversing detection systems, tire pressure monitoring systems, and data recorders in case of an accident (“event data recorders”). In relation
to this, various UN Regulations were developed, and for the equipment for which UN Regulations have not been developed, the EU established its own
technical standards.

Furthermore, a proposal for a major overhaul of the EU-type approval framework for motor vehicles was issued in June 2018. The new regulation
purports to raise the quality and independency of vehicle type-approval and testing, to increase checks of vehicles that are already on the EU market, and
to strengthen European Commission oversight of the framework. It became mandatory for all new vehicle models as of September 1, 2020. In the case
of automated driving vehicles, it is also possible to obtain approval under this framework only for cars produced in small quantities.

United Nations Standards

The United Nations restructured the existing working parties and established the Working Party on Automated/Autonomous and Connected
Vehicles (“GRVA”) that is dedicated to the development of regulations on automated driving. The GRVA is developing regulations covering functional
safety requirements, new evaluation test method requirements, cybersecurity, software updates, data recording for automated driving vehicles and data
recording in case of an accident. The new regulations on cyber security, software updates and automated lane keeping system came into effect in January
2021.

Chinese Standards
Vehicle safety regulations in China were in general established having regard to the UN regulations. However, China’s own national technical
standards on functions such as batteries, motors, and the charging and remote surveillance of BEVs have been made mandatory. Fuel-cell vehicles are
subject to the supervising regulations on the safety of high pressure gas in addition to the vehicle type approval requirement. Moreover, in accordance
with the Made in China 2025 policy, more than 100 standards for intelligent connected vehicles (“ICV”) are being developed (including automation,
telecommunication and security).

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Environmental Matters
Japanese Standards
Automotive operations in Japan are subject to substantial environmental regulation under laws such as the Air Pollution Control Act, the Water
Pollution Prevention Act, the Noise Regulation Act and the Vibration Control Act. Under these laws, if a business entity establishes or alters any facility
that is regulated by these laws, the business entity is required to give prior notice to regulators, and if a business entity discharges, uses or stores
substances that are environmental burdens or causes noise or vibration from such facility, the business entity is also required to comply with the
applicable standards. Toyota is subject to local regulations, which in some cases impose more stringent obligations than the Japanese central government
requirements. Under the Waste Management and Public Cleansing Act, producers of industrial waste must dispose of industrial waste in the manner
prescribed in the same act.

The Soil Contamination Countermeasures Act of Japan requires that landowners conduct contamination testing and submit a report at the time
they cease to use hazardous substances, such as in connection with the sale of a former factory, or if there is a possibility of health hazards due to land
contamination. If it is found that land contamination exceeds a certain level, the relevant prefectural authority designates the area as considered to be
contaminated, orders the landowner to submit a plan for decontamination (such plan must describe the measures to be taken in the area, the reasons
therefor, and the deadline for implementing such measures, etc.), and has the landowner take such measures in accordance with such plan. In addition,
under the Act on Recycling, etc. of End-of-Life Vehicles, vehicle manufacturers are required to take back and recycle specified materials (automotive
shredder residues, air bags and fluorocarbons) of end-of-life vehicles and the provisions concerning such obligations of vehicle manufacturers became
effective in January 2005. Toyota has coordinated with relevant parties to establish a vehicle take-back and recycle system throughout Japan. As a result,
in fiscal 2022, Toyota achieved a recycling/recovery rate of 96% for automobile shredder residue (the legal requirement being 70%) and 95% for air
bags (the legal requirement being 85%) and reached the targets set forth in this law.

U.S. Standards
The environmental regulations applicable in the United States include, among others, the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Pollution Prevention Act of 1990 and the Toxic Substances Control Act. Toyota is subject to a variety of state
legislation that parallels, and in some cases imposes more stringent obligations than, federal requirements.

Pursuant to the Clean Air Act, the EPA has promulgated National Ambient Air Quality Standards (“NAAQS”) for six “criteria” pollutants
including for particulate matter. The Clean Air Act requires that the EPA review and possibly revise these NAAQS every five years. On January 6, 2023,
the EPA announced a proposed decision to revise primary (health-based) annual particulate matter (PM2.5) standard from its current level of 12.0
µg/m3 to within the range of 9.0 to 10.0 µg/m3. The EPA proposed to make no changes to the current secondary (welfare-based) annual PM2.5 standard,
primary and secondary 24-hour PM2.5 standards, and primary and secondary PM10 standards. If implemented this proposed standard, as well as any
future NAAQS revisions to other criteria pollutants, could lead to additional pollution control requirements on the industry, including on Toyota’s
manufacturing operations.

European Standards
In the EU, the Ambient Air Quality and Clearer Air for Europe Directive (Directive 2008/50/EC) sets the environmental standards for air quality.
In relation to this, environmental regulations, such as the National Emissions Ceilings Directive, or NEC Directive (2016/2284/EU), the Industrial
Emissions Directive, or IED Directive (2010/75/EU), and Directive 2007/46/EC, which is intended to control on-road emission sources, have been
established, and emissions are managed under these directives based on their source.

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The European Commission is currently reviewing the EU Directive on End-of-Life Vehicles with a public consultation process. The Commission
expects to present a legislative proposal for revisions to this directive in 2022.

Toyota strives to ensure that its operations are in compliance with environmental regulatory requirements concerning its facilities and products in
each of the markets in which it operates. Toyota continuously monitors these requirements and takes necessary operational measures in an effort to
ensure that it remains in material compliance with all of these requirements. However, compliance with environmental regulations and standards has
increased costs and is expected to lead to higher costs in the future. Therefore, Toyota recognizes that effective environmental cost management will
become increasingly important. Moreover, innovation and leadership in the area of environmental protection are becoming increasingly important to
remain competitive in the market. As a result, Toyota has proceeded with the development and production of environmentally friendly technologies,
such as hybrid electric vehicles, PHEVs, FCEVs, BEVs and high fuel efficiency, low emission engines.

In addressing environmental issues, based on an assessment of the environmental impact of its products through their entire life cycles, from
production through sales, disposal and recycling, Toyota, as a manufacturer, strives to take all possible measures from development stage and continues
to work towards technological innovations to make efficient use of resources and to reduce the burden on the environment.

Toyota’s Approach to and Initiatives Towards Sustainability

The following is a discussion of Toyota’s approach to and initiatives towards sustainability. It contains forward-looking statements that are based
upon the current judgment, assumptions and beliefs of Toyota’s management. See “Cautionary Statement With Respect To Forward-Looking
Statements.” Actual business, financial and operational results may vary significantly from those described below as a result of unanticipated changes in
various factors, including those described in “Risk Factors.”

Governance
Toyota has inherited the spirit of “Toyoda Principles” since our foundation, and has aimed to create a prosperous society through our business
activities, based on “the Guiding Principles at Toyota.” In 2020, based on these Principles, we compiled the “Toyota Philosophy” and set the mission of
“Producing Happiness for All.” We aim to be the “best company in town” that is both loved and trusted by people. We aim to contribute to the
sustainable development of our society and planet through such “Toyota Philosophy.”

In order to grasp changes in the external environment and societal demands, and to prioritize issues of greater importance and urgency, we
continuously strive to promote and improve environmental, social, and governance sustainability activities while working closely with the relevant
groups under the promotion system illustrated below and under the supervision and decision-making of the Board of Directors.

Furthermore, we have appointed a Chief Sustainability Officer (“CSO”) to lead the engagement with external stakeholders and dissemination of
information regarding sustainability activities.

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<Sustainability promotion system>

Sustainability Meeting Sustainability Subcommittee

Chairperson President Deputy Chief Officer, General Administration & Human
Resources Group (Senior management position responsible for
sustainability)
Members Members include three Outside Directors / Outside Audit & Officers and General / Managers from related
Supervisory Board Members, the Chief Sustainability Officer divisions will participate in keeping with
and the Chief Human Resources Officer agenda topics such as the environment,
financial affairs, and human resources
Frequency Twice a year, in principle Four times a year, in principle
Function • To help increase corporate value by reflecting opinions and • To implement operations related to the promotion of
external advice about key sustainability-related issues in sustainability
management practices to achieve sustainable growth
• To consult with the Sustainability Meeting about key
issues and submit reports to the Board of Directors

Risk Management
Toyota will strengthen risk management in response to uncertainties amid our constantly needing to rise to new challenges in the era of major
changes in the circumstances surrounding, and in the values of, the automobile industry, such as carbon neutrality, CASE and other factors.

In order for each region, function, and in-house company to cooperate and support each other and prevent, mitigate, and reduce risks arising in
business activities from a global perspective, Toyota has appointed a Chief Risk Officer (“CRO”) and Deputy CRO (“DCRO”) in charge of risk
management, as well as regional CROs to serve as the head of risk management in each region. Furthermore, Toyota has established the below
promotion system, and the CRO/DCRO takes up each important risk that requires a prompt response at meetings of the Board of Directors and other
management meetings, where they are discussed.

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<Risk management promotion system>

In addition, as a risk management system framework, we estimate, identify, and evaluate risks based on the Toyota Global Risk Management
Standard (“TGRS”), a company-wide risk management framework based on ISO (International Organization for Standardization and COSO (Committee
for Sponsoring organizations of the Treadway Commission).

Approach to and Initiatives Towards Human Resources

The Toyota group has been focusing on human resource development since its foundation based on the philosophy that “monozukuri
(manufacturing) depends on human resource development.”

In the midst of a once-in-a-century transformation taking place in the automobile industry, the Toyota group has set out the theme of inheritance
and evolution and is doing its utmost to realize its transformation into a mobility company for the future in addition to carrying on what makes us Toyota
— “let’s make ever-better cars,” “let’s aim to be best-in-town, rather than being the best in the world” and “let’s work for the sake of others.”

Amid the era in which it is hard to predict the future, each and every one of us at Toyota, our 370,000 colleagues around the world, must share the
same thoughts, working together organically as a team at the same time in order to uphold our founding spirit and what makes us Toyota, as symbolized
by the Toyoda Principles, and to carve out the future of automobiles using the Toyota Philosophy as a guideline, and to that end, we need to develop
human resources.

Looking at the global Toyota group as a whole, in addition to instilling the philosophy in all regions around the world, through various
opportunities such as training for global executive candidates, the head office and regional entities are working together to strengthen a common
foundation for human resource development based on Toyota’s “philosophy, skills, and behavior (such as Toyota Philosophy and TPS).” In addition, for
regional entities, we are promoting the establishment of a system that flexibly promotes the formulation and execution of human resource strategies
rooted in the region in response to the characteristics of the region and the diverse needs of customers.

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We have also been engaged in ongoing dialogue between labor and management regarding investment in human resources, including human
resources development. In March 2023, under the shared value of “the company wishes for the happiness of its employees and employees wish for the
development of the Company,” we held discussions between labor and management on various measures for the future based on the common
recognition that “people” are our greatest asset. We have also confirmed specific initiatives to lead to speedy change.

In an era where our circumstances change rapidly is fast and the future is uncertain, various challenges need to be undertaken in order to realize
reforms for the future. On the other hand, in order to continue taking on challenges, there are many issues that need to be overcome and resolved. Toyota
has organized the tasks that should be addressed as follows.

Tasks that should be addressed

• Creating a culture and capacity to continue taking on challenges without fear of failure
• In order to bring together people with diverse characteristics and for each one of them to fully demonstrate their abilities, establishing a
structure that stays close to the “individual” and that takes into account that each generation and life stage, and indeed each person has
different values and sense of work.
• Contribution to the automobile industry as a whole amid a period of transformation

In the aim to address these tasks and to become a company where “anyone can take on challenges at any time, as many times as you wish, without
fear of failure,” we are undertaking various measures centered around the three pillars of “Diversity,” “Growth,” and “Contribution.”

Climate Change-related Disclosures

Toyota has announced that, in response to climate change, it would address global-scale challenges to achieve carbon neutrality by 2050. In order
to tackle these challenges, Toyota intends to respond quickly to changing demands, take into account the different energy conditions in each country and
region around the world, and provide a variety of bespoke solutions that correspond to such country-specific and region-specific conditions.

In addition, Toyota has endorsed and signed on to the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial
Disclosures (“TCFD”) in April 2019. Toyota has prepared the discussion below, which relates to Toyota’s climate change-related risks and opportunities,
in light of such recommendations. Certain emissions reduction targets referenced below have been set by Toyota with reference to and in line with
criteria established by the Science Based Targets Initiative (“SBTi”); however, such targets are not set forth in this annual report based upon the
authority of or in reliance upon SBTi as experts with respect to such targets.

Governance
(a) The Board’s Oversight of Climate-related Risks and Opportunities

Toyota addresses climate-related issues at the Board of Directors’ meetings to ensure effective strategy formulation and implementation in line
with the latest societal developments. The Board deliberates and oversees related strategy, major action plans, and business plans, and important climate-
related matters are included in the Board’s agenda.

The Board of Directors monitors progress toward qualitative and quantitative targets for addressing climate issues. As part of such monitoring, the
Board considers climate-related issues, including risks and opportunities

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related to products, such as fuel efficiency and emission regulations, as well as risks and opportunities related to low-carbon technology development. It
also considers the financial impact of such factors.

These governance mechanisms are used to formulate long-term strategy, including the Toyota Environmental Challenge 2050, and in formulating
and revising medium- to long-term targets and action plans.

Examples of decisions made by the Board of Directors in 2022 include the following.
• Identifying carbon neutrality (“CN”) as an important issue in relation to climate change, we submitted to the Board of Directors, and the
Board approved, the development of a transition plan towards achieving CN by 2050.
• In addition, in order to meet the growing demand for BEVs, the Board of Directors approved Toyota investing in increasing its automotive
battery production capacity by up to 40 GWh in Japan and the United States.

(b) Management’s Role in Assessing and Managing Climate-related Risks and Opportunities

The Board of Directors is Toyota’s ultimate decision-making and oversight body for addressing climate-related issues. The below are the principal
bodies for assessing and managing climate-related risks and opportunities.

Sustainability Environmental Product

Sustainability Meeting Production Environment
Subcommittee Design Assessment
(Advisory function) Committee
(Executory function) Committee
Frequency of reporting on
When an important matter When an important matter When an important matter
climate related issues to the —
arises arises arises
Board of Directors
Roles • Aims to improve the • Executes operations • Assesses product- • Assesses plant /
precision of initiatives related to promotion of related risks and production-related risks
with opinions and sustainability opportunities, and opportunities,
advice on key matters formulates / implements determines
• Reports important
related to sustainability strategies and plans, countermeasures,
issues to the
from a social conducts monitoring, conducts monitoring,
Sustainability Meeting
perspective for etc. etc.
and Board of Directors
sustainable growth

Strategy
(a) Climate-related Risks and Opportunities the Organization Has Identified over the Short, Medium, and Long Term

Toyota strives to identify the various risks and opportunities that will arise from environmental issues, takes action while continuously confirming
the validity of strategies, such as the Toyota Environmental Challenge 2050, and works to enhance its competitiveness.

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In particular, climate change requires measures in a variety of areas, including the adoption of new technology and responding to stricter
government regulations. Climate change is expected to result in higher temperatures, rising sea levels, and increases in the severity of natural disasters
such as storms and flooding. These impacts may pose risks to Toyota’s business. However, we believe that responding appropriately to the impacts of
climate change can lead to enhanced competitiveness and the acquisition of new business opportunities. In accordance with this understanding, we have
categorized the risks relating to climate change and identified particularly significant risks in line with risk management processes based on the degree
of impact and stakeholder interest.

Risks and Opportunities and Toyota’s Measures*1

Scenario Analysis*2
Risks Opportunities Toyota’s measures
Stated Policies Future 1.5°C or less Future
Storyline Storyline

(1) • Fines for failure in • Increase in sales of • Promotion of research

Tightening of regulations for achieving fuel efficiency electrified vehicles and development to
fuel efficiency and ZEVs regulations improve fuel and battery
(acceleration of electrification) • Increase in profits from efficiency
• Decrease in total vehicle external sales of
sales due to delays in electrification systems • Increase in investment in
complying with ZEV batteries and shift of
regulations resources
Impacts will be an
• Impairment of internal • Start of external sales of extension of current status Impacts will increase
combustion engine electrification systems
manufacturing facilities
• Expansion of electrified
vehicle lineup
• Reduction of CO2
emissions from vehicles
currently in use

(3) • Increase in production • Decrease in energy costs • Comprehensive

Expansion of carbon pricing and purchasing costs due to promoting the reduction of energy use
due to the introduction introduction of energy- and promotion of
of carbon taxes, etc. saving technology renewable energy and
hydrogen use Impacts will be an
• Improvement of energy extension of current status Impacts will increase
security by diversifying • Promotion of emission
energy supply sources reductions in
collaboration with
suppliers

(7) • Production suspension • Increase in demand for • Implementation of

Increase in frequency and due to damage to electrified vehicles due continuous adaptive
severity of natural disasters production sites and to increased need for improvements to our
supply chain disruptions supply of power from BCP in light of disaster
caused by natural automobiles during experiences
disasters emergency situations Impacts will increase Impacts will be an
• Reinforcement of extension of current status
information gathering in
collaboration with
suppliers to avoid
purchasing delays

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*1 This list is not intended be exhaustive and is only a partial list of risks and opportunities and Toyota’s measures.
*2 See “Item 4. — 4.B. Business Overview — Climate Change-related Disclosures — Strategy — Impact on Strategy —Resilience of the Organization’s
Strategy, Taking into Consideration Different Climate-related Scenarios, including a 2°C or Lower Scenario” for a discussion of these scenarios.

(b) Impact of Climate-related Risks and Opportunities on the Organization’s Businesses, Strategy, and Financial Planning

Recognizing that climate-related issues may have a substantive impact on its businesses, strategy, and financial planning, Toyota reviews its
strategy based on the risks and opportunities associated with climate-related issues whenever necessary.

Toyota identifies climate-related risks, determines their degree of significance, and sets priorities in accordance with the Toyota Global Risk
Management Standard (“TGRS”). Details regarding the TGRS are provided below under “Item 4. — 4.B. Business Overview — Climate Change-
related Disclosures — Risk Management.” The below table describes the specific impacts on our businesses, strategy, and financial planning.

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Impact on Strategy

Products and services Supply chains/value chains Investments in R&D Adaptation activities and
mitigation activities
Significant climate related risks • Regulatory risks for • Regulatory risks for • Regulatory risks for • Regulatory risks, such as the
decarbonization in different decarbonization in different decarbonization in different introduction of carbon pricing
countries (fuel efficiency countries (fuel efficiency countries and decarbonization
regulations, GHG emission regulations, GHG emission
regulations, etc.) regulations, etc.) • Market risks, such as changes • Market risks, such as
in consumer needs increased cost reductions,
including sudden price jumps
low-carbon and renewable
energy prices, etc.
Impact on strategies The following strategies were influenced:
• Long-term strategy (2050 Target): Toyota Environmental Challenge 2050 announced in 2015
• Medium-term strategy (2030 Target): 2030 Milestone announced in 2018; confirmed by Toyota to be in line with SBTi*1 criteria
in 2022
• Short-term strategy (2025 Target): 7th Toyota Environmental Action Plan announced in 2020
*1 Science Based Targets Initiative: Initiative established by CDP, United Nations Global Compact, World Resources Institute (WRI), and
the World Wide Fund for Nature (WWF).
History of impacts • The numerical target for CO2 • The numerical target for CO2 • The sales target for electrified • The target for CO2 emissions
emissions reduction was set as emissions reduction in the vehicles was set as the New reduction related to plant
the New Vehicle Zero CO2 entire value chain was set as Vehicle Zero CO2 Emissions operations was set as the
Emissions Challenge. the Life Cycle Zero CO2 Challenge. Plant Zero CO2 Emissions
Emissions Challenge. Challenge.
• Targets for Scope 3 Category • An increase in research and
11 were set by Toyota • The medium-term strategy development expenses is • In 2021, the decision to aim at
consistent with SBTi criteria takes into account of the expected for the promotion of carbon neutrality at plants by
in 2022. following: research and development 2035 was announced.
activities for electrified
• In 2021, Toyota announced its • Manufacturing and disposal vehicles. • Targets for Scope 1 and 2
aim to sell 3.5 million BEVs of batteries for the were set by Toyota consistent
in 2030. manufacture of electrified • In 2021, Toyota announced the with SBTi criteria in 2022.
vehicles aim to sell 3.5 million BEVs
• In April 2023, Toyota in 2030.
announced a new average • Collaboration with suppliers
GHG emissions target for new • In April 2023, Toyota
vehicles and set a pace of • Risks and opportunities announced a new average
selling 1.5 million BEV units related to recycling GHG emissions target for new
by 2026 as our base volume. vehicles and set a pace of
selling 1.5 million BEV units
by 2026 as our base volume.

(c) Resilience of the Organization’s Strategy, Taking into Consideration Different Climate-related Scenarios, including a 2°C or Lower Scenario

The below is a discussion of the resilience of Toyota’s strategy, taking into consideration different climate-related scenarios.

<Step 1> Set Future Storylines Assuming Climate Change Effects

Climate change and the policies of various countries may expose the automobile industry and mobility society as a whole to substantial changes.
We believe that these changes will present both risks and opportunities

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for Toyota. Based on risk and opportunity analysis, using such scenarios*1 such as those of the International Energy Agency (“IEA” *2), we envisioned
two future storylines of society and the external environment in around 2030: the “stated policies future storyline” and the “1.5°C or less future
storyline.”

*1 Set using scenarios such as the IPCC’s*3 Representative Concentration Pathways (RCP) 4.5 equivalent, IEA’s Stated Policies Scenario (STEPS),
Sustainable Development Scenario (SDS), and Net Zero Emissions by 2050 Scenario (NZE).
*2 International Energy Agency
*3 Intergovernmental Panel on Climate Change

<Step 2> Consider the Impacts on Toyota

We considered impacts on Toyota in each future storyline of society envisioned in Step 1. In the society of the “1.5°C or less future storyline” in
particular, the percentage of ZEVs*1 among new vehicle sales will likely increase greatly while the use of carbon-neutral fuels will also expand. With
regard to effects on production and purchasing, since the introduction of carbon taxes and increased tax rates may lead to higher costs, expanding the use
of energy-saving technology, renewable energy, and hydrogen will mitigate risks.

On the other hand, if adequate climate change measures are not implemented throughout society, as described in the “stated policies future
storyline,” we believe production suspensions due to the increased frequency and severity of natural disasters, such as flooding, as well as production
decreases and suspensions due to supply chain disruptions are likely to increase.

*1 ZEV: Zero emission vehicles. Vehicles that have the potential to emit no CO2 or NOx during driving, such as BEVs and FCEVs.

<Step 3> Toyota’s Strategies

In April 2021, Toyota proclaimed that it would address global-scale challenges to achieve carbon neutrality by 2050. We are developing diverse
technologies that will encourage customers in different areas to choose eco-friendly vehicles, with the belief that they can only help reduce GHG
emissions if they are widely used (multi-pathway). To this end, we have been working on environmental technology development for electrified
vehicles, such as HEVs, PHEVs, BEVs, and FCEVs. We are also promoting the development of electric vehicles, as well as hydrogen fuel and hydrogen
engine-powered vehicles, carbon neutral fuels, etc.

Toyota currently conducts sales in over approximately 200 countries and regions, among which economic conditions, energy and industrial
policies, and customer needs vary significantly. Therefore, it is important to have a strategy that offers a variety of electrified vehicle options to
optimally meet the diverse needs of each country and region.

Based on this electrified vehicle strategy, Toyota has sold a cumulative total of over 22.5 million Toyota and Lexus-branded electrified vehicles
worldwide (as of February 2023), and is one of the first companies to respond to climate change risks.

With regard to BEVs, we successively introduced models with dedicated platforms and will promote practical vehicle supply through battery
development and production strategies.

We will aim to newly introduce 10 models of BEVs by 2026, and set the pace of selling 1.5 million annual Toyota and Lexus-brand BEV units by
2026 as our base volume to reach a target of 3.5 million Toyota and Lexus-brand BEVs sold globally each year by 2030.

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In addition to BEVs, we are promoting electrification from all directions. We will flexibly and strategically adapt total vehicle sales and other
conditions in response to changes in the market while leveraging the strengths that we have gained through experience. We believe that this will
encourage customers in each region to choose us and accelerate the increased use of electrified vehicles.

Even if battery demand increases in accordance with shifts in customer needs, as in the “1.5°C or less future storyline,” we will flexibly work
toward carbon neutrality by such means as enhancing collaboration with existing and new partners and swiftly establishing production structures at
suppliers that have capital ties with Toyota.

In addition to increasing the number of electrified vehicles, Toyota is working on CO2-reducing off-cycle technology*4 (items not necessarily
reflected in driving mode fuel efficiency). There is a variety of technologies that contribute to reducing the CO2 emissions of vehicles, including carbon
neutral fuels that are fit for vehicles currently in use, and hydrogen fuel and HEVs will also contribute to reducing the CO2 emissions of vehicles. We are
therefore working to expand options for such technologies.

*4 Off-cycle technology: Technologies such as high efficiency lighting, waste heat recovery, active aerodynamic improvement, and solar
radiation/temperature management that improve actual fuel consumption. The United States has a system of offering credits in proportion to the amount
of improvement achieved.

Achieving Carbon Neutrality

To achieve carbon neutrality in the automotive industry, it is vital that energy policies (such as those relating to renewable energy and charging
infrastructure) and industrial policies (such as those relating to purchasing subsidies, supplier support and battery recycling systems) are advanced in a
unified manner. Initiatives must be implemented in coordination with various stakeholders, such as national governments and industry organizations.

In its global business activities, Toyota will coordinate with national governments to establish infrastructure for promoting electrification while
implementing electrified vehicle strategies that contribute to reducing CO2 emissions throughout the entire vehicle life cycle.

Initiatives in the Production Field

In the production field, we have announced that we intend to achieve carbon neutrality at global plants by 2035, and we are implementing
preparations to face such risks as carbon taxes. We are promoting the reduction of CO2 emissions through comprehensive energy-saving conservation
and the introduction of renewable energy and hydrogen at plants. We have already achieved 100 percent renewable electricity use at all plants in Europe.

Reinforcing Strategic Resilience

Toyota will prepare measures to respond to natural disasters, such as formulating BCPs, strengthening supply chains by enhancing information
gathering, and improving communication.

Working together with not only the automobile industry but all industries, Toyota will implement initiatives that are both practical and sustainable,
continuously striving to ensure compatibility with the society of the “1.5°C or less future storyline.”

To demonstrate progress and validate Toyota’s strategies, we plan to appropriately disclose information regarding various ESG assessment
indicators and enhance dialogue with stakeholders, including institutional investors. We believe that this will enable stable fund procurement and
sustained corporate value enhancement.

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Risk Management
(a) The Organization’s Processes for Identifying and Assessing Climate-related Risks

Toyota has a company-wide risk management system that covers all risks related to its global business activities. This system is called the TGRS.
All risks, including climate change, are identified, assessed and managed based on the TGRS.

Risk assessment is carried out based on the two perspectives of magnitude of impact and vulnerabilities to clarify the substantive financial or
strategic impact on Toyota’s business.

The magnitude of impact is assessed on a five-point scale based on the respective elements of finance, reputation, violation of laws and
regulations, and business continuity (financial impact is indexed as a ratio to sales).

Vulnerabilities are assessed based on the two elements of current status of countermeasures and probability of occurrence.

(b) The Organization’s Processes for Managing Climate-related Risks

Once risks by region, function (such as manufacturing and sales), and product are identified by each division and assessed from the perspectives
of magnitude of impact and vulnerability, each region and each group mutually cooperates and supports one another to implement a prompt response.
The group chief officers and in-house company presidents supervise the activities of the in-house companies and, at the subordinate level, the general
managers supervise the activities of divisions and implement and monitor countermeasures.

Furthermore, climate-related risks and opportunities are identified and assessed by the Environmental Product Design Assessment Committee,
Production Environment Committee and Sustainability Subcommittee and then deliberated by the relevant divisions and officers. The Environmental
Product Design Assessment Committee monitors the status of efforts to deal with such issues as fuel economy regulations and procurement, while the
Production Environment Committee does the same for such issues affecting direct operations, including CO2 emission regulations on plants and water
risk, and the Sustainability Subcommittee also does the same for the appropriateness of the initiatives in consideration of issues related to the promotion
of sustainability as well as external stakeholders.

These bodies convene when an important event arises with the participation of executive- or general manager-level members of relevant divisions,
such as technology, environment, finance, purchasing, and sales. These meetings assess risks multiple times a year. Important risks and opportunities
that require prompt response are reported as needed to the Board of Directors, where response measures are determined.

(c) How Processes for Identifying, Assessing, and Managing Climate-related Risks are Integrated into the Organization’s Overall Risk
Management

As described above, the processes using the TGRS constitute a company-wide risk management system that covers all risks and opportunities
related to global business activities, including climate change.

At the meetings of the Environmental Product Design Assessment Committee, Production Environment Committee and Sustainability
Subcommittee, which bring together members from relevant divisions, climate-related risks and opportunities are identified and assessed, and
countermeasures are examined.

Metrics and Targets

(a) Metrics Used by the Organization to Assess Climate-related Risks and Opportunities in Line with Its Strategy and Risk Management Process

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Toyota recognizes that setting multiple metrics to manage climate-related risks and opportunities comprehensively is an important measure for
adapting to and mitigating climate change. As such, Toyota’s metrics include not only the amount of GHG emissions but also other elements related to
climate change, such as energy, water, resource recycling, and biodiversity.

Taking these metrics into consideration, Toyota has set the following targets and is systematically promoting them through initiatives in six areas
called the “six challenges.”
• Toyota Environmental Challenge 2050: A long-term target toward 2050
• 2030 Milestone: A medium-term target (set by Toyota consistent with criteria of SBTi)
• Seventh Toyota Environmental Action Plan: A short-term target toward 2025

Among the “six challenges,” in an aim to achieve carbon neutrality by 2050, Toyota will attempt to achieve Scope 1, 2, and 3 carbon neutrality by
2050 by promoting the following “challenges.”

Correlation between coverage

Initiatives and Scope 1, 2 and 3
Life Cycle Zero CO2 Emissions Challenge Scope 1, 2 and 3
New Vehicle Zero CO2 Emissions Challenge Average GHG emissions from new vehicles (Scope 3, category 11)*1
Corporate activities Scope 1 and 2 + voluntary initiatives*2
Plant Zero CO2 Emissions Challenge Scope 1 and 2 at production sites + voluntary actions*2

*1 Per vehicle, gCO2e/km, Well to Wheel: Includes GHG emissions from the production of fuel and electricity, as well as GHG emissions during vehicle
operation.
*2 Production sites of Toyota Motor Corporation brands other than those of financially consolidated subsidiaries

Furthermore, Toyota announced in 2021 that it will aim to achieve carbon neutrality at plants by 2035. Internally, certain carbon prices are used as
indicators to examine capital investment and other activities.

(b) Targets Used by the Organization to Manage Climate-related Risks and Opportunities and Performance Against Targets

Structure of Environmental Strategies

Toyota is continuously monitoring social trends and customer opinions. Toyota considers which issues it should focus on, quickly anticipates
future issues, and addresses environmental issues by applying new ideas and technologies. However, global environmental issues, such as climate
change, water shortages, resource depletion, and biodiversity loss continue to spread and grow more serious every day.

We formulated the Toyota Environmental Challenge 2050 in 2015 and the 2030 Milestone in 2018 so that each one of us can understand better
these issues and continue to tackle challenges from a long-term perspective, looking toward the world 20 and 30 years in the future. In 2020, we set the
2025 Target as the most recent target of the Toyota Environmental Action Plan, a five-year plan for achieving the above targets.

In September 2022, we confirmed that our reduction targets for in Scope 1, 2 and Scope 3 Category 11 were in line with SBTi criteria, and
updated our medium-term targets accordingly.

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Toyota’s emissions reduction targets in line SBTi criteria

Base
Emissions Target Year Reduction Rate Target Class
Year
Scope 1, 2 2035 68% 1.5 degrees Celsius
Scope 3, Passenger light duty vehicles and light
category 11 commercial vehicles 2019 33% or greater Well Below 2 degrees
2030
(emission Celsius
Medium and heavy freight trucks
intensity) 11.6%
*4 Scope 1 and 2 emissions reduction targets are in line with the science-based criteria established by SBTi to limit the global average temperature
increase to 1.5 degrees Celsius above pre-industrial levels. Scope 3 Category 11 emissions (gCO2e/km) reduction targets are in line with the science-
based criteria to hold the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels.

In April 2023, we announced that we aim to reduce the average GHG emissions of vehicles sold worldwide by 33% or greater by 2030 and 50%
or greater by 2035 (compared to 2019 levels).

Through a process of back casting from Toyota’s medium- and long-term vision, we determine specific activities that we implement in
collaboration with our global consolidated subsidiaries and business partners with the aim of realizing a sustainable world.

Long-term Targets and Medium -term Targets

Challenge of Challenge of Challenge of

Life Cycle New Vehicle Plant Zero Minimizing Establishing a Establishing a
Zero CO2 Zero CO2 CO2 and Recycling- Future Society in
Emissions Emissions Corporate Emissions Optimizing based Society Harmony with
Challenge Challenge Activities Challenge Water Usage and Systems Nature

Contribution to
SDGs

Toyota Environmental Challenge 2050

Achieve CN for Achieve CN for Achieve CN for Achieve zero CO2 Minimize water usage Promote global Connect the reach of
GHG emissions average GHG GHG emissions emissions from and implement water deployment of nature conservation
Long-term throughout the life emissions*2 from new from corporate production at discharge management End-of-life vehicle activities among
cycle*1 by 2050 vehicles*3 by 2050 activities*4 by plants*5 by 2050 according to individual treatment and communities, with the
2050 local conditions recycling world, to the future
technologies and
systems developed
in Japan

Reduce global average Reduce GHG Achieve CN for

GHG emissions*2 by emissions in CO2 emissions
Medium-term 50% or greater from corporate from production
new vehicles*3 by activities by 68% at plants*5
by 2035

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Challenge of Challenge of Challenge of

Life Cycle New Vehicle Plant Zero Minimizing Establishing a Establishing a
Zero CO2 Zero CO2 CO2 and Recycling- Future Society in
Emissions Emissions Corporate Emissions Optimizing based Society Harmony with
Challenge Challenge Activities Challenge Water Usage and Systems Nature

2035 (compared to (compared to

2019 levels) 2019 levels)
(target set by
Toyota consistent
with SBTi
criteria)

2030 Milestone
Reduce CO2 • Reduce average • Implement measures, • Complete • Realize “Plant in
emissions by 30% GHG on a priority basis, in establishment of Harmony with
throughout the life emissions*2from new the regions where the battery collection Nature” — 12 in
cycle by 2030 vehicles by 2030 water environment is to recycling Japan and 7 in other
(compared to considered to have a systems globally regions — as well as
2019 levels) - Passenger light duty large impact implement activities
vehicles and light • Complete setup promoting harmony
commercial vehicles: - Water quantity: of 30 model with nature in all
33% or greater Complete measures facilities for regions in
reduction (compared at the 4 Challenge- appropriate collaboration with
to 2019 levels) focused plants in treatment and local communities
North America, Asia, recycling of and companies
- Medium and heavy and South Africa end-of-life
freight trucks: 11.6% vehicles • Contribute to
reduction (compared - Water quality: biodiversity
to 2019 levels) Complete conservation
activities in
impact assessments collaboration with
and measures at all NGOs and others
of the 22 plants • Expand initiatives
where used water is both in-house and
discharged directly to outside to foster
river in North environmentally
America, Asia, and conscious persons
Europe responsible for the
• Disclose information future
appropriately and
communicate
actively with local
communities and
suppliers
Short-term 7th Toyota Environmental Action Plan (2025 Target)

*1 Applies to GHG emissions from energy consumption in corporate activities of Toyota Motor Corporation and its financially consolidated subsidiaries, and GHG emissions from suppliers
and customers in relation to vehicles under Toyota Motor Corporation’s and financially consolidated subsidiaries’ brands (Scope1,2,3). (Only Toyota Motor Corporation’s vehicles are
applicable for 2050)

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*2 Per vehicle, gCO2e/km, Well to Wheel: Includes GHG emissions from the production of fuel and electricity, as well as GHG emissions during vehicle operation.
*3 Applies to finished vehicles under Toyota Motor Corporation and financially consolidated subsidiary brands. (Only Toyota Motor Corporation’s vehicles are applicable for 2050)
*4 Applies to GHG emissions from energy consumption in Toyota Motor and financially consolidated subsidiary corporate activities, and GHG emissions related to the production of Toyota
Motor brands other than by financially consolidated subsidiaries (Scope 1, 2 + voluntary actions).
*5 Applies to CO2 emissions from energy consumption in Toyota Motor Corporation and financially consolidated subsidiary plants, and CO2 emissions from the production of Toyota Motor
Corporation brands other than those of financially consolidated subsidiaries (Scope 1, 2 + voluntary actions).

Initiatives to Achieve Carbon Neutrality

In April 2021, the Toyota group declared its commitment to take on the global challenge of working toward achieving carbon neutrality by 2050.

We are aiming to promote practical electric vehicles that can reduce carbon emissions now and steadily, and offer sustainable options that are
closely aligned with the energy situation in each region and the reality of how cars are used.

Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934
Not applicable.

Research and Development

The overriding goals of Toyota’s technology and product development activities are to minimize the negative aspects of vehicles, such as traffic
accidents and impact on the environment, and maximize the positive aspects, such as driving pleasure, comfort and convenience. By achieving these
sometimes-conflicting goals to a high degree, Toyota seeks to open the door to the automobile society of the future. To ensure efficient progress in
research and development activities, Toyota coordinates and integrates all research and development phases, from basic research and advanced research
to forward-looking technology and product development. With

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respect to long-term basic research in areas such as energy, the environment, information technology, telecommunications and materials, projects are
regularly reviewed and evaluated in consultation with outside experts to achieve research and development cost control. With respect to forward-
looking, leading-edge technology and product development, Toyota establishes cost-performance benchmarks on a project-by-project basis to ensure
efficient development investment.

The chart below provides an overview of Toyota’s R&D at each phase.

Basic research Phase to discover development theme

Research on basic vehicle-related technology
Forward-looking and leading- Phase requiring technological breakthroughs such as components and systems
edge technology development Development of leading-edge components and systems that are more advanced than those of competitors
Product development Phase mainly for development of new models
Development of all-new models and existing-model upgrades

With a focus on environmentally friendly, carbon-neutral and safe-vehicle technology, Toyota is promoting research and development into the
early commercialization of next generation environmentally friendly, energy-efficient and safe-vehicle technology. Toyota is also moving forward with
the development of innovative technologies such as electrification, connected vehicles and automated driving so as to realize a mobility society of the
future that enables everyone to enjoy freedom of movement beyond the conventional concept of vehicles. To this end, Toyota is focusing on the
following areas:
• further improvements in hybrid technologies, including in functions and cost, and contributions to the environment through advancements;
• improvement in internal combustion engine fuel economy technology as well as improvement in technology in connection with more
stringent emission standards;
• development of BEVs, FCEVs and other alternative fuel vehicles;
• development of advanced safety technology designed to promote driving and vehicle safety;
• development of automated driving technologies
• connected car technologies; and
• development of technology to bring about more comfortable travel (driving).

For a detailed discussion of the company’s research and development infrastructure, see “Item 5. Operating and Financial Review and Prospects
— 5.C Research and Development, Patents and Licenses.”

Components and Parts, Raw Materials and Sources of Supply

Toyota purchases parts, components, raw materials, equipment and other supplies from multiple competing suppliers located around the world.
Toyota works closely with its suppliers to pursue optimal procurement. Toyota believes that this policy encourages technological innovation, cost
reduction and other measures to strengthen its vehicle competitiveness. Although there are supply restrictions with respect to the procurement of certain
parts and components, Toyota plans to continue purchases based on the same principle.

Because Toyota had more than 50 overseas operations in 26 countries and regions as of March 31, 2023, procurement of parts and components is
being carried out not only locally in the country of the production site but also from third countries. As a result, the distribution network has become
increasingly complex. In order to

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realize timely and efficient distribution while minimizing costs, Toyota is promoting efforts to optimize each stage of the supply chain. To this end,
Toyota has developed a standardized system of global distribution and is supporting the operation of the system at each production base. The use of the
global distribution system aims at implementing parts procurement that meets changes in vehicle production in a timely manner. These varying efforts,
combined together, have led to maximized customer satisfaction, as well as to building a good working relationship with Toyota’s suppliers.

Toyota aims to share information and collaborate among the procurement divisions in each of the regions throughout the world in order to procure
parts and materials from the most competitive suppliers among Toyota factories located in various areas worldwide. At the same time, Toyota carries out
streamlining efforts together with suppliers in each country in order to achieve sustainable growth. Toyota has been working on cost reduction measures,
referred to as RR-CI (ryohin-renka, or cost innovation) and VA (value analysis) activities, which aims to eliminate waste in all processes from design to
production while ensuring the reliability and safety of each part. Through these activities, Toyota focuses on “developing a real cost-competitive
structure” by working together with suppliers.

In response to a significant upward trend in materials costs, including related logistics and other costs, since fiscal 2022, Toyota is accelerating
initiatives such as the replacement of raw materials with those that are less subject to price pressure and reduction of raw material usage.

Intellectual Property
Through its ongoing challenge to be one step ahead in conducting new research and development, Toyota has enhanced its product appeal and
technological prowess, which have been serving as the source of the company’s competitiveness. At the core of Toyota’s products created through this
research and development always lies intellectual property, including invention, know-how and brands. This intellectual property functions as Toyota’s
important management resources. By protecting and utilizing our intellectual property in an appropriate manner, we will continue to contribute to
society.

Toward the realization of a future mobility society, Toyota is carrying out intellectual property activities in line with management priorities.

For example, we are focusing resources on such areas as carbon neutrality, including the development of electrified vehicles and batteries, and on
software and connected initiatives, including connected and automated driving technologies. We are also reinforcing efforts to obtain and utilize
intellectual property licenses in such areas to strengthen our future competitiveness.

As for the intellectual property activities framework, having established intellectual property functions at the R&D centers in Japan, the United
States, Europe and China, Toyota supports technology development globally by securing organic, systematic coordination between R&D activities and
intellectual property activities. Working in concert with approximately 110 law firms around the world, we also collect intellectual property information
and take measures suitable for any intellectual property disputes that may arise in specific countries or regions. To enhance activities that incorporate
management, R&D and intellectual property in one, Toyota has an Intellectual Property Management Committee. The members of the Committee
discuss and make decisions concerning obtaining and utilizing important intellectual property conducive to management and for responding to
management risks related to intellectual property.

In 2022, Toyota filed approximately 14,000 patent applications domestically and internationally. In Japan, Toyota believes it was one of the
leading companies that year in terms of the number of both patent applications and patent registrations. In the United States, Toyota believes it was one
of the leading automobile manufacturers that year in terms of the number of patent registrations.

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Capital Expenditures and Divestitures

Set forth below is a chart of Toyota’s principal capital expenditures between April 1, 2020 and March 31, 2023, the approximate total costs of such
activity, as well as the location and method of financing of such activity, presented on a “by subsidiary” basis and as reported in Toyota’s annual
Japanese securities report filed with the director of the Kanto Local Finance Bureau.

Primary
Total Cost Method of
Description of Activity (Yen in billions) Location Financing
Japan
Investment primarily in technology and products by
Toyota Motor Corporation 1,105.6 Japan Internal funds,
financing from
issuance of bonds,
etc.
Investment primarily in technology and products by
Daihatsu Motor Co., Ltd. 110.9 Japan Internal funds
Investment primarily in technology and products by
Toyota Motor Kyushu, Inc. 107.8 Japan Internal funds
Investment primarily in technology and products by
Toyota Auto Body Co., Ltd. 93.1 Japan Internal funds
Investment primarily in technology and products by
Prime Planet Energy & Solutions, Inc. 92.5 Japan Internal funds
Investment primarily in technology and products by
Primearth EV Energy Co., Ltd. 61.4 Japan Internal funds
Outside of Japan
Investment primarily to promote localization by
Toyota Motor Manufacturing Texas, Inc. 173.6 United States Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing Canada, Inc. 167.2 Canada Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing, Indiana, Inc. 140.9 United States Internal funds
Investment primarily to promote localization by
Toyota Battery Manufacturing, Inc. 102.5 United States Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing, Kentucky, Inc. 88.0 United States Internal funds
Investment primarily to promote localization by
Toyota Motor Thailand Co., Ltd. 68.7 Thailand Internal funds
Investment primarily to promote localization by
Toyota Motor Europe NV/SA 68.3 Belgium Internal funds
Investment primarily to promote localization by
Toyota Motor Manufacturing, Northern Kentucky, Inc. 66.1 United States Internal funds
Investment primarily in leased automobiles by
Toyota Motor Credit Corporation 5,095.0 United States Internal funds,
financing
from issuance
of bonds, etc.

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Set forth below is information with respect to Toyota’s material plans to construct, expand or improve its facilities between April 2023 and March
2024, presented on a “by subsidiary” basis and as reported in Toyota’s annual Japanese securities report filed with the director of the Kanto Local
Finance Bureau.

Primary
Total Cost Method of
Description of Activity (Yen in billions) Location Financing
Japan
Investment primarily in manufacturing facilities by
Toyota Motor Corporation 530.0 Japan Internal funds
Investment primarily in manufacturing facilities by
Prime Planet Energy & Solutions, Inc. 76.5 Japan Internal funds
Outside of Japan
Investment primarily in manufacturing facilities by
Toyota Battery Manufacturing, Inc. 186.0 United States Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing de Guanajuato 104.4 Mexico Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing, Indiana, Inc. 91.7 United States Internal funds
Investment primarily in manufacturing facilities by
Toyota Motor Manufacturing, Kentucky, Inc. 75.7 United States Internal funds

Toyota does not collect information on the amount of expenditures already paid for each plant under construction because Toyota believes that it is
difficult and it would require unreasonable effort or expense to identify and categorize each expenditure item with reasonable accuracy as past and future
expenditures. Toyota’s construction projects consist of numerous expenditures, each of which is continually being adjusted and incurred in variable and
constantly changing amounts as part of the overall work-in-progress.

Seasonality
Toyota does not consider its seasonality material in the sense of significantly higher sales during any certain period of the year as compared to
other periods of the year.

Legal Proceedings
Toyota and other automakers were named in certain class actions filed in Mexico, Australia, Israel and Brazil relating to Takata airbag issues. The
actions in Israel and Brazil are being litigated. The actions in Mexico and Australia have been resolved.

Toyota is named as a defendant in an economic loss class action lawsuit in Australia in which damages are claimed on the basis that diesel
particulate filters in certain vehicle models are defective. On April 7, 2022 and March 27, 2023, Toyota received unfavorable judgments in the court of
first instance and the Federal Court of Australia, respectively. The judgments included a finding that there was a perceived reduction in vehicle value of
certain vehicle models. Toyota disagrees with the appeal court judgment and has filed a final appeal. Other claims of economic loss in this class action
lawsuit continue to be litigated at the court of first instance. In calculating the provision we should record in the consolidated financial statements as a
result of the aforementioned judgments, Toyota has considered various factors including the legal and factual circumstances of the case, the contents of
the judgement of the court of first instance and the Federal Court of Australia, and the views of legal counsel. The currently estimated probable
economic outflow related to the class action is immaterial to Toyota’s consolidated financial position, results of operations and cash flows. At this stage,
however, the final outcome and therefore ultimate financial liability for Toyota on account of this matter cannot be predicted with certainty.

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In April 2020, Toyota reported possible anti-bribery violations related to a Thai subsidiary to the SEC and the DOJ, and is cooperating with their
investigations. Investigations by governmental authorities related to these matters could result in the imposition of civil or criminal penalties, fines or
other sanctions, or litigation. Toyota cannot predict the scope, duration or outcome of these matters at this time.

On March 4, 2022, Hino Motors, Ltd., a publicly traded Japanese company that produces and sells commercial trucks and buses, and of which
Toyota owns 50.19% of the voting interests as of March 31, 2023, disclosed that it had voluntarily commenced an investigation into potential issues
regarding emissions performance and certification in the North American and Japanese markets, and that it has reported such issues to and is
cooperating with the relevant authorities. Hino announced that, through such investigation, it identified past misconduct in relation to its applications for
certification concerning the emissions and the fuel economy performance of certain of its engines for the Japanese market. In Japan, Hino was subject to
an on-site inspection from MLIT, and received a corrective action order from it. On October 7, 2022, Hino submitted a recurrence prevention report to
MLIT. MLIT has also revoked certain of the “type approvals” (that is, approvals that exempt new vehicles or vehicles with certain equipment from
individual testing by government inspectors prior to sale) and the fuel consumption ratings relating to certain engine models. Hino has also further
agreed to compensate certain of its customers in Japan for certain additional motor vehicle taxes that have become payable on account of the
misconduct, as well as in connection with vehicles with engines with respect to which there were fuel efficiency problems. With respect to the United
States, the U.S. Department of Justice and other U.S. agencies are conducting an investigation with respect to potential violations of relevant laws and
regulations regarding the certification of Hino’s model year 2010 to model year 2019 engines for the U.S. market. In this regard, a lawsuit naming Hino
and its subsidiaries as defendants in a putative class action lawsuit has been filed at the U.S. District Court for the Southern District of Florida claiming
damages related to Hino’s vehicles sold in the U.S. from 2004 to 2021. Both the investigation and the legal proceedings are ongoing. In addition, a
lawsuit against Hino and its subsidiaries as defendants in a representative action lawsuit has also been filed in Australia as a class action lawsuit. In the
lawsuit, the plaintiffs claim that they have suffered loss and damage resulting from alleged misleading or deceptive conduct in relation to
non-compliance of the affected vehicles with emissions standards and fuel efficiency standards. It is possible that other similar lawsuits may be filed in
the future. Further, Hino is continuing to conduct a comprehensive review related to engine certification procedures under European and other
jurisdictions’ standards in addition to U.S. standards. Investigations by governmental authorities, as well as civil litigation, related to these matters could
result in the imposition of civil or criminal penalties, fines or other sanctions, damages awards, or other consequences. Toyota cannot predict the scope,
duration, or outcome of these matters at this time. See “Item 4. Information on the Company — 4.B Business Overview — Selected Initiatives” for
further discussion of these and related matters.

Toyota also has various other pending legal actions and claims, including without limitation personal injury and wrongful death lawsuits and
claims in the United States, as well as intellectual property litigation, and is subject to government investigations from time to time.

Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a range of reasonably possible loss, if any,
for the pending legal matters because (i) many of the proceedings are in evidence gathering stages, (ii) significant factual issues need to be resolved,
(iii) the legal theory or nature of the claims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of other matters
of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Therefore, for all of the aforementioned matters, which
Toyota is in discussions to resolve, any losses that are beyond the amounts accrued could have an adverse effect on Toyota’s financial position, results of
operations or cash flows.

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4.C ORGANIZATIONAL STRUCTURE

As of March 31, 2023, Toyota Motor Corporation had 207 Japanese subsidiaries and 362 overseas subsidiaries. The following table sets forth for
each of Toyota Motor Corporation’s principal subsidiaries, the country of incorporation and the percentage ownership interest and the voting interest
held by Toyota Motor Corporation.

Percentage Percentage
Country of Ownership Voting
Name of Subsidiary Incorporation Interest Interest
Toyota Financial Services Corporation Japan 100.00 100.00
Hino Motors, Ltd. Japan 50.11 50.19
Daihatsu Motor Co., Ltd. Japan 100.00 100.00
TOYOTA Mobility Tokyo Inc. Japan 100.00 100.00
Toyota Finance Corporation Japan 100.00 100.00
Toyota Mobility Parts Co., Ltd. Japan 54.08 54.08
Toyota Auto Body Co., Ltd. Japan 100.00 100.00
Toyota Motor Kyushu, Inc. Japan 100.00 100.00
Toyota Motor East Japan, Inc. Japan 100.00 100.00
Daihatsu Motor Kyushu Co., Ltd. Japan 100.00 100.00
Cataler Corporation Japan 56.51 57.38
Toyota Motor Engineering & Manufacturing North America, Inc. United States 100.00 100.00
Toyota Motor Manufacturing, Kentucky, Inc. United States 100.00 100.00
Toyota Motor North America, Inc. United States 100.00 100.00
Toyota Motor Credit Corporation United States 100.00 100.00
Toyota Motor Manufacturing, Indiana, Inc. United States 100.00 100.00
Toyota Motor Manufacturing, Texas, Inc. United States 100.00 100.00
Toyota Motor Sales, U.S.A., Inc. United States 100.00 100.00
Toyota Financial Savings Bank United States 100.00 100.00
Toyota Motor Manufacturing Canada Inc. Canada 100.00 100.00
Toyota Credit Canada Inc. Canada 100.00 100.00
Toyota Canada Inc. Canada 51.00 51.00
Toyota Motor Manufacturing de Baja California, S. de R.L. de C.V. Mexico 100.00 100.00
Toyota Motor Manufacturing de Guanajuato, S.A.de C.V. Mexico 100.00 100.00
Toyota Motor Europe NV/SA Belgium 100.00 100.00
Toyota Motor Manufacturing France S.A.S. France 100.00 100.00
Toyota France S.A.S France 100.00 100.00
Toyota Motor Finance (Netherlands) B.V. Netherlands 100.00 100.00
Toyota Central Europe Sp. z o.o. Poland 100.00 100.00
Toyota Financial Services (UK) PLC United Kingdom 100.00 100.00
Toyota (GB) PLC United Kingdom 100.00 100.00
Toyota Motor Manufacturing Czech Republic, s.r.o. Czech Republic 100.00 100.00
Toyota Motor Manufacturing Turkey Inc. Turkey 90.00 90.00
Guangqi Toyota Engine Co., Ltd. China 70.00 70.00
Toyota Motor (China) Investment Co., Ltd. China 100.00 100.00
Toyota Motor Finance (China) Co., Ltd. China 100.00 100.00
Toyota Kirloskar Motor Private Ltd. India 89.00 89.00
P.T. Astra Daihatsu Motor Indonesia 61.75 61.75
PT. Toyota Motor Manufacturing Indonesia Indonesia 95.00 95.00
Toyota Motor Asia Pacific Pte Ltd. Singapore 100.00 100.00
Kuozui Motors, Ltd. Taiwan 70.00 70.00
Toyota Leasing (Thailand) Co., Ltd. Thailand 87.44 87.44
Toyota Motor Thailand Co., Ltd. Thailand 86.43 86.43
Toyota Daihatsu Engineering & Manufacturing Co., Ltd. Thailand 100.00 100.00
Toyota Motor Corporation Australia Ltd. Australia 100.00 100.00
Toyota Finance Australia Ltd. Australia 100.00 100.00
Toyota Argentina S.A. Argentina 100.00 100.00
Toyota do Brasil Ltda. Brazil 100.00 100.00
Toyota South Africa Motors (Pty) Ltd. South Africa 100.00 100.00

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4.D PROPERTY, PLANTS AND EQUIPMENT

As of March 31, 2023, Toyota and its affiliated companies produced automobiles and related components through more than 50 overseas
manufacturing organizations in 26 countries and regions besides Japan. The facilities are located principally in Japan, the United States, Canada, the
United Kingdom, France, Turkey, Czech Republic, Poland, Thailand, China, Taiwan, India, Indonesia, South Africa, Argentina and Brazil.

In addition to its manufacturing facilities, Toyota’s properties include sales offices and other sales facilities in major cities, repair service facilities
and research and development facilities.

The following table sets forth information, as of March 31, 2023, with respect to Toyota’s principal facilities and organizations, all of which are
owned by Toyota Motor Corporation or its subsidiaries. However, small portions, all under approximately 20%, of some facilities are on leased
premises.

Land Area
(thousands Principal
of square Number of Products or
Facility or Subsidiary Name Location meters) Employees Functions
Japan (Toyota Motor Corporation)
Toyota Technical Center Shimoyama Research and
Toyota City, Aichi Pref. 5,573 347 Development
Tahara Plant Tahara City, Aichi Pref. 4,032 6,509 Automobiles
Toyota Head Office and Technical Center Research and
Toyota City, Aichi Pref. 2,767 22,891 Development
Higashi-Fuji Technical Center Susono City, Shizuoka Pref. 2,722 2,572 Research and
Development
Motomachi Plant Toyota City, Aichi Pref. 1,575 8,135 Automobiles
Takaoka Plant Toyota City, Aichi Pref. 1,318 4,189 Automobiles
Tsutsumi Plant Toyota City, Aichi Pref. 1,004 4,811 Automobiles
Kamigo Plant Toyota City, Aichi Pref. 895 3,172 Automobile parts
Kinu-ura Plant Hekinan City, Aichi Pref. 808 2,791 Automobile parts
Honsha Plant Toyota City, Aichi Pref. 623 1,838 Automobile parts
Japan (Subsidiaries)
Daihatsu Motor Co., Ltd. Ikeda City, Osaka, etc. 7,739 11,048 Automobiles
Hino Motors, Ltd. Hino City, Tokyo, etc. 6,324 12,244 Automobiles
Toyota Auto Body Co., Ltd. Kariya City, Aichi Pref., etc. 2,274 11,504 Automobiles
Toyota Motor Kyushu, Inc. Miyawaka City, Fukuoka Pref. 1,940 8,508 Automobiles
TOYOTA Mobility Tokyo Inc. Minato-ku, Tokyo, etc. 388 6,702 Sales facilities
Outside Japan (Subsidiaries)
Toyota Motor Manufacturing, Texas, Inc. Texas, U.S.A. 8,127 2,881 Automobiles
Toyota Motor Manufacturing, Kentucky, Inc. Kentucky, U.S.A. 5,161 7,715 Automobiles
Toyota Motor Manufacturing Canada, Inc. Ontario, Canada 4,752 7,904 Automobiles
Toyota Motor Thailand Co., Ltd. Samutprakarn, Thailand 4,414 8,189 Automobiles
Toyota Motor Manufacturing, Indiana, Inc. Indiana, U.S.A. 4,359 6,490 Automobiles

Toyota is constantly engaged in upgrading, modernizing and revamping the operations of its manufacturing facilities based on its assessment of
market needs and prospects. To respond flexibly to fluctuations in demand in each of its production operations throughout the world, Toyota continually
reviews and implements appropriate

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production measures such as revising takt time and adjusting days of operation. As a result, Toyota believes it would require unreasonable effort to track
the exact productive capacity and the extent of utilization of each of its manufacturing facilities with a reasonable degree of accuracy.

As of March 31, 2023, property, plant and equipment having a net book value of approximately ¥1,498.4 billion was pledged as collateral securing
indebtedness incurred by Toyota Motor Corporation’s consolidated subsidiaries. Toyota believes that there does not exist any material environmental
issues that may affect the company’s utilization of its assets.

Toyota considers all its principal manufacturing facilities and other significant properties to be in good condition and adequate to meet the needs
of its operations.

See “Item 4. Information on the Company — 4.B Business Overview — Capital Expenditures and Divestitures” for a description of Toyota’s
material plans to construct, expand or improve facilities.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A OPERATING RESULTS
Financial information discussed in this section is derived from Toyota’s consolidated financial statements that appear elsewhere in this annual
report. The financial statements have been prepared in accordance with IFRS, as issued by the IASB.

Overview
The business segments of Toyota include automotive operations, financial services operations and all other operations. Automotive operations are
Toyota’s most significant business segment, accounting for 89% of Toyota’s total revenues before the elimination of intersegment revenues for fiscal
2023. Toyota’s primary markets based on vehicle unit sales for fiscal 2023 were: Japan (23.5%), North America (27.3%), Europe (11.7%) and Asia
(19.8%).

Automotive Market Environment

The worldwide automotive market is highly competitive and volatile. The demand for automobiles is affected by a number of factors including
social, political and general economic conditions; introduction of new vehicles and technologies; and costs incurred by customers to purchase or operate
vehicles. These factors can cause consumer demand to vary substantially in different geographic markets and for different types of automobiles.

During fiscal 2023, the global economy experienced an accelerated rise in consumer prices in both developed and emerging countries as energy
and other prices soared against a backdrop of geopolitical tensions. From August onward, there were signs of a decline in demand due to concerns of a
slowdown in the global economy as central banks in various countries accelerated the pace of monetary tightening.

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The following table sets forth Toyota’s consolidated vehicle unit sales by geographic market based on location of customers for the past three
fiscal years.

Thousands of units
Year Ended March 31,
2021 2022 2023
Japan 2,125 1,924 2,069
North America 2,313 2,394 2,407
Europe 959 1,017 1,030
Asia 1,222 1,543 1,751
Other* 1,027 1,352 1,565
Overseas total 5,521 6,306 6,753
Total 7,646 8,230 8,822

* “Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

During fiscal 2022, Toyota’s consolidated vehicle unit sales in Japan decreased due to tightening of supply of, and increasing demand for,
semiconductors and the spread of COVID-19. During fiscal 2023, Toyota’s consolidated vehicle unit sales in Japan increased due to gradual lessening of
the impact of COVID-19. During both fiscal 2022 and fiscal 2023, overseas vehicle unit sales increased due to strong market conditions as compared to
the prior year.

Toyota’s share of total vehicle unit sales in each market is influenced by the quality, safety, reliability, price, design, performance, economy and
utility of Toyota’s vehicles compared with those offered by other manufacturers. The timely introduction of new or redesigned vehicles is also an
important factor in satisfying customer needs. Toyota’s ability to satisfy changing customer preferences can affect its revenues and earnings
significantly.

The profitability of Toyota’s automotive operations is affected by many factors. These factors include:
• vehicle unit sales volumes,
• the mix of vehicle models and options sold,
• the level of parts and service sales,
• the levels of price discounts and other sales incentives and marketing costs,
• the cost of customer warranty claims and other customer satisfaction actions,
• the cost of research and development and other fixed costs,
• the prices of raw materials,
• the ability to control costs,
• the efficient use of production capacity,
• the adverse effect on production due to such factors as the reliance on various suppliers for the provision of supplies, or the general scarcity
of certain supplies,
• climate change risk, including both physical risks as well as transition risks,
• the adverse effect on market, sales and productions of natural calamities as well as the outbreak and spread of epidemics and interruptions of
social infrastructure, and
• changes in the value of the Japanese yen and other currencies in which Toyota conducts business.

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Changes in laws, regulations, policies and other governmental actions can also materially impact the profitability of Toyota’s automotive
operations. These laws, regulations and policies include those attributed to environmental matters, vehicle safety, fuel economy and emissions that can
add significantly to the cost of vehicles.

Many governments also impose local content requirements, impose tariffs and other trade barriers, and enact price or exchange controls that can
limit an automaker’s operations and can make the repatriation of profits unpredictable. Changes in these laws, regulations, policies and other
governmental actions may affect the production, licensing, distribution or sale of Toyota’s products, cost of products or applicable tax rates. From
time-to-time when potential safety problems arise, Toyota issues vehicle recalls and takes other safety measures including safety campaigns relating to
its vehicles. The recalls and other safety measures described above have led to a number of claims and legal proceedings against Toyota. For a more
detailed description of these claims and legal proceedings, see “Item 4. Information on the Company — 4B. Business Overview — Legal Proceedings”
and notes 24 and 30 to the consolidated financial statements.

The worldwide automotive industry is in a period of global competition which may continue for the foreseeable future, and in general the
competitive environment in which Toyota operates is likely to intensify. Toyota believes it has the resources, strategies and technologies in place to
compete effectively in the industry as an independent company for the foreseeable future.

Financial Services Operations

The competition in the worldwide automobile financial services industry is intensifying. As competition increases, margins on financing
transactions may decrease and market share may also decline as customers obtain financing for Toyota vehicles from alternative sources.

Toyota’s financial services operations mainly include loans and leasing programs for customers and dealers. Toyota believes that its ability to
provide financing to its customers is an important value added service. Therefore, Toyota has expanded its network of finance subsidiaries in order to
offer financial services in many countries.

Toyota’s competitors for retail financing and retail leasing include commercial banks, credit unions and other finance companies. Meanwhile,
commercial banks and other captive automobile finance companies also compete against Toyota’s wholesale financing activities.

Toyota’s total receivables related to financial services increased during fiscal 2023 mainly due to an increase in retail receivables. Also, vehicles
and equipment on operating leases decreased during fiscal 2023 mainly due to a decrease in the number of operating leases in financial services
subsidiaries in North America.

For details on receivables related to financial services and vehicles and equipment on operating leases, see notes 8 and 12 to the consolidated
financial statements.

Toyota’s receivables related to financial services are subject to collectability risks. These risks include consumer and dealer insolvencies and
insufficient collateral values (less costs to sell) to realize the full carrying values of these receivables. See notes 4 and 19 to the consolidated financial
statements for additional information.

Toyota continues to originate leases to finance new Toyota vehicles. These leasing activities are subject to residual value risk. Residual value
losses could be incurred when the lessee of a vehicle does not exercise the option to purchase the vehicle at the end of the lease term. See note 3 to the
consolidated financial statements for additional information.

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Toyota enters into interest rate swap agreements and cross currency interest rate swap agreements to convert its fixed-rate debt to variable-rate
functional currency debt. A portion of the derivative instruments are entered into to hedge interest rate risk from an economic perspective and are not
designated as a hedge of specific assets or liabilities on Toyota’s consolidated statements of financial position and accordingly, unrealized gains or losses
related to derivatives that are not designated as a hedge are recognized currently in operations. See the discussion in “Quantitative and Qualitative
Disclosures about Market Risk” and notes 20 and 21 to the consolidated financial statements.

The fluctuations in funding costs can affect the profitability of Toyota’s financial services operations. Funding costs are affected by a number of
factors, some of which are not in Toyota’s control. These factors include general economic conditions, prevailing interest rates and Toyota’s financial
strength. Funding costs decreased during fiscal 2022 mainly as a result of lower interest rates. Funding costs increased during fiscal 2023 mainly as a
result of higher interest rates.

Toyota launched its credit card business in Japan in April 2001. As of March 31, 2022, Toyota had 15.7 million cardholders, a decrease of
0.7 million cardholders compared with March 31, 2021. As of March 31, 2023, Toyota had 16.1 million cardholders, an increase of 0.4 million
cardholders compared with March 31, 2022. Credit card receivables as of March 31, 2022 increased by ¥17.3 billion from March 31, 2021 to
¥501.4 billion, and that as of March 31, 2023 increased by ¥53.4 billion from March 31, 2022 to ¥554.8 billion.

Other Business Operations

Toyota’s other business operations consist of its information technology business and others.

Toyota does not expect its other business operations to materially contribute to Toyota’s consolidated results of operations.

Currency Fluctuations
Toyota is affected by fluctuations in foreign currency exchange rates. Toyota is exposed to fluctuations in the value of the Japanese yen against the
U.S. dollar and the euro as well as the Australian dollar, the Canadian dollar, the British pound and others. Toyota’s consolidated financial statements,
which are presented in Japanese yen, are affected by foreign currency exchange fluctuations through both translation risk and transaction risk.

Translation risk is the risk that Toyota’s consolidated financial statements for a particular period or for a particular date will be affected by changes
in the prevailing exchange rates of the currencies in those countries in which Toyota does business compared with the Japanese yen. Even though the
fluctuations of currency exchange rates to the Japanese yen can be substantial, and therefore significantly impact comparisons with prior periods and
among the various geographic markets, the translation risk is a reporting consideration and does not reflect Toyota’s underlying results of operations.
Toyota does not hedge against translation risk.

Transaction risk is the risk that the currency structure of Toyota’s costs and liabilities will deviate from the currency structure of sales proceeds
and assets. Transaction risk relates primarily to sales proceeds from Toyota’s non-domestic operations from vehicles produced in Japan.

Toyota believes that the location of its production facilities in different parts of the world has significantly reduced the level of transaction risk. As
part of its globalization strategy, Toyota has continued to localize production by constructing production facilities in the major markets in which it sells
its vehicles. In fiscal 2022 and 2023, Toyota produced 71.6% and 77.3%, respectively, of its non-domestic sales outside Japan. In North America, 68.5%
and 76.8% of vehicles sold in fiscal 2022 and 2023, respectively, were produced locally. In Europe, 69.1% and 73.9% of vehicles sold in fiscal 2022 and
2023, respectively, were produced locally. In Asia, 90.6% and 98.3% of vehicles sold in fiscal 2022 and 2023, respectively, were produced locally.
Localizing production enables Toyota to locally purchase many of the supplies and resources used in the production process, which allows for a better
match of local currency revenues with local currency expenses.

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Toyota also enters into foreign currency transactions and other hedging instruments to address a portion of its transaction risk. This has reduced,
but not eliminated, the effects of foreign currency exchange rate fluctuations, which in some years can be significant. See notes 20 and 21 to the
consolidated financial statements for additional information.

Generally, a weakening of the Japanese yen against other currencies has a positive effect on Toyota’s revenues, operating income and net income
attributable to Toyota Motor Corporation. A strengthening of the Japanese yen against other currencies has the opposite effect. In fiscal 2022 and 2023,
the Japanese yen was on average weaker against the U.S. dollar and the euro in comparison to fiscal 2021 and 2022, respectively. At the end of each of
fiscal 2022 and 2023, the Japanese yen was weaker against the U.S. dollar and the euro in comparison to the end of fiscal 2021 and 2022, respectively.
See note 19 to the consolidated financial statements for additional information.

Segmentation
Toyota’s most significant business segment is its automotive operations. Toyota carries out its automotive operations as a global competitor in the
worldwide automotive market. Management allocates resources to, and assesses the performance of, its automotive operations as a single business
segment on a worldwide basis and assesses financial and non-financial data such as vehicle unit sales, production volume, market share information,
vehicle model plans and plant location costs to allocate resources within the automotive operations. Toyota does not manage any subset of its automotive
operations, such as domestic or overseas operations or parts, as separate management units.

Geographic Breakdown
The following table sets forth Toyota’s sales revenues in each geographic market based on the country location of TMC or the subsidiaries that
transacted the sale with the external customer for the past three fiscal years.

Yen in millions
Year ended March 31,
2021 2022 2023
Japan 8,587,193 8,214,740 9,122,282
North America 9,325,950 10,897,946 13,509,027
Europe 2,968,289 3,692,214 4,097,537
Asia 4,555,897 5,778,115 7,076,922
Other* 1,777,266 2,796,493 3,348,530

* “Other” consists of Central and South America, Oceania, Africa and the Middle East.

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Results of Operations — Fiscal 2023 Compared with Fiscal 2022

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Japan 15,991,436 17,583,196 1,591,760 10.0%
North America 11,166,479 13,843,901 2,677,421 24.0
Europe 3,867,847 4,273,735 405,888 10.5
Asia 6,530,566 8,044,906 1,514,340 23.2
Other* 2,928,183 3,472,193 544,011 18.6
Intersegment elimination/unallocated amount (9,105,004) (10,063,633) (958,629) —
Total 31,379,507 37,154,298 5,774,791 18.4
Operating income (loss):
Japan 1,423,445 1,901,463 478,018 33.6
North America 565,784 (74,736) (640,520) —
Europe 162,973 57,460 (105,513) (64.7)
Asia 672,350 714,451 42,101 6.3
Other* 238,169 231,362 (6,807) (2.9)
Intersegment elimination/unallocated amount (67,024) (104,974) (37,950) —
Total 2,995,697 2,725,025 (270,672) (9.0)
Operating margin 9.5% 7.3% (2.2)%
Income before income taxes 3,990,532 3,668,733 (321,799) (8.1)
Net margin from income before income taxes 12.7% 9.9% (2.8)%
Net income attributable to Toyota Motor Corporation 2,850,110 2,451,318 (398,792) (14.0)
Net margin attributable to Toyota Motor Corporation 9.1% 6.6% (2.5)%

* “Other” consists of Central and South America, Oceania, Africa and the Middle East.

Sales Revenues
Toyota had sales revenues for fiscal 2023 of ¥37,154.2 billion, an increase of ¥5,774.7 billion, or 18.4%, compared with the prior fiscal year. The
increase resulted mainly from the ¥1,150.0 billion impact of increased vehicle unit sales and changes in sales mix and the ¥3,580.0 billion favorable
impact of changes in exchange rates.

The table below shows Toyota’s sales revenues from external customers by product category and by business.

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Vehicles 23,739,442 28,394,256 4,654,814 19.6%
Parts and components for production 1,504,215 1,710,422 206,208 13.7
Parts and components for after service 2,407,143 2,866,196 459,053 19.1
Other 881,193 805,995 (75,198) (8.5)
Total Automotive 28,531,993 33,776,870 5,244,877 18.4
All Other 541,436 590,749 49,314 9.1
Total sales of products 29,073,428 34,367,619 5,294,191 18.2
Financial services 2,306,079 2,786,679 480,600 20.8
Total sales revenues 31,379,507 37,154,298 5,774,791 18.4%

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Toyota’s sales revenues include sales revenues from sales of products, consisting of sales revenues from automotive operations and all other
operations, which increased by 18.2% during fiscal 2023 compared with the prior fiscal year to ¥34,367.6 billion, and sales revenues from financial
services operations, which increased by 20.8% during fiscal 2023 compared with the prior fiscal year to ¥2,786.6 billion. The increase in sales revenues
from sales of products is mainly due to an increase in Toyota vehicle unit sales of 591 thousand vehicles and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

The following table shows the number of financing contracts by geographic region at the end of fiscal 2023 and 2022, respectively.

Number of financing contracts in thousands

As of March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Japan 2,745 2,767 22 0.8%
North America 5,549 5,500 (49) (0.9)
Europe 1,507 1,647 140 9.3
Asia 2,070 2,034 (36) (1.7)
Other* 895 938 43 4.8
Total 12,766 12,886 120 0.9%

* “Other” consists of Central and South America, Oceania and Africa.

Geographically, sales revenues (before the elimination of intersegment revenues) for fiscal 2023 increased by 10.0% in Japan, 24.0% in North
America, 10.5% in Europe, 23.2% in Asia, and 18.6% in Other compared with the prior fiscal year. Excluding the impact of changes in exchange rates
of ¥3,580.0 billion, sales revenues in fiscal 2023 would have increased by 10.0% in Japan, 3.2% in North America, 2.8% in Europe, 7.9% in Asia, and
12.7% in Other compared with the prior fiscal year.

The following is a discussion of sales revenues in each geographic market (before the elimination of intersegment revenues).

Japan

Thousands of units
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Toyota’s consolidated vehicle unit sales* 3,640 3,703 62 1.7%

* including number of exported vehicle unit sales

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Sales of products 15,706,514 17,271,451 1,564,938 10.0%
Financial services 284,922 311,744 26,822 9.4
Total 15,991,436 17,583,196 1,591,760 10.0%

Sales revenues in Japan increased due primarily to the 62 thousand vehicles increase in domestic and exported vehicle unit sales and the favorable
impact of changes in exchange rates related to export transactions compared with the prior fiscal year. For fiscal 2022 and 2023, exported vehicle unit
sales were 1,716 thousand units and 1,634 thousand units, respectively.

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North America

Thousands of units
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Toyota’s consolidated vehicle unit sales 2,394 2,407 13 0.5%

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Sales of products 9,578,534 11,965,050 2,386,516 24.9%
Financial services 1,587,945 1,878,850 290,905 18.3
Total 11,166,479 13,843,901 2,677,421 24.0%

Sales revenues in North America increased due primarily to the 13 thousand vehicles increase in vehicle unit sales and the favorable impact of
changes in exchange rates compared with the prior fiscal year.

Europe

Thousands of units
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Toyota’s consolidated vehicle unit sales 1,017 1,030 13 1.3%

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Sales of products 3,671,205 4,003,043 331,838 9.0%
Financial services 196,642 270,693 74,050 37.7
Total 3,867,847 4,273,735 405,888 10.5%

Sales revenues in Europe increased due primarily to the 13 thousand vehicles increase in vehicle unit sales and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

Asia

Thousands of units
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Toyota’s consolidated vehicle unit sales 1,543 1,751 208 13.5%

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Sales of products 6,345,172 7,832,020 1,486,848 23.4%
Financial services 185,394 212,886 27,492 14.8
Total 6,530,566 8,044,906 1,514,340 23.2%

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Sales revenues in Asia increased due primarily to the 208 thousand vehicles increase in vehicle unit sales and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

Other

Thousands of units
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Toyota’s consolidated vehicle unit sales 1,352 1,565 213 15.8%

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Sales revenues:
Sales of products 2,756,840 3,225,962 469,122 17.0%
Financial services 171,343 246,232 74,889 43.7
Total 2,928,183 3,472,193 544,011 18.6%

Sales revenues in Other increased due primarily to the 213 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year.

Operating Costs and Expenses

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Operating costs and expenses
Cost of products sold 24,250,784 29,128,561 4,877,778 20.1%
Cost of financing services 1,157,050 1,712,721 555,671 48.0
Selling, general and administrative 2,975,977 3,587,990 612,014 20.6
Total 28,383,811 34,429,273 6,045,462 21.3%

Yen in millions
2023 v. 2022 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix 1,110,000
Effect of changes in exchange rates 2,300,000
Effect of increase of cost of financial services 320,000
Effect of cost reduction efforts 1,290,000
Increase or decrease in expenses and expense reduction efforts 525,000
Other 500,462
Total 6,045,462

Operating costs and expenses increased by ¥6,045.4 billion, or 21.3%, to ¥34,429.2 billion during fiscal 2023 compared with the prior fiscal year.

Cost Reduction Efforts

Cost reduction efforts, together with related costs and expenses, led to an aggregate increase in operating costs and expenses of ¥1,290.0 billion
during fiscal 2023. This increase was due to a ¥1,545.0 billion increase in

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operating costs and expenses attributable to the impact of soaring materials prices. Through continued cost reduction efforts together with suppliers,
however, that increase was partially offset by a ¥205.0 billion reduction principally attributable to value engineering activities and other cost reduction
efforts concerning design-related costs, and a ¥50.0 billion reduction attributable to cost reduction efforts principally at plants and logistics departments.

The cost reduction efforts described above related to ongoing value engineering and value analysis activities, the use of common parts resulting in
a reduction of part types and other manufacturing initiatives designed to reduce the costs of vehicle production. The impact of soaring materials prices
includes the impact of fluctuation in the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production
materials and parts.

Cost of Products Sold

Cost of products sold increased by ¥4,877.7 billion, or 20.1%, to ¥29,128.5 billion during fiscal 2023 compared with the prior fiscal year. This
increase mainly reflected the unfavorable impact of fluctuations in foreign currency translation rates, the unfavorable impact of soaring materials prices,
and the impact of changes in vehicle unit sales and sales mix.

Cost of Financial Services

Cost of financial services increased by ¥555.6 billion, or 48.0%, to ¥1,712.7 billion during fiscal 2023 compared with the prior fiscal year. This
increase was due mainly to the worsening overall of valuation gains or losses from interest rate swaps and interest rate currency swaps and the increase
in funding costs resulting from higher interest rates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by ¥612.0 billion, or 20.6%, to ¥3,587.9 billion during fiscal 2023 compared with the prior
fiscal year. This increase mainly reflected the unfavorable impact of fluctuations in foreign currency translation rates, the increase in labor costs, and the
increase in research and development expenses.

Operating Income

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 680,000
Effect of cost reduction efforts (1,290,000)
Effect of changes in exchange rates 1,280,000
Increase or decrease in expenses and expense reduction efforts (525,000)
Other (415,672)
Total (270,672)

Toyota’s operating income decreased by ¥270.6 billion, or 9.0%, to ¥2,725.0 billion during fiscal 2023 compared with the prior fiscal year. This
decrease was due to the ¥1,290.0 billion aggregate unfavorable impact of factors categorized as cost reduction efforts (including fluctuations in raw
materials prices), the ¥525.0 billion aggregate unfavorable impact of changes in expenses and expense reduction efforts and other factors, partially offset
by the ¥1,280.0 billion favorable impact of changes in exchange rates and the ¥680.0 billion impact of marketing efforts.

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Marketing efforts includes changes in vehicle unit sales and sales mix, sales expenses and other. “Other” includes valuation gains or losses from
interest rate swaps and interest rate currency swaps.

The favorable impact of changes in exchange rates was due mainly to the ¥1,200.0 billion impact of overseas transactions such as imports and
exports denominated in foreign currencies.

During fiscal 2023, operating income (before elimination of intersegment profits) compared with the prior fiscal year decreased by ¥640.5 billion
in North America, ¥105.5 billion, or 64.7%, in Europe, and ¥6.8 billion, or 2.9%, in Other, and increased by ¥478.0 billion, or 33.6%, in Japan, and
¥42.1 billion, or 6.3%, in Asia.

The following is a description of operating income in each geographic market.

Japan

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 365,000
Effect of cost reduction efforts (690,000)
Effect of changes in exchange rates 1,210,000
Increase or decrease in expenses and expense reduction efforts (320,000)
Other (86,982)
Total 478,018

North America

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 90,000
Effect of cost reduction efforts (395,000)
Effect of changes in exchange rates (15,000)
Increase or decrease in expenses and expense reduction efforts (135,000)
Other (185,520)
Total (640,520)

Europe

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 130,000
Effect of cost reduction efforts (120,000)
Effect of changes in exchange rates (15,000)
Increase or decrease in expenses and expense reduction efforts (25,000)
Other (75,513)
Total (105,513)

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Asia

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 75,000
Effect of cost reduction efforts (25,000)
Effect of changes in exchange rates 90,000
Increase or decrease in expenses and expense reduction efforts (45,000)
Other (52,899)
Total 42,101

Other

Yen in millions
2023 v. 2022 Change
Changes in operating income and loss:
Effect of marketing efforts 60,000
Effect of cost reduction efforts (60,000)
Effect of changes in exchange rates 10,000
Increase or decrease in expenses and expense reduction efforts 0
Other (16,807)
Total (6,807)

Other Income and Expenses

Share of profit (loss) of investments accounted for using the equity method during fiscal 2023 increased by ¥82.7 billion, or 14.8%, to
¥643.0 billion compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2023 in net income attributable to the
shareholders of companies accounted for by the equity method.

Other finance income increased by ¥44.5 billion, or 13.3%, to ¥379.3 billion during fiscal 2023 compared with the prior fiscal year. This increase
was due mainly to an increase during fiscal 2023 in interest income.

Other finance costs increased by ¥81.1 billion, or 184.4%, to ¥125.1 billion during fiscal 2023 compared with the prior fiscal year. This increase
was due mainly to an increase during fiscal 2023 in losses on securities revaluation.

Foreign exchange gain (loss), net decreased by ¥91.6 billion to ¥124.5 billion during fiscal 2023 compared with the prior fiscal year. Foreign
exchange gains and losses include the differences between the value of foreign currency denominated assets and liabilities recognized through
transactions in foreign currencies translated at prevailing exchange rates and the value at the date the transaction settled during the fiscal year, including
those settled using forward foreign currency exchange contracts, or the value translated by appropriate year-end exchange rates. The ¥91.6 billion
decrease in foreign exchange gain (loss), net was due mainly to the losses recorded in fiscal 2023 resulting from the functional currency of overseas
subsidiaries being weaker against foreign currencies at the dates of settlement of the foreign currency trade accounts payable than at the dates of the
transactions.

Other income (loss), net decreased by ¥5.6 billion, to ¥78.1 billion in losses during fiscal 2023 compared with the prior fiscal year.

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Income Taxes
The provision for income taxes increased by ¥59.8 billion, or 5.4%, to ¥1,175.7 billion during fiscal 2023 compared with the prior fiscal year. This
increase was due mainly to the reversals of deferred tax assets on account of the reassessment of their recoverability. The average effective tax rate for
fiscal 2023 was 32.0%.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests increased by ¥17.1 billion, or 70.0%, to ¥41.6 billion during fiscal 2023 compared with the
prior fiscal year. This increase was due mainly to an increase during fiscal 2023 in net income of consolidated subsidiaries.

Net Income Attributable to Toyota Motor Corporation

Net income attributable to Toyota Motor Corporation decreased by ¥398.7 billion, or 14.0%, to ¥2,451.3 billion during fiscal 2023 compared with
the prior fiscal year.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax decreased by ¥315.4 billion to ¥827.7 billion for fiscal 2023 compared with the prior fiscal year. This
decrease resulted from exchange differences on translating foreign operations gains of ¥676.0 billion in fiscal 2023 compared with gains of
¥902.8 billion in the prior fiscal year and share of other comprehensive income of equity method investees gains of ¥103.0 billion in fiscal 2023
compared with gains of ¥307.4 billion in the prior fiscal year, due mainly to the weakening of the yen against the U.S. dollar and the euro, net changes in
revaluation of financial assets measured at fair value through other comprehensive income losses of ¥16.5 billion in fiscal 2023 compared with losses of
¥203.4 billion in the prior fiscal year, due mainly to changes in prices of public and corporate bonds, and remeasurements of defined benefit plans gains
of ¥65.1 billion in fiscal 2023 compared with gains of ¥136.2 billion in the prior fiscal year, due mainly to changes in fair value of plan assets.

Segment Information
The following is a discussion of the results of operations for each of Toyota’s operating segments. The amounts presented are prior to intersegment
elimination.

Yen in millions
Year ended March 31, 2023 v. 2022 Change
2022 2023 Amount Percentage
Automotive:
Sales revenues 28,605,738 33,820,000 5,214,263 18.2%
Operating income 2,284,290 2,180,637 (103,653) (4.5)
Financial Services:
Sales revenues 2,324,026 2,809,647 485,621 20.9
Operating income 657,001 437,516 (219,485) (33.4)
All Other:
Sales revenues 1,129,876 1,224,943 95,067 8.4
Operating income 42,302 103,451 61,150 144.6
Intersegment elimination/unallocated amount:
Sales revenues (680,133) (700,293) (20,160) —
Operating income 12,104 3,420 (8,684) —
Total
Sales revenues 31,379,507 37,154,298 5,774,791 18.4
Operating income 2,995,697 2,725,025 (270,672) (9.0)

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Automotive Operations Segment

The automotive operations segment is Toyota’s largest operating segment by sales revenues. Sales revenues for the automotive segment increased
during fiscal 2023 by ¥5,214.2 billion, or 18.2%, to ¥33,820.0 billion compared with the prior fiscal year. The increase mainly reflects the
¥3,170.0 billion favorable impact of changes in exchange rates and the ¥1,150.0 billion favorable impact of changes in vehicle unit sales and sales mix.

Operating income from the automotive operations decreased by ¥103.6 billion, or 4.5%, to ¥2,180.6 billion during fiscal 2023 compared with the
prior fiscal year. This decrease in operating income was due mainly to the ¥1,290.0 billion aggregate unfavorable impact of factors categorized as cost
reduction efforts (including fluctuations in raw materials prices) and the ¥525.0 billion aggregate unfavorable impact of changes in expenses and
expense reduction efforts, partially offset by the ¥1,220.0 billion favorable impact of changes in exchange rates and the ¥755.0 billion impact of
marketing efforts.

Financial Services Operations Segment

Sales revenues for the financial services operations increased during fiscal 2023 by ¥485.6 billion, or 20.9%, to ¥2,809.6 billion compared with
the prior fiscal year. This increase was due mainly to the favorable impact of changes in exchange rates.

Operating income from financial services operations decreased by ¥219.4 billion, or 33.4%, to ¥437.5 billion during fiscal 2023 compared with
the prior fiscal year. This decrease was due mainly to the worsening overall of valuation gains or losses from interest rate swaps and interest rate
currency swaps.

All Other Operations Segment

Sales revenues for Toyota’s other operations segments increased by ¥95.0 billion, or 8.4%, to ¥1,224.9 billion during fiscal 2023 compared with
the prior fiscal year.

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Operating income from Toyota’s other operations segments increased by ¥61.1 billion, or 144.6%, to ¥103.4 billion during fiscal 2023 compared
with the prior fiscal year.

Results of Operations — Fiscal 2022 Compared with Fiscal 2021

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Sales revenues:
Japan 14,948,931 15,991,436 1,042,505 7.0%
North America 9,491,803 11,166,479 1,674,676 17.6
Europe 3,134,489 3,867,847 733,359 23.4
Asia 5,045,295 6,530,566 1,485,272 29.4
Other* 1,872,895 2,928,183 1,055,287 56.3
Intersegment elimination/unallocated amount (7,278,820) (9,105,004) (1,826,185) —
Total 27,214,594 31,379,507 4,164,914 15.3
Operating income (loss):
Japan 1,149,217 1,423,445 274,228 23.9
North America 401,361 565,784 164,423 41.0
Europe 107,971 162,973 55,002 50.9
Asia 435,940 672,350 236,410 54.2
Other* 59,847 238,169 178,322 298.0
Intersegment elimination/unallocated amount 43,413 (67,024) (110,436) —
Total 2,197,748 2,995,697 797,948 36.3
Operating margin 8.1% 9.5% 1.4%
Income before income taxes 2,932,354 3,990,532 1,058,177 36.1
Net margin from income before income taxes 10.8% 12.7% 1.9%
Net income attributable to Toyota Motor Corporation 2,245,261 2,850,110 604,849 26.9
Net margin attributable to Toyota Motor Corporation 8.3% 9.1% 0.8%

* “Other” consists of Central and South America, Oceania, Africa and the Middle East.

Sales Revenues
Toyota had sales revenues for fiscal 2022 of ¥31,379.5 billion, an increase of ¥4,164.9 billion, or 15.3%, compared with the prior fiscal year. The
increase resulted mainly from the ¥1,510.0 billion impact of increased vehicle unit sales and changes in sales mix and the ¥1,390.0 billion favorable
impact of changes in exchange rates.

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The table below shows Toyota’s sales revenues from external customers by product category and by business.

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Vehicles 20,509,606 23,739,442 3,229,836 15.7%
Parts and components for production 1,287,053 1,504,215 217,162 16.9
Parts and components for after service 2,049,187 2,407,143 357,956 17.5
Other 752,000 881,193 129,193 17.2
Total Automotive 24,597,846 28,531,993 3,934,147 16.0
All Other 479,553 541,436 61,883 12.9
Total sales of products 25,077,398 29,073,428 3,996,030 15.9
Financial services 2,137,195 2,306,079 168,884 7.9
Total sales revenues 27,214,594 31,379,507 4,164,914 15.3%

Toyota’s sales revenues include sales revenues from sales of products, consisting of sales revenues from automotive operations and all other
operations, which increased by 15.9% during fiscal 2022 compared with the prior fiscal year to ¥29,073.4 billion, and sales revenues from financial
services operations, which increased by 7.9% during fiscal 2022 compared with the prior fiscal year to ¥2,306.0 billion. The increase in sales revenues
from sales of products is mainly due to an increase in Toyota vehicle unit sales of 584 thousand vehicles and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

The following table shows the number of financing contracts by geographic region at the end of fiscal 2022 and 2021, respectively.

Number of financing contracts in thousands

As of March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Japan 2,660 2,745 85 3.2%
North America 5,553 5,549 (4) (0.1)
Europe 1,412 1,507 95 6.7
Asia 1,992 2,070 78 3.9
Other* 881 895 14 1.6
Total 12,498 12,766 268 2.1%

* “Other” consists of Central and South America, Oceania and Africa.

Geographically, sales revenues (before the elimination of intersegment revenues) for fiscal 2022 increased by 7.0% in Japan, 17.6% in North
America, 23.4% in Europe, 29.4% in Asia, and 56.3% in Other compared with the prior fiscal year. Excluding the impact of changes in exchange rates
of ¥1,390.0 billion, sales revenues in fiscal 2022 would have increased by 7.0% in Japan, 10.5% in North America, 16.6% in Europe, 20.3% in Asia, and
49.2% in Other compared with the prior fiscal year.

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The following is a discussion of sales revenues in each geographic market (before the elimination of intersegment revenues).

Japan

Thousands of units
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Toyota’s consolidated vehicle unit sales* 3,853 3,640 (213) (5.5)%

* including number of exported vehicle unit sales

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Sales revenues:
Sales of products 14,674,496 15,706,514 1,032,018 7.0%
Financial services 274,435 284,922 10,487 3.8
Total 14,948,931 15,991,436 1,042,505 7.0%

Despite Toyota’s domestic and exported vehicle unit sales having decreased by 213 thousand vehicles compared with the prior fiscal year, sales
revenues in Japan increased due primarily to the favorable impact of changes in exchange rates related to export transactions. For fiscal 2021 and 2022,
exported vehicle unit sales were 1,728 thousand units and 1,716 thousand units, respectively.

North America

Thousands of units
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Toyota’s consolidated vehicle unit sales 2,313 2,394 81 3.5%

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Sales revenues:
Sales of products 7,995,051 9,578,534 1,583,483 19.8%
Financial services 1,496,752 1,587,945 91,193 6.1
Total 9,491,803 11,166,479 1,674,676 17.6%

Sales revenues in North America increased due primarily to the 81 thousand vehicles increase in vehicle unit sales and the favorable impact of
changes in exchange rates compared with the prior fiscal year.

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Europe

Thousands of units
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Toyota’s consolidated vehicle unit sales 959 1,017 58 6.0%

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Sales revenues:
Sales of products 2,976,259 3,671,205 694,946 23.3%
Financial services 158,229 196,642 38,413 24.3
Total 3,134,489 3,867,847 733,359 23.4%

Sales revenues in Europe increased due primarily to the 58 thousand vehicles increase in vehicle unit sales and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

Asia

Thousands of units
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Toyota’s consolidated vehicle unit sales 1,222 1,543 321 26.3%

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Sales revenues:
Sales of products 4,874,746 6,345,172 1,470,426 30.2%
Financial services 170,549 185,394 14,845 8.7
Total 5,045,295 6,530,566 1,485,272 29.4%

Sales revenues in Asia increased due primarily to the 321 thousand vehicles increase in vehicle unit sales and the favorable impact of changes in
exchange rates compared with the prior fiscal year.

Other

Thousands of units
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Toyota’s consolidated vehicle unit sales 1,027 1,352 326 31.7%

Yen in millions
Year ended March 31, 2022 v. 2021Change
2021 2022 Amount Percentage
Sales revenues:
Sales of products 1,719,132 2,756,840 1,037,708 60.4%
Financial services 153,764 171,343 17,579 11.4
Total 1,872,895 2,928,183 1,055,287 56.3%

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Sales revenues in Other increased due primarily to the 326 thousand vehicles increase in vehicle unit sales compared with the prior fiscal year.

Operating Costs and Expenses

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Operating costs and expenses
Cost of products sold 21,199,890 24,250,784 3,050,894 14.4%
Cost of financing services 1,182,330 1,157,050 (25,280) (2.1)
Selling, general and administrative 2,634,625 2,975,977 341,351 13.0
Total 25,016,845 28,383,811 3,366,965 13.5%

Yen in millions
2022 v. 2021 Change
Changes in operating costs and expenses:
Effect of changes in vehicle unit sales and sales mix 1,330,000
Effect of changes in exchange rates 780,000
Effect of decrease of cost of financial services (100,000)
Effect of cost reduction efforts 360,000
Increase or decrease in expenses and expense reduction efforts 220,000
Other 776,965
Total 3,366,965

Operating costs and expenses increased by ¥3,366.9 billion, or 13.5%, to ¥28,383.8 billion during fiscal 2022 compared with the prior fiscal year.

Cost Reduction Efforts

Operating costs and expenses increased by ¥360.0 billion during fiscal 2022. This increase was due to a ¥640.0 billion increase in operating costs
and expenses attributable to the impact of soaring materials prices. Through continued cost reduction efforts together with suppliers, however, that
increase was partially offset by a ¥240.0 billion reduction principally attributable to value engineering activities and other cost reduction efforts
concerning design-related costs, and a ¥40.0 billion reduction attributable to cost reduction efforts principally at plants and logistics departments.

The cost reduction efforts described above related to ongoing value engineering and value analysis activities, the use of common parts resulting in
a reduction of part types and other manufacturing initiatives designed to reduce the costs of vehicle production. The impact of soaring materials prices
includes the impact of fluctuation in the price of steel, precious metals, non-ferrous alloys including aluminum, plastic parts and other production
materials and parts.

Cost of Products Sold

Cost of products sold increased by ¥3,050.8 billion, or 14.4%, to ¥24,250.7 billion during fiscal 2022 compared with the prior fiscal year. This
increase mainly reflected the impact of changes in vehicle unit sales and sales mix, the unfavorable impact of soaring materials prices, and the
unfavorable impact of fluctuations in foreign currency translation rates.

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Cost of Financial Services

Cost of financial services decreased by ¥25.2 billion, or 2.1%, to ¥1,157.0 billion during fiscal 2022 compared with the prior fiscal year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by ¥341.3 billion, or 13.0%, to ¥2,975.9 billion during fiscal 2022 compared with the prior
fiscal year. This increase mainly reflected the unfavorable impact of fluctuations in foreign currency translation rates.

Operating Income

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 860,000
Effect of cost reduction efforts (360,000)
Effect of changes in exchange rates 610,000
Increase or decrease in expenses and expense reduction efforts (220,000)
Other (92,052)
Total 797,948

Toyota’s operating income increased by ¥797.9 billion, or 36.3%, to ¥2,995.6 billion during fiscal 2022 compared with the prior fiscal year. This
increase was due to the ¥860.0 billion impact of marketing efforts and the ¥610.0 billion favorable impact of changes in exchange rates, partially offset
by, among other factors, the ¥360.0 billion aggregate unfavorable impact of factors categorized as cost reduction efforts (including fluctuations in raw
materials prices) and the ¥220.0 billion aggregate unfavorable impact of changes in expenses and expense reduction efforts.

Marketing efforts includes changes in vehicle unit sales and sales mix, sales expenses and other. “Other” includes valuation gains or losses from
interest rate swaps and interest rate currency swaps.

The favorable impact of changes in exchange rates was due mainly to the ¥590.0 billion impact of overseas transactions such as imports and
exports denominated in foreign currencies.

During fiscal 2022, operating income (before elimination of intersegment profits) compared with the prior fiscal year increased by ¥274.2 billion,
or 23.9%, in Japan, ¥164.4 billion, or 41.0%, in North America, ¥55.0 billion, or 50.9%, in Europe, ¥236.4 billion, or 54.2%, in Asia, and ¥178.3 billion,
or 298.0%, in Other.

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The following is a description of operating income in each geographic market.

Japan

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 260,000
Effect of cost reduction efforts (145,000)
Effect of changes in exchange rates 370,000
Increase or decrease in expenses and expense reduction efforts (50,000)
Other (160,772)
Total 274,228

North America

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 380,000
Effect of cost reduction efforts (125,000)
Effect of changes in exchange rates 50,000
Increase or decrease in expenses and expense reduction efforts (135,000)
Other (5,577)
Total 164,423

Europe

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 105,000
Effect of cost reduction efforts (40,000)
Effect of changes in exchange rates 0
Increase or decrease in expenses and expense reduction efforts (10,000)
Other 2
Total 55,002

Asia

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 130,000
Effect of cost reduction efforts (35,000)
Effect of changes in exchange rates 170,000
Increase or decrease in expenses and expense reduction efforts (40,000)
Other 11,410
Total 236,410

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Other

Yen in millions
2022 v. 2021 Change
Changes in operating income and loss:
Effect of marketing efforts 95,000
Effect of cost reduction efforts (15,000)
Effect of changes in exchange rates 20,000
Increase or decrease in expenses and expense reduction efforts 15,000
Other 63,322
Total 178,322

Other Income and Expenses

Share of profit (loss) of investments accounted for using the equity method during fiscal 2022 increased by ¥209.3 billion, or 59.6%, to
¥560.3 billion compared with the prior fiscal year. This increase was due mainly to an increase during fiscal 2022 in net income attributable to the
shareholders of companies accounted for by the equity method.

Other finance income decreased by ¥100.4 billion, or 23.1%, to ¥334.7 billion during fiscal 2022 compared with the prior fiscal year. This
decrease was due mainly to a decrease during fiscal 2022 in profit on sales of securities.

Other finance costs decreased by ¥3.5 billion, or 7.4%, to ¥43.9 billion during fiscal 2022 compared with the prior fiscal year.

Foreign exchange gain (loss), net increased by ¥201.0 billion to ¥216.1 billion during fiscal 2022 compared with the prior fiscal year. Foreign
exchange gains and losses include the differences between the value of foreign currency denominated assets and liabilities recognized through
transactions in foreign currencies translated at prevailing exchange rates and the value at the date the transaction settled during the fiscal year, including
those settled using forward foreign currency exchange contracts, or the value translated by appropriate year-end exchange rates. The ¥201.0 billion
increase in foreign exchange gain (loss), net was due mainly to the gains recorded in fiscal 2022 resulting from the Japanese yen being weaker against
foreign currencies at the maturity dates of the foreign currency deposit than at the dates of the deposit.

Other income (loss), net decreased by ¥53.2 billion, to ¥72.4 billion in losses during fiscal 2022 compared with the prior fiscal year.

Income Taxes
The provision for income taxes increased by ¥465.9 billion, or 71.7%, to ¥1,115.9 billion during fiscal 2022 compared with the prior fiscal year.
This increase was due mainly to the increase in income before income taxes and reversals of deferred tax assets on account of the reassessment of their
recoverability. The average effective tax rate for fiscal 2022 was 28.0%.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests decreased by ¥12.6 billion, or 34.0%, to ¥24.5 billion during fiscal 2022 compared with the
prior fiscal year. This decrease was due mainly to a decrease during fiscal 2022 in net income of consolidated subsidiaries.

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Net Income Attributable to Toyota Motor Corporation

Net income attributable to Toyota Motor Corporation increased by ¥604.8 billion, or 26.9%, to ¥2,850.1 billion during fiscal 2022 compared with
the prior fiscal year.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax increased by ¥130.6 billion to ¥1,143.1 billion for fiscal 2022 compared with the prior fiscal year. This
increase resulted from exchange differences on translating foreign operations gains of ¥902.8 billion in fiscal 2022 compared with gains of
¥403.6 billion in the prior fiscal year and share of other comprehensive income of equity method investees gains of ¥307.4 billion in fiscal 2022
compared with gains of ¥88.6 billion in the prior fiscal year, due mainly to the weakening of the yen against the U.S. dollar and the euro, net changes in
revaluation of financial assets measured at fair value through other comprehensive income losses of ¥203.4 billion in fiscal 2022 compared with gains of
¥303.9 billion in the prior fiscal year, due mainly to changes in prices of public and corporate bonds, and remeasurements of defined benefit plans gains
of ¥136.2 billion in fiscal 2022 compared with gains of ¥216.2 billion in the prior fiscal year, due mainly to changes in fair value of plan assets.

Segment Information
The following is a discussion of the results of operations for each of Toyota’s operating segments. The amounts presented are prior to intersegment
elimination.

Yen in millions
Year ended March 31, 2022 v. 2021 Change
2021 2022 Amount Percentage
Automotive:
Sales revenues 24,651,552 28,605,738 3,954,186 16.0%
Operating income 1,607,161 2,284,290 677,130 42.1
Financial Services:
Sales revenues 2,162,237 2,324,026 161,789 7.5
Operating income 495,593 657,001 161,408 32.6
All Other:
Sales revenues 1,052,365 1,129,876 77,512 7.4
Operating income 85,350 42,302 (43,048) (50.4)
Intersegment elimination/unallocated amount:
Sales revenues (651,560) (680,133) (28,573) —
Operating income 9,645 12,104 2,459 —

Automotive Operations Segment

The automotive operations segment is Toyota’s largest operating segment by sales revenues. Sales revenues for the automotive segment increased
during fiscal 2022 by ¥3,954.1 billion, or 16.0%, to ¥28,605.7 billion compared with the prior fiscal year. The increase mainly reflects the
¥1,510.0 billion favorable impact of changes in vehicle unit sales and sales mix and the ¥1,250.0 billion favorable impact of changes in exchange rates.

Operating income from the automotive operations increased by ¥677.1 billion, or 42.1%, to ¥2,284.2 billion during fiscal 2022 compared with the
prior fiscal year. This increase in operating income was due mainly to the ¥760.0 billion effect of marketing activities and the ¥570.0 billion favorable
impact of changes in exchange rates, partially offset by the ¥360.0 billion aggregate unfavorable impact of factors categorized as cost reduction efforts
(including fluctuations in raw materials prices) and the ¥220.0 billion aggregate unfavorable impact of changes in expenses and expense reduction
efforts.

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Financial Services Operations Segment

Sales revenues for the financial services operations increased during fiscal 2022 by ¥161.7 billion, or 7.5%, to ¥2,324.0 billion compared with the
prior fiscal year. This increase was due mainly to the favorable impact of changes in exchange rates.

Operating income from financial services operations increased by ¥161.4 billion, or 32.6%, to ¥657.0 billion during fiscal 2022 compared with the
prior fiscal year. This increase was due primarily to the increases in both financing margin and financing volume.

All Other Operations Segment

Sales revenues for Toyota’s other operations segments increased by ¥77.5 billion, or 7.4%, to ¥1,129.8 billion during fiscal 2022 compared with
the prior fiscal year.

Operating income from Toyota’s other operations segments decreased by ¥43.0 billion, or 50.4%, to ¥42.3 billion during fiscal 2022 compared
with the prior fiscal year.

Related Party Transactions

See note 32 to the consolidated financial statements for further discussion.

Basic Concept Regarding the Selection of Accounting Standards

TMC has adopted IFRS for its consolidated financial statements in order to improve the international comparability of its financial information in
the capital markets, among other reasons, beginning with the first quarter of the fiscal year ended March 31, 2021.

Outlook
Toyota, with its full lineup and profitable HEVs and PHEVs, along with its diverse options of BEVs that it will be strengthening, will make sure to
meet a wide range of global demand and is committed to further growth. For growth in emerging markets, profitable HEVs will be used as a source of
income, and with a value chain that can support approximately 10 million units sold annually, we will also take part in a wide range of business
opportunities. In addition, we will achieve cost reductions and Kaizen by leveraging the strengths of the TPS, and thereby enhance our future investment
capacity for the expansion of growth in BEVs and mobility areas, and establish a strong business foundation whereby carbon neutrality and growth can
both be achieved. Taking the foregoing external factors and other factors into account, Toyota expects that sales revenues for fiscal 2024 will increase
compared with fiscal 2023 due mainly to the increase in vehicle unit sales, partially offset by the unfavorable impact of changes in exchange rates.
Toyota expects that operating income will increase in fiscal 2024 compared with fiscal 2023 due mainly to marketing efforts, partially offset by the
unfavorable impact of changes in exchange rates. Toyota expects that income before income taxes and net income attributable to Toyota Motor
Corporation will also increase in fiscal 2024 compared with fiscal 2023.

For the purposes of this outlook discussion, Toyota is assuming an average exchange rate of ¥125 to the U.S. dollar and ¥135 to the euro.
Exchange rate fluctuations can materially affect Toyota’s operating results. In particular, a strengthening of the Japanese yen against the U.S. dollar can
have a material adverse effect on Toyota’s operating results. See “Item 5. Operating and Financial Review and Prospects — 5.A Operating Results —
Overview — Currency Fluctuations” for further discussion.

The foregoing statements are forward-looking statements based upon Toyota’s management’s assumptions and beliefs regarding exchange rates,
market demand for Toyota’s products, economic conditions and others. See

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“Cautionary Statement With Respect To Forward-Looking Statements”. Toyota’s actual results of operations could vary significantly from those
described above as a result of unanticipated changes in the factors described above or other factors, including those described in “Risk Factors”.

5.B LIQUIDITY AND CAPITAL RESOURCES

Historically, Toyota has funded its cash requirements, including those relating to capital expenditures as well as its research and development
activities through cash generated by operations.

In fiscal 2024, Toyota expects to sufficiently fund its cash requirements, including those relating to capital expenditures as well as its research and
development activities, through cash and cash equivalents on hand, cash generated by operations, the issuance of corporate bonds, and debt financing.
Toyota will use its funds to efficiently invest in maintenance and replacement of conventional manufacturing facilities and the introduction of new
products and will focus on investment in areas contributing to strengthening competitiveness and future growth for transformation into a mobility
company. See “Item 4. Information on the Company — 4.B Business Overview — Capital Expenditures and Divestitures” for information regarding
Toyota’s material capital expenditures and divestitures for fiscal 2021, 2022 and 2023, and information concerning Toyota’s principal capital
expenditures and divestitures currently in progress.

Toyota funds its financing programs for customers and dealers, including loans and leasing programs, from both cash generated by operations, the
issuance of corporate bonds, and debt financing by its sales finance subsidiaries. Toyota seeks to expand its ability to raise funds locally in markets
throughout the world by expanding its network of finance subsidiaries.

Net cash provided by operating activities decreased by ¥767.5 billion to ¥2,955.0 billion for fiscal 2023, compared with ¥3,722.6 billion for fiscal
2022. The decrease was primarily attributable to the ¥381.6 billion decrease in net income.

Net cash used in investing activities increased by ¥1,021.3 billion to ¥1,598.8 billion for fiscal 2023, compared with ¥577.4 billion for fiscal 2022.
The increase was primarily attributable to the ¥1,762.7 billion decrease in withdrawals from time deposits compared to the previous fiscal year.

Net cash used in financing activities was ¥56.1 billion for fiscal 2023, compared with net cash used in financing activities of ¥2,466.5 billion for
fiscal 2022, a ¥2,410.3 billion change. The change was primarily attributable to the ¥1,154.2 billion increase in funding by long-term debt in fiscal 2023.

For a discussion of cash flows for fiscal 2022 as compared to those for fiscal 2021, see “Item 4.B. Operating and Financial Review and Prospects
— 5.B. Liquidity and Capital Resources” of Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2022.

Total capital expenditures for property, plant and equipment, including vehicles and equipment on operating leases, were ¥3,496.2 billion during
fiscal 2023, remaining largely unchanged from the ¥3,611.5 billion in total capital expenditures during the prior fiscal year.

Toyota expects investments in property, plant and equipment, excluding vehicles and equipment on operating leases, to be approximately
¥1,860.0 billion during fiscal 2024.

Cash and cash equivalents were ¥7,516.9 billion as of March 31, 2023. Most of Toyota’s cash and cash equivalents are held in Japanese yen or in
U.S. dollars.

Liquid assets, which Toyota defines as cash and cash equivalents, time deposits, public and corporate bonds and its investment in monetary trust
funds increased during fiscal 2023, by ¥1,263.9 billion, or 9.4%, to ¥14,715.0 billion as of March 31, 2023.

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Trade accounts and notes receivable, less allowance for doubtful accounts increased during fiscal 2023 by ¥443.2 billion, or 14.1%, to
¥3,586.1 billion. This increase was due mainly to increased revenue from sales during the quarter ended March 31, 2023.

Inventories increased during fiscal 2023 by ¥434.2 billion, or 11.4%, to ¥4,255.6 billion. This increase was due mainly to an increase in the
volume of precious metals procured.

Total finance receivables, net increased during fiscal 2023 by ¥3,006.3 billion, or 13.8%, to ¥24,770.8 billion. This increase was due mainly to an
increase in the impact of changes in exchange rates. Finance receivables were geographically distributed as follows: in North America 56.9%, in Asia
12.0%, in Europe 14.0%, in Japan 6.3% and in Other 10.8%.

Other financial assets increased during fiscal 2023 by ¥247.5 billion, or 2.1%.

Property, plant and equipment increased during fiscal 2023 by ¥307.3 billion, or 2.5%. This increase was due mainly to capital expenditures.

Accounts and notes payable increased during fiscal 2023 by ¥694.2 billion, or 16.2%. This increase was due mainly to an increase in accounts
payable associated with parts procurement.

Income taxes payable decreased during fiscal 2023 by ¥422.2 billion, or 51.1%. This decrease was mainly due to an increase in interim payments
of income taxes.

Toyota’s total borrowings increased during fiscal 2023 by ¥2,883.9 billion, or 10.9%. Toyota’s short-term borrowings consist of loans with a
weighted-average interest rate of 2.02% and commercial paper with a weighted-average interest rate of 3.81%. Short-term borrowings increased during
fiscal 2023 by ¥485.3 billion, or 11.8%, to ¥4,590.1 billion. Toyota’s long-term debt mainly consists of unsecured and secured loans, medium-term
notes, unsecured and secured notes with weighted-average interest rates ranging from 1.29% to 6.53%, and maturity dates ranging from 2023 to 2048.
The current portion of long-term debt increased during fiscal 2023 by ¥621.7 billion, or 8.8%, to ¥7,648.5 billion and the non-current portion increased
by ¥1,741.6 billion, or 11.7%, to ¥16,685.3 billion. The increase in total borrowings resulted mainly from the increasing demand for financing
associated with the increase in the loan balance at financial subsidiaries. As of March 31, 2023, approximately 53% of long-term debt was denominated
in U.S. dollars, 11% in Japanese yen, 13% in euros, 6% in Australian dollars, 3% in Canadian dollars, and 14% in other currencies. Toyota hedges
interest rate risk exposure of fixed-rate borrowings by entering into interest rate swaps. There are no material seasonal variations in Toyota’s borrowings
requirements.

As of March 31, 2023, Toyota’s total interest-bearing debt was 103.7% of Toyota Motor Corporation shareholders’ equity, compared with 101.0%
as of March 31, 2022.

The following table provides information on credit ratings of Toyota’s short-term borrowing and long-term debt from Standard & Poor’s Ratings
Group (S&P), Moody’s Investors Services (Moody’s), and Rating and Investment Information, Inc. (R&I), as of May 31, 2023. A credit rating is not a
recommendation to buy, sell or hold securities. A credit rating may be subject to withdrawal or revision at any time. Each rating should be evaluated
separately of any other rating.

S&P Moody’s R&I

Short-term borrowing A-1+ P-1 —
Long-term debt A+ A1 AAA

Toyota’s net defined benefit liability (asset) of Japanese plans decreased during fiscal 2023 by ¥108.2 billion, or 46.6%, to ¥124.0 billion. The net
defined benefit liability (asset) of foreign plans increased

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during fiscal 2023 by ¥50.8 billion, or 19.3%, to ¥313.8 billion. The amounts of net defined benefit liability (asset) will be funded through future cash
contributions by Toyota or in some cases will be settled on the retirement date of each covered employee. The decrease in net defined benefit liability
(asset) of the Japanese plans reflects mainly a decrease in defined benefit obligations due to an increased discount rate. See note 23 to the consolidated
financial statements for further discussion.

Toyota’s treasury policy is to maintain controls on all exposures, to adhere to stringent counterparty credit standards, and to actively monitor
marketplace exposures. Toyota remains centralized and is pursuing global efficiency of its financial services operations through Toyota Financial
Services Corporation.

The key element of Toyota’s financial strategy is maintaining a strong financial position that will allow Toyota to fund its research and
development initiatives, capital expenditures and financial services operations efficiently even if earnings are subject to short-term fluctuations. Toyota
believes that it maintains sufficient liquidity for its present cash requirements and that, by maintaining its high credit ratings, it will continue to be able
to access funds from external sources in large amounts and at relatively low costs. Toyota’s ability to maintain its high credit ratings is subject to a
number of factors, some of which are not within Toyota’s control. These factors include general economic conditions in Japan and the other major
markets in which Toyota does business, as well as Toyota’s successful implementation of its business strategy.

Toyota uses its securitization program as part of its funding through special purpose entities for its financial services operations. Toyota is
considered as the primary beneficiary of these special purpose entities and therefore consolidates them. Toyota has not entered into any off-balance sheet
securitization transactions during fiscal 2023.

For information regarding the amounts of non-derivative financial liabilities and derivative financial liabilities by a remaining contract maturity
period, see note 19 to the consolidated financial statements. In addition, as part of Toyota’s normal business practices, Toyota enters into long-term
arrangements with suppliers for purchases of certain raw materials, components and services. These arrangements may contain fixed/minimum quantity
purchase requirements. Toyota enters into such arrangements to facilitate an adequate supply of these materials and services.

The following tables summarize Toyota’s contractual obligations and commercial commitments as of March 31, 2023

Yen in millions
Payments Due by Period
Less than 1 to 3 to 5 years
Total 1 year 3 years 5 years and after
Contractual Obligations:
Short-term debt 4,590,173 4,590,173 — — —
Long-term debt 24,790,100 7,715,466 9,875,785 5,427,639 1,771,210
Commitments for the purchase of property, plant, other assets and
services (note 30) 522,336 251,521 208,243 28,942 33,630
Total 29,902,609 12,557,160 10,084,028 5,456,581 1,804,840
Commercial Commitments (note 30):
Maximum potential exposure to guarantees given in the ordinary
course of business 3,600,631 955,483 1,614,133 926,168 104,847
Total 3,600,631 955,483 1,614,133 926,168 104,847

* “Long-term debt” represents future principal payments.

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Toyota expects to contribute ¥38,309 million domestically and ¥16,423 million overseas to its pension plans in fiscal 2024.

Lending Commitments
Credit Facilities with Credit Card Holders
Toyota’s financial services operations issue credit cards to customers. As customary for credit card businesses, Toyota maintains credit facilities
with holders of credit cards issued by Toyota. These facilities are used upon each holder’s requests up to the limits established on an individual holder’s
basis. Although loans made to customers through these facilities are not secured, for the purposes of minimizing credit risks and of appropriately
establishing credit limits for each individual credit card holder, Toyota employs its own risk management policy which includes an analysis of
information provided by financial institutions in alliance with Toyota. Toyota periodically reviews and revises, as appropriate, these credit limits.
Outstanding credit facilities with credit card holders were ¥171.4 billion as of March 31, 2023.

Credit Facilities with Dealers

Toyota’s financial services operations maintain credit facilities with dealers. These credit facilities may be used for business acquisitions, facilities
refurbishment, real estate purchases, and working capital requirements. These loans are typically collateralized with liens on real estate, vehicle
inventory, and/or other dealership assets, as appropriate. Toyota obtains a personal guarantee from the dealer or corporate guarantee from the dealership
when deemed prudent. Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be
sufficient to cover Toyota’s exposure under such agreements. Toyota evaluates the credit facilities according to the risks assumed in entering into the
credit facility. Toyota’s financial services operations also provide financing to various multi-franchise dealer organizations, referred to as dealer groups,
often as part of a lending consortium, for wholesale inventory financing, business acquisitions, facilities refurbishment, real estate purchases, and
working capital requirements. Toyota’s outstanding credit facilities with dealers totaled ¥3,820.9 billion as of March 31, 2023.

Guarantees
See note 30 to the consolidated financial statements for further discussion.

5.C RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

Toyota’s research and development is dedicated to capturing the increasingly diverse and sophisticated market through the development of
attractive, affordable, high-quality products for customers worldwide. The intellectual property that R&D generates is a vital management resource that
Toyota utilizes and protects to maximize its corporate value. For a more detailed discussion of the company’s research and development objectives and
policies, see “Item 4. Information on the Company — 4.B Business Overview — Research and Development.”

Toyota’s research and development expenditures were approximately ¥1,241.6 billion in fiscal 2023, ¥1,124.2 billion in fiscal 2022 and
¥1,090.4 billion in fiscal 2021.

Toyota presents research and development expenditures as a supplemental measure that demonstrates the amount of research and development
expenditures undertaken during the relevant reporting period. Toyota defines research and development expenditures as research and development cost,
plus research and development-related expenditures that were recognized as intangible assets, less amortization expenses for such assets. This measure
has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of Toyota’s research and development
cost as reported under IFRS.

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For details of the research and development cost recorded in the consolidated statement of income, see note 27 to the consolidated financial
statements.

Toyota operates a global research and development organization with the primary goal of building automobiles that meet the needs of customers in
every region of the world. In Japan, research and development operations are led by Toyota and Toyota Central Research & Development Laboratories,
Inc., which works closely with Daihatsu, Hino, Toyota Auto Body Co., Ltd., Toyota Motor East Japan, Inc., and many other Toyota group companies.
Overseas, Toyota has a worldwide network of technical centers as well as design and motorsports research and development centers.

Toyota established TRI in January 2016 to accelerate research and development of artificial intelligence technology, which has significant
potential to support future industrial technologies. In July 2017, TRI invested $100 million to launch a venture capital fund designed to provide
financing to startup companies, and is making investments in newly established promising startup companies in the four areas of artificial intelligence,
robotics, autonomous mobility, and data and cloud technology. TRI successively invested another $100 million in May 2019 and $150 million in June
2021. In addition, TRI established a $150 million fund in an aim to achieve carbon neutrality.

In Japan, Toyota established a new company, Toyota Research Institute — Advanced Development (“TRI-AD”), in March 2018 to further
accelerate its efforts in advanced development for automated driving technology and related technologies. Its key objectives include creating a smooth
software pipeline from research to commercialization, leveraging data-handling capabilities, strengthening collaboration in development within the
Toyota group, including TRI, to accelerate development, and recruiting and employing top-level engineers globally, while cultivating and coordinating
strong talent within the Toyota group. In January 2021, TRI-AD was reorganized into Woven Planet Group comprising four companies — Woven Planet
Holdings, Inc., which is responsible for decision-making for the entire group and creates new business opportunities; Woven Core, Inc., which assumed
the business of TRI-AD and is responsible for the development of automated driving technologies; Woven Alpha, Inc., which is responsible for the
development of new projects such as Woven City and Arene, a software platform; and Woven Capital, L.P. with a total investment value of $800 million,
which invests in growth-stage companies in areas such as autonomous driving mobility, artificial intelligence, and smart city. Moreover, to bolster
overseas research and development initiatives related to automated driving technology and software platforms, Toyota established Woven Planet North
America (WPNA) in the United States and Woven Planet United Kingdom in the United Kingdom, and transferred TRI’s automated driving division to
WPNA in May 2022. On April 1, 2023, Woven Planet Holdings, Inc., Woven Core, Inc. and Woven Alpha, Inc. were merged and changed their name to
Woven by Toyota, Inc.

Toyota also established a technical development center in Otemachi, Tokyo, Japan in October 2018 as a site for development of key IT
technologies that will support automated driving in collaboration with Woven Core, as well as promotion of collaboration with venture companies and
creation of new value by utilizing big data.

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The following table provides information on Toyota’s principal research and development facilities.

Facility Principal Activity

Japan
Toyota Technical Center Product planning, style, design, prototype production and vehicle evaluation
Higashi-Fuji Technical Center Advanced development
Tokyo Design Research & Laboratory Advanced styling designs
Woven by Toyota, Inc. Development of artificial intelligence technology with a focus on automated driving
technology
Development of Woven City and software platform technologies
Otemachi Office Development of key IT technologies, creation of new values by utilizing big data
and collaboration with venture companies
Shibetsu Proving Ground Evaluation
Toyota Central R&D Labs., Inc. Basic research
United States
Toyota Motor Engineering and Manufacturing North Product planning, design and evaluation of vehicles manufactured in North
America, Inc. America
Calty Design Research, Inc. Design
Toyota Research Institute of North America Advanced research relating to “energy and environment,” “safety” and “mobility
(TRI-NA) infrastructure”
Toyota Research Institute, Inc. Research and development of artificial intelligence technology
Woven by Toyota, U.S., Inc. Development of automated driving technology and software
Europe
Toyota Motor Europe NV/SA Planning and evaluation of vehicles manufactured in Europe
Toyota Europe Design Development S.A.R.L. Design
Toyota Motorsport GmbH Development of motor sports vehicles
Woven by Toyota, U.K., Ltd. Development of automated driving technology and software platform technology
Asia Pacific
Toyota Daihatsu Engineering and Manufacturing Co., Ltd. Planning and evaluation of vehicles manufactured in Australia and Asia
China
Toyota Motor Engineering and Manufacturing (China) Co.,
Ltd. Environmental technology design and evaluation in China
FAW Toyota Research & Development Co., Ltd. Design, evaluation and certification of vehicles manufactured in China
GAC Toyota Motor Co., Ltd. R&D Center Design, evaluation and certification of vehicles manufactured in China
BYD Toyota EV Technology Co., Ltd. Design and evaluation of BEVs
Toyota Motor Technical Research and Service (Shanghai)
Co., Ltd. Research of new technology, construction and system of automobiles
United Fuel Cell System R&D (Beijing) Co., Ltd. Development of FC system for commercial vehicles in China

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Toyota carefully analyzes patents and the need for patents in each area of research to formulate more effective research and development
strategies. Toyota identifies research and development projects in which it should build a strong global patent portfolio.

For a further discussion of Toyota’s intellectual property, see “Item 4. Information on the Company — 4.B Business Overview — Intellectual
Property.”

5.D TREND INFORMATION

For a discussion of the trends that affect Toyota’s business and operating results, see “Item 5. Operating and Financial Review and Prospects —
5.A Operating Results” and “Item 5. Operating and Financial Review and Prospects — 5.B Liquidity and Capital Resources.”

5.E CRITICAL ACCOUNTING ESTIMATES

Not applicable.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A DIRECTORS AND SENIOR MANAGEMENT
In order to advance its transition to a mobility company, Toyota has reflected on the path it has taken thus far and has formulated the “Toyota
Philosophy” as a roadmap for the future. Toyota’s mission is “Producing Happiness for All” by expanding the possibilities of people, companies and
communities through addressing the challenges of mobility as a mobility company. In order to do so, Toyota will continue to create new and unique
value with various partners by relentlessly committing towards monozukuri (manufacturing), and by fostering imagination for people and society.

Toyota strives to provide a full lineup of products with “good quality yet affordable prices” globally at the right place at the right time, and offer
products and services that are sympathetic towards customers in each country and region, through the initiative of “making even better cars” that we
have been engaged in since the 2008 financial crisis. In order to meet these objectives, following the introduction of “region-based operations,” the
“business unit system” and the “in-house company system” in 2011, 2013 and 2016, respectively, in April 2017 Toyota further clarified that, for the
purpose of further accelerating decision-making and operational execution, members of the board of directors are responsible for decision-making and
management oversight and that operating officers are responsible for operational execution. Furthermore, in 2018, Toyota changed the commencement
of operating officers’ terms of office from April to January, reduced corporate strategy functions and restructured the Japan Sales Business Group based
on regions rather than sales channels in an effort to enable decision-making closer to customers and the field, in order to further accelerate execution in
full coordination with each site. In 2019, in order to further advance Toyota’s “acceleration of management” and the development of a diverse and
talented workforce, the executive structure was changed to be composed only of senior managing officers and people of higher rank, and a new
classification called “senior professional/senior management” (kanbushoku) grouped and replaced the following titles or ranks: managing officers,
executive general managers, (sub-executive managerial level) senior grade 1 and senior grade 2 managers, and grand masters. From the perspective of
appointing the right people to the right positions, senior professionals/senior management were positioned in a wide range of posts, from those of chief
officer, deputy chief officer, plant general manager, and senior general manager to group manager, to deal with management issues as they arise and to
strengthen their development as part of a diverse and talented workforce through on-site learning and problem-solving (genchi genbutsu). In April 2020,
Toyota consolidated the posts of executive vice president and operating officer into the post of operating officer. In July 2020, Toyota further clarified
the roles of operating officers. Members of management who, together with the president, have cross-functional oversight of the entire company, were
redefined as “operating officers.” In-house company presidents, regional CEOs, and chief

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officers, as on-site leaders of business implementation elements, were given authority while being consolidated into the classification of “senior
professional/senior management.” The roles of operating officers and senior professionals/senior management are to be determined where and as
needed, and persons appointed as operating officers and senior professionals/senior management will change in accordance with the challenges faced
and the path that should be taken, as the company exercises greater flexibility in making appointments. However, because of the rapidly changing
business environment, Toyota now recognizes that there is an increasing need for such executives to fulfill management roles (related to people, goods,
and money) together with our President. Therefore, in April 2022, Toyota reorganized the roles of operating officers and reestablished the position of
“executive vice president,” defining it as an operating officer who is focused on the business from a management perspective. In April 2023, the role of
operating officers was revised to a management team that implements “product-centered (manufacturing ever-better cars) and region-centered
(best-in-town) management” under the theme of “inheritance and evolution,” and the executive vice presidents were selected upon their extensive
knowledge and experience from the two pillars of products and regions. Based on its basic policy of appointing the right people to the right positions,
Toyota has been swiftly and continuously innovating. Toyota will further press forward the tide of such innovations, aiming for a corporate structure
capable of carrying out management from a viewpoint that is optimal for a global company.

In order to convey top management’s aspirations and the company’s direction to all stakeholders, Toyota communicates what Toyota is really like
through “Toyota Times.”

Toyota believes that it is critical to appoint individuals who are capable of contributing to decision-making aimed at sustainable growth into the
future by practicing “product-centered and region-centered management” in keeping with the spirit of the Toyoda Principles, which set forth its founding
philosophy. Moreover, these individuals should be able to play a significant role in transforming Toyota into a “mobility company” through responding
to electrification, intelligence, and diversification and external partnerships based on trust and friendship and internal two-way interactive teamwork,
while working towards solutions for social challenges such as the climate change issue. Toyota maintains its board of directors and senior management
at an adequate size, and ensures they are overall balanced and diverse, including from the perspective of gender and nationality. Three outside members
of the board of directors have been appointed in order to further reflect the opinions of those from outside the company in management’s decision-
making process. Toyota has six audit & supervisory board members, four of whom are outside audit & supervisory board members. In order to be
prepared in the event Toyota lacks the number of audit & supervisory board members required by law, one substitute audit & supervisory board member
has been appointed pursuant to Article 329, Paragraph 3 of the Companies Act.

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Set forth below are brief summaries of Toyota’s members of the board of directors and audit & supervisory board members.

Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
Akio Toyoda Chairman of the Board of 1984 Joined TMC 24,691
(May 3, 1956) Directors 2000 Member of the Board of Directors of TMC
2002 Managing Director of TMC
2003 Senior Managing Director of TMC
2005 Executive Vice President of TMC
2009 President of TMC
2023 Chairman of TMC (to present)
(important concurrent duties)
Chairman of TOYOTA FUDOSAN CO., LTD.
Chairman of the Japan Automobile Manufacturers Association, Inc.
Director of DENSO Corporation
Representative Director of ROOKIE Racing, Inc.
Chairman of TOYOTA GAZOO Racing World Rally Team
Shigeru Hayakawa Vice Chairman of the Board 1977 Joined Toyota Motor Sales Co., Ltd. 326
(September 15, 1953) of Directors 2007 Managing Officer of TMC
2007 Toyota Motor North America, Inc. President
2012 Senior Managing Officer of TMC
2015 Member of the Board of Directors and Senior Managing Officer
of TMC
2017 Vice Chairman of TMC (to present)
(important concurrent duties)
Representative Director of Institute for International Economic Studies
Koji Sato President, 1992 Joined TMC 55
(October 19, 1969) Member of the Board of 2017 Executive General Manager of TMC
Directors 2020 Operating Officer of TMC
2021 Operating Officer of TMC (current system)
2023 Operating Officer and President of TMC
President of TMC (to present)
(important concurrent duties)
Chairman of TOYOTA GAZOO Racing Europe GmbH
Chairman of Toyota Motor North America, Inc.

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Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
Hiroki Nakajima Member of the Board of 1987 Joined TMC 20
(April 10, 1962) Directors, Operating 2014 Executive General Manager of TMC
Officer, Vice President 2015 Managing Officer of TMC
2020 Operating Officer of TMC
2023 Operating Officer and Executive Vice President of TMC
(current system)
Member of the Board of Directors, Operating Officer, Vice President
of TMC (to present)
(important concurrent duties)
President of Commercial Japan Partnership Technologies
Corporation
Yoichi Miyazaki Member of the Board of 1986 Joined TMC 42
(October 19, 1963) Directors, Operating 2015 Managing Officer of TMC
Officer, Vice President 2019 Operating Officer of TMC
2022 Operating Officer of TMC (current system)
2023 Operating Officer and Executive Vice President of TMC
Member of the Board of Directors, Operating Officer, Vice President
of TMC (to present)
Simon Humphries Member of the Board of 1988 Joined DCA Design in UK. 10
(March 30, 1967) Directors, Operating 1994 Joined TMC
Officer 2016 President of Toyota Europe Design Development S.A.R.L.
2018 Executive General Manager of TMC
2023 Operating Officer of TMC
Member of the Board of Directors, Operating Officer (to present)
(important concurrent duties)
Executive Vice President of Calty Design Research, Inc.
Ikuro Sugawara Outside Member of the 1981 Joined Ministry of International Trade and Industry —
(March 6, 1957) Board of Directors 2010 Director-General of the Industrial Science and Technology
Policy and Environment Bureau, Ministry of Economy, Trade and
Industry
2012 Director-General of the Manufacturing Industries Bureau,
Ministry of Economy, Trade and Industry
2013 Director-General of the Economic and Industrial Policy
Bureau, Ministry of Economy, Trade and Industry
2015 Vice-Minister of Ministry of Economy, Trade and Industry
2017 Retired from the Ministry of Economy, Trade and Industry

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Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
2017 Special Advisor to the Cabinet 2018 Retired from Special
Advisor to the Cabinet
2018 Outside Member of the Board of Directors of TMC (to present)
(important concurrent duties)
Independent Director of Hitachi, Ltd.
Outside Director of FUJIFILM Holdings Corporation
Sir Philip Craven Outside Member of the 1989 President of the International Wheelchair Basketball Federation —
(July 4, 1950) Board of Directors 2001 President of the International Paralympic Committee
2002 Retired as President of the International Wheelchair Basketball
Federation
2017 Retired as President of the International Paralympic Committee
2018 Outside Member of the Board of Directors of TMC (to present)
Masahiko Oshima Outside Member of the 1984 Joined The Mitsui Bank Limited —
(September 13, 1960) Board of Directors 2012 Executive Officer of Sumitomo Mitsui Banking Corporation
(SMBC)
2014 Managing Executive Officer of SMBC
2017 Director and Managing Executive Officer of SMBC
Director and Senior Managing Executive Officer of SMBC
2018 Senior Managing Corporate Executive Officer of Sumitomo
Mitsui Financial Group, Inc. (SMFG)
Senior Managing Executive Officer of SMBC
2019 Deputy President and Executive Officer of SMFG
Director and Deputy President of SMBC
2023 Deputy Chairman of SMBC (to present)
Outside Member of the Board of Directors of TMC (to present)
(important concurrent duties)
Deputy Chairman of Sumitomo Mitsui Banking Corporation

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Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
Emi Osono Outside Member of the 1988 Joined The Sumitomo Bank, Limited —
(August 8, 1965) Board of Directors 1998 Visiting Professor of the Waseda Institute of Asia-Pacific
Studies (WIAPS)
2000 Full-time lecturer at School of International Corporate Strategy,
Hitotsubashi University Business School
2002 Assistant Professor at School of International Corporate
Strategy, Hitotsubashi University Business School
2010 Professor at School of International Corporate Strategy,
Hitotsubashi University Business School
2018 Professor at School of Business Administration, Hitotsubashi
University Business School
2022 Dean and Professor at School of Business Administration and
School of International Corporate Strategy, Hitotsubashi
University Business School (to present)
2023 Outside Member of the Board of Directors of TMC (to present)
(important concurrent duties)
Professor at School of Business Administration, Hitotsubashi
University Business School
Outside Director of Tokio Marine Holdings, Inc.
Masahide Yasuda Full-time Audit & 1972 Joined TMC 62
(April 1, 1949) Supervisory Board 2000 General Manager of Overseas Parts Division of TMC
Member 2007 President of Toyota Motor Corporation Australia Ltd.
2014 Chairman of Toyota Motor Corporation Australia Ltd.
2017 Retired as Chairman of Toyota Motor Corporation Australia
Ltd.
2018 Audit & Supervisory Board Member of TMC (to present)
Katsuyuki Ogura (January Full-time Audit & 1985 Joined TMC 29
25, 1963) Supervisory Board 2015 General Manager of Affiliated Companies Finance Dept. of
Member TMC
2018 General Manager of Audit & Supervisory Board Office of
TMC
2019 Audit & Supervisory Board Member of TMC (to present)
(important concurrent duties)
Outside Audit & Supervisory Board Member of Aichi Steel
Corporation

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Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
Takeshi Shirane Full-time Audit & 1977 Joined TMC 150
(September 5, 1952) Supervisory Board 2001 General Manager of Production Management Div. of TMC
Member 2004 General Manager of Global Procurement Planning Div. of
TMC
2005 General Manager of 1st Procurement Div. of TMC
Managing Officer of TMC
2009 Senior Managing Director of TMC
2011 Senior Managing Officer of TMC
Advisor of Kanto Auto Works, Ltd.
2012 President of Kanto Auto Works, Ltd.
President of Toyota Motor East Japan, Inc.
2019 Chairman of the Board of Toyota Motor East Japan, Inc.
2023 Senior Executive Advisor of Toyota Motor East Japan, Inc. (to
present)
Audit & Supervisory Board Member of TMC (to present)
George Olcott Outside Audit & 1986 Joined S.G.Warburg & Co.,Ltd 2
(May 7, 1955) Supervisory Board 1999 President of UBS Asset Management (Japan)
Member 1999 President, Japan UBS Brinson
2000 Managing Director, Equity Capital Markets, UBS Warburg
Tokyo
2001 Judge Business School, University of Cambridge
2005 FME Teaching Fellow, Judge Business School, University of
Cambridge
2008 Senior Fellow, Judge Business School, University of
Cambridge
2022 Outside Audit & Supervisory Board Member of TMC (to
present)
(important concurrent duties)
Outside Director of Kirin Holdings Company, Limited
Ryuji Sakai Outside Audit & 1985 Registered as attorney —
(August 7, 1957) Supervisory Board Nagashima & Ohno
Member 1990 Wilson, Sonsini, Goodrich & Rosati (located in U.S.)
1995 Partner, Nagashima & Ohno
2000 Partner, Nagashima Ohno & Tsunematsu
2022 Audit & Supervisory Board Member of TMC (to present)
2023 Senior Counsel of Nagashima Ohno & Tsunematsu (to present)
(important concurrent duties)
Attorney

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Number of
Common Shares
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties (in thousands)
Catherine O’Connell Outside Audit & 1987 Japan Travel Bureau Inc. —
(February 10, 1967) Supervisory Board 1994 Senior Solicitor of Anderson Lloyd Barristers & Solicitors
Member (New Zealand)
2002 In House Counsel of Olympus Corporation
2004 Senior In House Counsel of Matsushita Electric Industrial Co.,
Ltd. Motor Company
Senior In House Counsel of Matsushita Electronic Components Co.,
Ltd.
2008 Hogan Lovells Horitsu Jimusho Gaikokuho Kyodo Jigyo
2012 Head of Legal of Molex Japan LLC
2017 President of O’Connell Consultants
2018 CEO of Catherine O’Connell Law (to present)
2023 Outside Audit & Supervisory Board Member of TMC (to
present)
(important concurrent duties)
Registered foreign attorney
External Audit & Supervisory Board Member of Fujitsu Limited

1. Mr. Koji Sato, who is President and Member of the Board of Directors, concurrently serves as Operating Officer (President).
2. The terms of office of the members of the board of directors are from the conclusion of the Ordinary General Shareholders’ Meeting held
on June 14, 2023 to the conclusion of the Ordinary General Shareholders’ Meeting for fiscal 2024.
3. The terms of office of Mr. Masahide Yasuda and Mr. George Olcott, who are both Audit & Supervisory Board Members, are from the
conclusion of the Ordinary General Shareholders’ Meeting held on June 15, 2022 to the conclusion of the Ordinary General Shareholders’
Meeting for fiscal 2026.
4. The terms of office of Mr. Katsuyuki Ogura, Mr. Takeshi Shirane, Mr. Ryuji Sakai and Ms. Catherine O’Connell, who are all Audit &
Supervisory Board Members, are from the conclusion of the Ordinary General Shareholders’ Meeting held on June 14, 2023 to the
conclusion of the Ordinary General Shareholders’ Meeting for fiscal 2027.

None of the persons listed above was selected as a member of board of directors, audit & supervisory board member or member of senior
management pursuant to an arrangement or understanding with Toyota’s major shareholders, customers, suppliers or others.

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Set forth below is a brief summary of Toyota’s substitute audit & supervisory board member.

Number of
Common
Name (Date of Birth) Position Brief Career Summary and Important Concurrent Duties Shares
Maoko Kikuchi Substitute Audit & 1992 Public Prosecutor at Public Prosecutor’s Office, Mistry of Justice —
(July 14, 1965) Supervisory Board 1997 Joined Paul Hastings, LLP (U.S.)
Member 1999 Registered as attorney
Joined Nagashima & Ohno
2004 Chief of the General Secretariat of the Japan Fair Trade Commission
2006 General Manager of Legal and Regulatory Affairs Div. of Vodafone
K.K.
2014 Executive Officer of Microsoft Japan Co., Ltd.
2016 Standing Outside Audit & Supervisory Board Member of
MITSUISOKO HOLDINGS Co., Ltd.
2020 President of Compass International Law Office (to present)
(important concurrent duties)
Attorney
Outside Director of MITSUISOKO HOLDINGS Co., Ltd.
Outside Director of Hitachi Construction Machinery Co., Ltd.

6.B COMPENSATION
Decision Making Policy and Process
Toyota believes that it is critical to appoint individuals who are capable of implementing “management centered on products and regions” and
contributing to decision-making aimed at sustainable growth into the future in keeping with the spirit of the Toyoda Principles, which set forth its
founding philosophy. Moreover, these individuals should be able to play a significant role in transforming Toyota into a mobility company and
contribute to the solutions of social issues, including climate change, through efforts for electrification, intelligence, and diversification and building
external partnerships therefor based on trust and friendship and internal two-way interactive teamwork. Toyota’s director compensation system is an
important means through which to promote various initiatives and is determined based on the following policy.
• It should be a system that encourages members of the board of directors to work to improve the medium- to long-term corporate value of
Toyota.
• It should be a system that can maintain compensation levels that will allow Toyota to secure and retain talented personnel.
• It should be a system that motivates members of the board of directors to promote management from the same viewpoint as our shareholders
with a stronger sense of responsibility as corporate managers.

The board of directors decides by resolution the policy for determining remuneration for and other payments to each member of the board of
directors. Remuneration is effectively linked to corporate performance while reflecting individual job responsibilities and performance. Remuneration
for outside members of the board of directors and audit & supervisory board members consists only of fixed payments. As a result, this remuneration is
not readily impacted by business performance, helping to ensure independence from management.

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Based on the resolution of the 115th Ordinary General Shareholders’ Meeting held on June 13, 2019 concerning remuneration for the members of
the board of directors of Toyota, the maximum cash compensation was set at 3.0 billion yen per year (of which, the maximum amount payable to outside
members of the board of directors is 0.3 billion yen per year), and the maximum share compensation was set at 4.0 billion yen per year. The number of
members of the board of directors as of the conclusion of the 115th Ordinary General Shareholders’ Meeting was nine (including three outside members
of the board of directors).

The amount of remuneration for audit & supervisory board members of Toyota was set at 30 million yen or less per month at the 104th Ordinary
General Shareholders’ Meeting held on June 24, 2008. The number of audit & supervisory board members as of the conclusion of the 104th Ordinary
General Shareholders’ Meeting was seven.

The amount of remuneration for each member of the board of directors of Toyota and the remuneration system are decided by the board of
directors and the “Executive Compensation Meeting,” a majority of the members of which are outside members of the board of directors, to ensure the
independence of the decision. For fiscal 2023, the Executive Compensation Meeting consists of vice chairman of the board of directors Shigeru
Hayakawa*1(Chairman), member of the board of directors Yoichi Miyazaki, and outside members of the board of directors Ikuro Sugawara, Sir Philip
Craven, Masahiko Oshima*3 and Emi Osono*3.
*1 Shigeru Hayakawa, Vice Chairman of the Board of Directors, replaced Takeshi Uchiyamada, Chairman of the Board of Directors, as Chairman of
the Executive Compensation Meeting on April 1, 2023. Takeshi Uchiyamada, Chairman of the Board of Directors, became a member of the Board
of Directors as of the same date, and subsequently retired as a member of the Board of Directors upon the conclusion of the Ordinary General
Shareholders’ Meeting held on June 14, 2023.
*2 Kenta Kon, a member of the Board of Directors, replaced Koji Kobayashi, a member of the Board of Directors, as a member of the Executive
Compensation Meeting on June 15, 2022. Yoichi Miyazaki, Operating Officer, subsequently replaced Kenta Kon as a member of the Executive
Compensation Meeting on April 1, 2023. Koji Kobayashi, a member of the Board of Directors, retired as a member of the Board of Directors upon
the conclusion of the Ordinary General Shareholders’ Meeting held on June 15, 2022. Kenta Kon, a member of the Board of Directors, retired as a
member of the Board of Directors upon the conclusion of the Ordinary General Shareholders’ Meeting held on June 14, 2023, and Yoichi
Miyazaki, Operating Officer, became a member of the Board of Directors upon the conclusion of the Ordinary General Shareholders’ Meeting
held on June 14, 2023.
*3 Masahiko Oshima and Emi Osono, both outside members of the Board of Directors, replaced Teiko Kudo, an outside member of the Board of
Directors, as members of the Executive Compensation Meeting on June 14, 2023. Teiko Kudo, an outside member of the Board of Directors,
retired as an outside member of the Board of Directors upon the conclusion of the Ordinary General Shareholders’ Meeting held on June 14, 2023.
*4 The amount of remuneration for each outside member of the Board of Directors and the amount of remuneration for each non-outside member of
the Board of Directors were determined at meetings of the Executive Compensation Meeting held in April 2022 and April 2023, respectively.

The board of directors resolves the policy for determining remuneration for and other payments to each member of the board of directors and the
executive remuneration system as well as the total amount of remuneration for a given fiscal year. The board of directors also resolves to delegate the
determination of the amount of remuneration for each member of the board of directors to the Executive Compensation Meeting.

The Executive Compensation Meeting reviews the remuneration system for members of board of directors and senior management on which it
will consult with the board of directors and determines the amount of remuneration for each member of the board of directors, taking into account
factors such as corporate performance as well as individual job responsibilities and performance, in accordance with the policy for

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determining remuneration for and other payments to each member of the board of directors established by the board of directors. The board of directors
considers that such decisions made by the Executive Compensation Meeting are in line with the policy on determining remuneration and other payments
for each member of the board of directors.

Remuneration for audit & supervisory board members is determined by the audit & supervisory board within the scope determined by resolution
of the shareholders’ meeting.

Executive Compensation Meetings were held in April 2022 and March and April 2023 to discuss and determine the amount of remuneration for
fiscal 2023 and other relevant matters.

Furthermore, preliminary examination meetings, consisting only of outside members of the board of directors, were held on a total of five
occasions in July, September and October 2022 and January and February 2023 to discuss matters for the Executive Compensation Meetings.
Remuneration for the members of the board of directors were determined with the unanimous consent of the Executive Compensation Meeting.

The principal topics discussed at Executive Compensation Meetings included:

• Remuneration level for each position and job responsibility
• Evaluation of benchmarks and actual results of fiscal 2022
• Determination of the amount of remuneration for each member of the board of directors

Method of Determining Performance-based Remuneration (Bonus and Share Compensation)

Directors with Japanese Citizenship (Excluding Outside Members of the Board of Directors)
Toyota sets the total amount of remuneration (“Annual Total Remuneration”) received by each member of the board of directors in a year based on
consolidated operating income, the fluctuation of the market capitalization of Toyota (calculated by multiplying the closing price of Toyota’s common
stock on the Tokyo Stock Exchange and the total number of issued shares of Toyota common stock (less shares of treasury stock)) and individual
performance evaluation. The balance after deducting fixed remuneration, or monthly remuneration, from Annual Total Remuneration constitutes
performance-based remuneration.

Toyota determines the annual total remuneration level appropriate for each position and job responsibility in accordance with factors including the
size of each director’s role, and by referring to the benchmarking result of remuneration for officers of both Japanese and global companies.

Concept of Each Item

Consolidated operating income Indicator for evaluating Toyota’s efforts based on business performance
Fluctuation of the market
capitalization Corporate value indicator for shareholders and investors to evaluate Toyota’s efforts
Individual performance
evaluation Qualitative evaluation of performance of each member of the board of directors

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Method and Reference Value for Evaluating Indicators and Evaluation Result for Fiscal 2022

Evaluation
Evaluation Evaluation Reference
Result for
Weight Method Value
Fiscal 2022
Evaluate the degree of attainment of consolidated
Consolidated operating income in fiscal 2021, using required
70% ¥1 trillion
operating income income (set in 2011) for Toyota’s sustainable
growth as reference value
Comparatively evaluate the fluctuation of Toyota’s Toyota: ¥30.4 trillion
Fluctuation of market capitalization up to fiscal 2022 (average of
Toyota’s market 30% January-March), using the market capitalization of 180%
TOPIX
capitalization Toyota and the TOPIX of fiscal 2021 (average of
: ¥1,909.75
January-March) as reference values

Method of Setting Annual Total Remuneration

Annual Total Remuneration is set using a theoretical formula that takes into account the benchmarking results of remuneration for members of the
board of directors. Annual Total Remuneration is set based on consolidated operating income and the fluctuation of the market capitalization of Toyota,
and then adjusted based on individual performance evaluation. Individual performance evaluation takes into account various factors such as initiatives
(including the ESG perspective) in keeping with the spirit of the Toyoda Principles, which set forth Toyota’s founding philosophy, trust from his or her
peers and contribution to the promotion of human resources development. The Individual performance evaluation is set within the range of 50% above
or below Annual Total Remuneration in accordance with the position and job responsibilities, and the amount of the annual total remuneration for each
member of the board of directors is calculated based on such evaluation results.

Directors with Foreign Citizenship (Excluding Outside Members of the Board of Directors)
Fixed remuneration and performance-based remuneration are set based on the remuneration levels and structures that allow Toyota to secure and
retain talented personnel. Fixed remuneration is set, taking into account each member’s job responsibilities and the remuneration standards of such
member’s home country (application determined based on each member’s job responsibilities and other factors). Performance-based remuneration is set
based on consolidated operating income, the fluctuation of the market capitalization of Toyota and individual performance, taking into account each
member’s job responsibilities and the remuneration standards of such member’s home country (application determined based on each member’s job
responsibilities and other factors). The concept of each item is the same as that for directors with Japanese citizenship (excluding outside members of the
board of directors). There are cases where Toyota provides income tax compensation for certain members of the board of directors in light of the
difference in income tax rates with those of his or her home country.

Compensation
The aggregate amount of remuneration, including bonuses, accrued for all members of the board of directors and audit & supervisory board
members as a group by Toyota for services in all capacities was ¥3,461 million during fiscal 2023.

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Toyota Motor Corporation and its subsidiaries have not set aside or accrued any amounts to provide pension, retirement or similar benefits to
members of the board of directors and audit & supervisory board members of Toyota Motor Corporation.

Toyota’s Annual Securities Report filed with the Kanto Local Bureau of Finance on June 30, 2023, contained the following information
concerning compensation in fiscal 2023 on a consolidated basis for members of the board of directors and audit & supervisory board members whose
total compensation exceeded ¥100 million during such period:

Compensation per Type (million yen)

Fixed Performance-based Total
Compensation Compensation Compensation
Monthly Share Retirement (millions of
Name, Position Classification of Company Compensation Bonus Compensation Benefits yen)
Takeshi Uchiyamada, Member of the Board
of Directors Toyota Motor Corporation 122 197 — — 319
Shigeru Hayakawa, Member of the Board of 73
Directors Toyota Motor Corporation 77 1 (38,000 shares) — 151
Akio Toyoda, Member of the Board of 735
Directors Toyota Motor Corporation 264 — (383,000 shares) — 999
James Kuffner, Member of the Board of Toyota Motor 108 68 — — 811
Directors Corporation 587 48 — —
Consolidated subsidiary
(Woven Planet Holdings,
Inc.*)
Kenta Kon, Member of the Board of Toyota Motor 52 56 — — 120
Directors Corporation 11 — — —
Consolidated subsidiary
(Hino Motors, Ltd.)

* Fixed compensation that Woven Planet Holdings, Inc., Toyota’s consolidated subsidiary, pays to James Kuffner includes fixed compensation that is
paid trimonthly and annually. In addition to the above compensation, Toyota and its consolidated subsidiary, Woven Planet Holdings, Inc. paid a tax
compensation of 520 million yen to James Kuffner, taking into account the difference in tax rates with respect to his home country and Japan. Woven
Planet Holdings, Inc. was renamed Woven by Toyota, Inc. on April 1, 2023.

The amounts above were recorded as expenses in fiscal 2023.

6.C BOARD PRACTICES

Toyota’s articles of incorporation provide for a board of directors of not more than 20 members and for not more than seven audit & supervisory
board members. Shareholders elect the members of the board of directors and audit & supervisory board members at the general shareholders’ meeting.
The normal term of office of a member of the board of directors is one year and that of an audit & supervisory board member is four years. Members of
the board of directors and audit & supervisory board members may serve any number of consecutive terms.

The board of directors may appoint one Chairman of the Board of Directors and one President, as well as one or more Vice Chairmen of the Board
and Executive Vice Presidents. The board of directors elects, pursuant to its resolutions, one or more Representative Directors. Each Representative
Director represents Toyota generally in the conduct of its affairs. The board of directors has the ultimate responsibility for the administration of Toyota’s
affairs. None of Toyota’s members of the board of directors is party to a service contract with Toyota or any of its subsidiaries that provides for benefits
upon termination of employment.

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Under the provisions of the Companies Act, if Toyota decides the terms of an agreement promising that Toyota will compensate a member of the
board of directors for all or part of certain expenses incurred by the member of the board of directors, such a decision must be made by a resolution of
the board of directors. Under the provisions of the Companies Act, if Toyota decides the terms of an insurance agreement to be executed with an insurer,
under which a member of the board of directors is the insured, and which promises that the insurer will compensate for damage arising from the member
of the board of directors being held liable in relation to the execution of his or her duties or from a liability claim filed against the member of the board
of directors, such decision must be made by a resolution of the board of directors.

Under the Companies Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of directors, exempt members of the
board of directors (including former members of the board of directors) from their liabilities to Toyota arising in connection with their failure to execute
their duties within the limits stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with each member of
the board of directors (excluding executive members of the board of directors, among others) which limits the maximum amount of their liabilities owed
to Toyota arising in connection with their failure to execute their duties to an amount equal to the minimum liability limit amount prescribed in the laws
and regulations.

Under the Companies Act, Toyota must have at least three audit & supervisory board members. At least half of the audit & supervisory board
members are required to be an “outside” audit & supervisory board member, which is any person who satisfies all of the following requirements:

(a) the person has never been a member of the board of directors, accounting counselor (in the case that an accounting counselor is a legal entity,
an employee of such entity who is in charge of its affairs), executive officer, manager or employee of Toyota or its subsidiaries during the ten year
period before becoming an outside audit & supervisory board member;

(b) if the person was an audit & supervisory board member of Toyota or any of its subsidiaries at any time during the ten year period before
becoming an outside audit & supervisory board member, such person has not been a member of the board of directors, accounting counselor (in the case
that an accounting counselor is a legal entity, an employee of such entity who is in charge of its affairs), executive officer, manager or employee of
Toyota or any of its subsidiaries during the ten year period before becoming an audit & supervisory board member of Toyota or any of its subsidiaries;
and

(c) the person is not a spouse or relative within the second degree of kinship of any member of the board of directors or manager or other key
employee of Toyota.

The audit & supervisory board members may not at the same time be a member of the board of directors, an accounting counselor (in case that an
accounting counselor is a judicial person, a member of such judicial person who is in charge of its affairs), executive officers, general managers or
employees of Toyota or any of its subsidiaries. Together, these audit & supervisory board members form the audit & supervisory board. The audit &
supervisory board members have the duty to examine the financial statements and business reports which are submitted by the board of directors to the
general shareholders’ meeting. The audit & supervisory board members also monitor the administration of Toyota’s affairs by the members of the board
of directors. Audit & supervisory board members are not required to be, and Toyota’s audit & supervisory board members are not, certified public
accountants. They are required to participate in meetings of the board of directors but are not entitled to vote.

Under the Companies Act and Toyota’s articles of incorporation, Toyota may, by a resolution of its board of directors, exempt audit & supervisory
board members (including former audit & supervisory board members) from their liabilities to Toyota arising in connection with their failure to execute
their duties within the limits stipulated by laws and regulations. In addition, Toyota may enter into a liability limitation agreement with each audit &
supervisory board member which limits the maximum amount of their liabilities owed to Toyota arising

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in connection with their failure to execute their duties to an amount equal to the minimum liability limit amount prescribed in the laws and regulations.

Toyota does not have a remuneration committee. However, members of Toyota’s Executive Compensation Meeting discuss remuneration for
members of the board of directors.

The Executive Compensation Meeting reviews the remuneration system for members of the board of directors and senior management and
determines the amount of remuneration for each member of the board of directors, taking into account factors such as corporate performance as well as
individual job responsibilities and performance. The members of the meeting are Shigeru Hayakawa, the Vice Chairman of the Board of Directors, and
Yoichi Miyazaki, Ikuro Sugawara, Sir Philip Craven, Masahiko Oshima and Emi Osono, each, a Member of the Board of Directors.

6.D EMPLOYEES
The total number of Toyota employees, on a consolidated basis, was 375,235 as of March 31, 2023, 372,817 as of March 31, 2022, and 366,283 as
of March 31, 2021. The following tables set forth a breakdown of persons employed by business segment and by geographic location as of March 31,
2023.

Number of Number of
Segment Employees Location Employees
Automotive 332,425 Japan 203,212
Financial services 13,894 North America 59,000
All other 22,856 Europe 23,730
Unallocated 6,060 Asia 66,176
Other* 23,117
Total 375,235 Total 375,235

* “Other” consists of Central and South America, Oceania, Africa and

the Middle East.

Most regular employees of Toyota Motor Corporation and its consolidated subsidiaries in Japan, other than management, are required to become
members of the labor unions that compose the Federation of All Toyota Workers’ Unions. Approximately 86% of Toyota Motor Corporation’s regular
employees in Japan are members of this union.

In Japan, basic wages and other working conditions are negotiated annually. In addition, in accordance with Japanese national custom, each
employee is also paid a semi-annual bonus. Bonuses are negotiated at the time of wage negotiations and are based on Toyota’s financial results,
prospects and other factors. The average wage increase for all union members, excluding bonuses, in Japan was approximately 3.15% in fiscal 2023.

In general, Toyota considers its labor relations with all of its workers to be good. However, Toyota is currently a party to, and otherwise from time
to time experiences, labor disputes in some of the countries in which it operates. Toyota does not expect any disputes to which it is currently a party to
materially affect Toyota’s consolidated financial position.

Toyota’s average number of temporary employees on a consolidated basis was 94,974 during fiscal 2023.

6.E SHARE OWNERSHIP

For information on the number of shares of Toyota’s common stock held by each member of the board of directors and audit & supervisory board
member as of June 2023, see “Item 6. Directors, Senior Management and Employees — 6.A Directors and Senior Management.”

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None of Toyota’s shares of common stock entitles the holder to any preferential voting rights. As of March 31, 2023, Toyota does not have any
stock option plan for which stock options or stock acquisition rights are exercisable or will become exercisable in the future.

Toyota’s board of directors resolves the share compensation within the maximum share compensation amount of 4.0 billion yen per year (also, the
total number of Toyota’s shares of common stock to be allotted shall not exceed a maximum of 4 million shares per year in total for eligible members of
the board of directors (excluding outside members of the board of directors)) established at the 115th Ordinary General Shareholders’ Meeting held on
June 13, 2019 and the 118th Ordinary General Shareholders’ Meeting held on June 15, 2022. The overview of the share compensation is as follows.

Eligible Persons Members of the board of directors of Toyota (excluding outside members of the board of directors)
Total amount of the share compensation Maximum of 4.0 billion yen per year
Amount of the share compensation Set each year considering factors such as corporate results, duties, and performance
payable to each member of the board of
directors
Type of shares to be allotted and method Issue or disposal of common stock (with transfer restrictions under an allotment agreement)
of allotment
Total number of shares to be allotted Maximum of 4,000,000 shares per year in total to eligible members of the board of directors
(Provided, however, that if a stock split, including a gratis allotment, or a reverse stock split of
Toyota’s common stock is carried out after June 15, 2022, or in case of events that otherwise require
an adjustment to the total number of Toyota’s shares of common stock to be issued or disposed of as
restricted share compensation, such total number of shares will be adjusted to a reasonable extent.)
Amount to be paid Determined by the board of directors of Toyota based on the closing price of Toyota’s common stock
on the Tokyo Stock Exchange on the business day prior to each resolution of the board of directors,
within a range that is not particularly advantageous to eligible members of the board of directors
Transfer restriction period A period of three to fifty years from the allotment date, which is determined by the board of directors
of Toyota in advance
Conditions for removal of transfer Restrictions will be removed upon the expiration of the transfer restriction period. However,
restrictions restrictions will also be removed in the case of expiration of the term of office, death, or other
legitimate reasons.
Gratis acquisition by Toyota Toyota will be able to acquire all allotted shares without consideration in the case of violations of
laws and regulations or other reasons specified by the board of directors of Toyota during the transfer
restriction period.

Members of the board of directors of Toyota with foreign citizenship are not eligible for the share compensation.

Toyota also has an employee stock ownership association in Japan for employees and full time and part time company advisors. Members of the
employee stock ownership association set aside certain amounts from their

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monthly salary and bonuses to purchase Toyota’s common stock through the employee stock ownership association. As of March 31, 2023, the
employee stock ownership association held 74,266,923 shares of Toyota’s common stock.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A MAJOR SHAREHOLDERS
As of March 31, 2023, 16,314,987,460 shares of Toyota’s common stock (of which 2,749,807,731 shares were treasury stock and 13,565,179,729
shares were outstanding) were issued. Toyota resolved at its board of directors meeting held on December 14, 2020 to exercise Toyota’s cash call option
to acquire all outstanding Model AA Class Shares and, subject to such acquisition, to cancel all Model AA Class Shares pursuant to the Companies Act.
Toyota completed the acquisition of all outstanding Model AA Class Shares on April 2, 2021 and cancelled them on April 3, 2021. Information
concerning beneficial ownership of Toyota’s common stock in the table below was prepared from information known to Toyota or that could be
ascertained from public filings, including filings made by Toyota’s shareholders regarding their ownership of Toyota’s common stock under the
Financial Instruments and Exchange Law of Japan.

Under the Financial Instruments and Exchange Law, any person who becomes, beneficially and solely or jointly, a holder, including, but not
limited to, a deemed holder who manages shares for another holder pursuant to a discretionary investment agreement, of more than 5% of the total
issued shares of a company listed on a Japanese stock exchange (including American Depositary Shares, or ADSs, representing such shares) must file a
report concerning the shareholding with the director of the relevant local finance bureau. A similar report must be filed, with certain exceptions, if the
percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued shares of a company increases or decreases by 1% or more, or
if any change to a material matter set forth in any previously filed reports occurs.

Based on information known to Toyota or that can be ascertained from public filings, the following table sets forth the beneficial ownership of
holders of 5% or more of Toyota’s common stock as of the most recent practicable date.

Number of Percentage of
Shares of Outstanding
Common Stock Voting Shares of
Name of Beneficial Owner (in thousands) Common Stock
Toyota Industries Corporation 1,192,331 8.81

According to The Bank of New York Mellon, depositary for Toyota’s ADSs (the “Depositary”), as of March 31, 2022, 292,036,035 shares of
Toyota’s common stock were held in the form of ADSs and there were 1,740 ADS holders of record and 515,686 beneficial owners in the United States.
According to Toyota’s register of shareholders, as of March 31, 2023, there were 989,548 holders of common stock of record worldwide. As of
March 31, 2023, there were 489 record holders of Toyota’s common stock with addresses in the United States, whose shareholdings represented
approximately 9.7% of the issued common stock on that date. Because some of these shares were held by brokers or other nominees, the number of
record holders with addresses in the United States might not fully show the number of beneficial owners in the United States.

None of Toyota’s shares of common stock entitles the holder to any preferential voting rights.

Toyota cancelled all of the First Series Model AA Class Shares on April 3, 2021, and as such, there are no holders of First Series Model AA
Class Shares.

To the extent known to Toyota, Toyota is not owned or controlled, directly or indirectly, by another corporation, any foreign government or any
natural or legal person.

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Toyota knows of no arrangements the operation of which may at a later time result in a change of control.

Toyota resolved at its board of directors meeting held on May 12, 2021 to split each share of common stock of Toyota as of September 30, 2021,
the record date, into five shares, effective October 1, 2021. Toyota decided to do so in order to create an environment in which Toyota shares are more
accessible to a broader base of investors by reducing the price per investment unit. In conjunction with the stock split, in accordance with Article 184,
Paragraph 2 of the Companies Act, Toyota amended its articles of incorporation to increase the total number of shares of common stock which Toyota is
authorized to issue from 10,000,000,000 to 50,000,000,000 on October 1, 2021, the effective date of the stock split.

7.B RELATED PARTY TRANSACTIONS

Business Relationships
Toyota purchases materials, supplies and services, among others, from numerous suppliers throughout the world in the ordinary course of
business, including Toyota’s associates and joint ventures accounted for by the equity method and those firms with which certain members of Toyota’s
board of directors are affiliated. Toyota purchased materials, supplies and services, among others, from these associates and joint ventures in the amount
of ¥9,951.5 billion in fiscal 2023. Toyota also sells its products and services, among others, to Toyota’s associates and joint ventures accounted for by
the equity method and firms with which certain members of Toyota’s board of directors are affiliated. Toyota sold products and services, among others,
to these associates and joint ventures entities in the amount of ¥3,544.2 billion in fiscal 2023. See note 32 of Toyota’s consolidated financial statements
for additional information regarding Toyota’s investments in and transactions with associates and joint ventures.

For a discussion of the Memorandum of Understanding concerning conducting a business combination of Mitsubishi Fuso and Hino Motors,
please see “Item 4. Information on the Company — 4.B Business Overview — Selected Initiatives.”

Loans
Toyota regularly has trade accounts and other receivables by, and accounts payable to, Toyota’s associates and joint ventures accounted for by the
equity method and firms with which certain members of Toyota’s board of directors are affiliated. Toyota had outstanding trade accounts and other
receivables by these associates and joint ventures in the amount of ¥532.6 billion as of March 31, 2023. Toyota had outstanding trade accounts and other
payables to these associates and joint ventures in the amount of ¥1,459.9 billion as of March 31, 2023.

Toyota, from time to time, provides short- to medium-term loans to its associates and joint ventures, as well as loans under a loan program
established by certain subsidiaries to assist their executives and members of the board of directors with the purchase of homes. As of March 31, 2023, an
aggregate amount of ¥179.6 billion in loans was outstanding to its associates and joint ventures accounted for by the equity method. Toyota believes that
each of these loans was entered into in the ordinary course of business.

7.C INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
1-3. Consolidated Financial Statements. Toyota’s audited consolidated financial statements are included under “Item 18 — Financial Statements.”
Except for Toyota’s consolidated financial statements included under Item 18, no other information in this annual report has been audited by
Toyota’s auditors.

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4. Not applicable.
5. Not applicable.
6. Export Sales. See “Item 5. Operating and Financial Review and Prospects — 5.A Operating Results — Overview — Geographic Breakdown.”
7. Legal and Arbitration Proceedings. See “Item 4. Information on the Company — 4.B Business Overview — Legal Proceedings.”
8. Dividend Information.

Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend. Toyota’s articles of incorporation provide
that retained earnings can be distributed as dividends pursuant to a resolution of its board of directors. Toyota’s board of directors resolves to pay
year-end dividends to holders of common stock and registered pledgees of common stock of record as of March 31, the record date, in each year.

At the 111th Ordinary General Shareholders’ Meeting held in June 2015, Toyota’s shareholders approved amendments to Toyota’s articles of
incorporation permitting the issuance of Model AA Class Shares in the future. Toyota resolved at its board of directors meeting held on December 14,
2020 to exercise Toyota’s cash call option to acquire all outstanding First Series Model AA Class Shares and, subject to such acquisition, to cancel all
First Series Model AA Class Shares pursuant to the Companies Act. Toyota completed the acquisition of all outstanding First Series Model AA
Class Shares on April 2, 2021 and cancelled them on April 3, 2021. At the 117th Ordinary General Shareholders’ Meeting held in June 2021, Toyota’s
shareholders approved amendments to Toyota’s articles of incorporation to, among other things, eliminate the First Series Model AA Class Shares
through the Fifth Series Model AA Class Shares as classes of Toyota’s capital stock, effective June 16, 2021. Prior to the June 16, 2021 amendment, the
articles of incorporation provided that, in the event that Toyota paid a year-end dividend to holders of common stock, it would pay a year-end dividend
to any holders of Model AA Class Shares or registered pledgees of Model AA Class Shares of record as of the record date for the year-end dividend, in
the amount payable on the Model AA Class Shares pursuant to their terms (“AA Dividends”), in preference to holders of common stock or registered
pledgees of common stock.

In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash distributions from its distributable surplus to
holders of common stock and pledgees of common stock of record as of September 30, the record date, in each year by a resolution of its board of
directors. Prior to the June 16, 2021 amendment, the articles of incorporation provided that, in the event that Toyota paid such interim dividends, Toyota
would pay an amount equivalent to one-half of the AA Dividends as an interim dividend to any holders of Model AA Class Shares or registered pledgees
of Model AA Class Shares of record as of the record date for the interim dividend, in preference to holders of common stock or registered pledgees of
common stock.

In addition, under the Companies Act, dividends may be paid to holders of common stock and pledgees of record of common stock as of any
record date, other than those specified above, as set forth in Toyota’s articles of incorporation or as determined by its board of directors from time to
time. Under the Companies Act, dividends may be distributed in cash or (except in the case of interim dividends mentioned in the third preceding
paragraph) in kind, subject to limitations on distributable surplus and to certain other conditions.

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The following table sets forth the dividends declared per share of common stock by Toyota for each of the periods shown. The periods shown are
the six months ended on that date. The U.S. dollar equivalents for the cash dividends shown are based on the noon buying rate for Japanese yen on the
last date of each period set forth below.

Cash Dividends
per Common Share
Period Ended Yen U.S. dollars
September 30, 2020 105.0 0.99
March 31, 2021 135.0 1.22
September 30, 2021 120.0 1.07
March 31, 2022 28.0 0.23
<140.0> <1.15>
September 30, 2023 25.0 0.17
<125.0> <0.86>
March 31, 2023 35.0 0.26
<175.0>* <1.32>*

* The numbers in angle brackets are calculated based on a “pre-stock split” basis, that is, on the assumption that the five-for-one stock split that Toyota
effected on October 1, 2021 had not taken place.

Toyota deems improving shareholder returns as one of its priority management policies, and it will continue to work to improve its corporate
culture to realize sustainable growth in order to enhance its corporate value. Toyota will strive for the stable and continuous increase of dividends.

With a view to surviving tough competition and transitioning to a mobility company, Toyota will aim to utilize its internal funds mainly for
investment in growth for the next generation, such as environmental technologies to achieve a carbon-neutral society and safety technologies for the
safety and security of its customers, and also for the stakeholders such as employees, business partners and local communities.

Considering these factors, with respect to the dividends for fiscal 2023, Toyota has determined to pay a year-end dividend of 35 yen (175 yen on a
pre-stock split basis) per share of common stock by a resolution of the board of directors pursuant to Toyota’s articles of incorporation. As a result,
combined with the interim dividend of 25 yen (125 yen on a pre-stock split basis) per share of common stock, the annual dividend will be 60 yen (300
yen on a pre-stock split basis) per share of common stock, and the total amount of the dividends on common stock for the year will be 816.9 billion yen.

Furthermore, Toyota resolved, at its board of directors meeting held on May 10, 2023, to repurchase up to 120 million shares of its common stock
between June 17, 2022 and September 30, 2022 at a total maximum purchase price of 150 billion yen.

Toyota intends to repurchase shares flexibly by taking into consideration the price level of its common stock and other factors.

8.B SIGNIFICANT CHANGES

Except as disclosed in this annual report, there have been no significant changes since the date of Toyota’s latest annual financial statements.

ITEM 9. THE OFFER AND LISTING

9.A LISTING DETAILS
Shares of Toyota common stock are traded on the Prime Market of the Tokyo Stock Exchange and the Nagoya Stock Exchange under the ticker
symbol “7203” in Japan, and on the London Stock Exchange under the

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ticker symbol “TYT.” Toyota’s ADSs, each representing ten shares of Toyota common stock, are listed on the New York Stock Exchange, or NYSE,
under the ticker symbol “TM.”

9.B PLAN OF DISTRIBUTION

Not applicable.

9.C MARKETS
The primary trading market for Toyota’s common stock is the Prime Market of the Tokyo Stock Exchange. The common stock is also listed on the
Nagoya Stock Exchange and on the London Stock Exchange.

Since September 29, 1999, American Depositary Shares, each equal to ten shares of Toyota’s common stock, have been traded and listed on the
New York Stock Exchange through a sponsored ADS facility operated by The Bank of New York Mellon, as Depositary. Prior to that time, Toyota’s
ADSs were listed on the Nasdaq SmallCap Market through five unsponsored ADS facilities.

9.D SELLING SHAREHOLDERS

Not applicable.

9.E DILUTION
Not applicable.

9.F EXPENSES OF THE ISSUE

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A SHARE CAPITAL
Toyota resolved at its board of directors meeting held on May 12, 2021 to split each share of common stock of Toyota as of September 30, 2021,
the record date, into five shares, effective October 1, 2021. Toyota decided to do so in order to create an environment in which Toyota shares are more
accessible to a broader base of investors by reducing the price per investment unit.

In conjunction with the stock split, in accordance with Article 184, Paragraph 2 of the Companies Act, Toyota amended its articles of
incorporation to increase the total number of shares of common stock which Toyota is authorized to issue from 10,000,000,000 to 50,000,000,000 on
October 1, 2021, the effective date of the stock split.

10.B MEMORANDUM AND ARTICLES OF ASSOCIATION

Except as otherwise stated, set forth below is information relating to Toyota’s common stock, including brief summaries of the relevant provisions
of Toyota’s articles of incorporation and share handling regulations, as currently in effect, and of the Companies Act, Act Concerning Book-Entry
Transfer of Corporate Bonds, Shares and Other Securities and related legislation.

General
Toyota’s authorized number of shares as of March 31, 2023 was 50,000,000,000 shares, of which 16,314,987,460 shares of common stock have
been issued. In conjunction with the cancellation of all of the Model AA Class Shares on April 3, 2021, Toyota’s articles of incorporation were amended
at the 117th Ordinary General Shareholders’ Meeting held in June 2021.

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Toyota does not issue share certificates for its shares. In accordance with the Companies Act, the Book-Entry Transfer Act and Toyota’s articles of
incorporation, Toyota’s common stock are recorded or registered on (i) Toyota’s register of shareholders and (ii) transfer account books of the Japan
Securities Depository Center, Inc. (“JASDEC”) which is a book-entry transfer institution, and securities firms, banks or other account management
institutions. The transfer of common stock will generally become effective once the transfer is recorded in the transferee’s account. There are no
restrictions imposed by Toyota’s articles of incorporation or share handling regulations on the transfer of common stock. In order to assert shareholders’
rights against Toyota, a shareholder must generally have his or her name and address recorded or registered on Toyota’s register of shareholders. A
holder of common stock can assert minority shareholders’ rights (shareholders’ rights for which Toyota has not set a record date) against Toyota if
JASDEC provides an individual shareholder notice to Toyota upon the shareholder’s request. The shareholder of deposited shares underlying the ADSs
is the Depositary for the ADSs. Accordingly, holders of ADSs will not be able directly to assert shareholders’ rights.

A holder of common stock must have a transfer account to transfer shares. Holders of common stock who do not have a transfer account with
JASDEC must have an account with an account management institution that directly or indirectly has a transfer account with JASDEC. Once Toyota
decides on the record date for its shareholders’ meeting or makes a request to JASDEC based on justifiable grounds, JASDEC will promptly provide to
Toyota names, addresses and other information with respect to the holders of Toyota’s common stock who are recorded on the transfer account books of
JASDEC or account management institutions. Upon receiving such information, Toyota will record or register such information received from JASDEC
on its register of shareholders. Accordingly, holders of common stock recorded or registered on Toyota’s register of shareholders will be treated as
holders of common stock of Toyota and may exercise rights, such as voting rights, and will receive dividends (if any) and notices to holders of common
stock directly from Toyota. Holders of common stock wishing to assert minority shareholders’ rights against Toyota must request an individual
shareholder notice to JASDEC or the account management institution at which the shareholder has opened a transfer account. In response to such
request, JASDEC will provide the individual shareholders notice to Toyota. A holder of common stock may assert his or her minority shareholders’
rights against Toyota for a period of four weeks after the date the individual shareholder notice is provided to Toyota. The shares held by a person who is
deemed to hold additional shares according to the transfer account books are aggregated for these purposes.

Corporate Purpose
Article 2 of Toyota’s articles of incorporation states that its purpose is to engage in the following businesses:
• the manufacture, sale, leasing and repair of:
• motor vehicles, industrial vehicles, ships, aircraft, other transportation machinery and apparatus, spacecraft and space machinery and
apparatus, and parts thereof;
• industrial machinery and apparatus, other general machinery and apparatus, and parts thereof;
• electrical machinery and apparatus, and parts thereof; and
• measuring machinery and apparatus, medical machinery and apparatus, and parts thereof;
• the manufacture and sale of ceramics and products of synthetic resins, and materials thereof;
• the manufacture, sale and repair of construction materials and equipment, furnishings and fixtures for residential buildings;
• the planning, designing, supervision, execution and undertaking of construction works, civil engineering works, land development, urban
development and regional development;
• the sale, purchase, leasing, brokerage and management of real estate;
• the service of information processing, information communications and information supply and the development, sale and leasing of
software;

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• the design and development of product sales systems that utilize networks such as the Internet, sale, leasing and maintenance of computers
included within such systems, and sale of products by utilizing such systems;
• the inland transportation, marine transportation, air transportation, stevedoring, warehousing and tourism businesses;
• the printing, publishing, advertising and publicity, general leasing, security and workers dispatch businesses;
• the credit card operations, purchase and sale of securities, investment consulting, investment trust operation, and other financial services;
• the operation and management of such facilities as parking lots, showrooms, educational facilities, medical care facilities, sports facilities,
marinas, airfields, food and drink stands and restaurants, lodging facilities, retail stores and others;
• the non-life insurance agency business and the life insurance agency business;
• the production and processing by using biotechnology of agricultural products including trees, and the sale of such products;
• the power generation and the supply and sale of electric power;
• the sale of goods related to each of the preceding items and mineral oil;
• the conducting of engineering, consulting, invention and research relating to each of the preceding items and the utilization of such
invention and research; and
• any businesses incidental to or related to any of the preceding items.

Dividends
Dividends — General
Toyota normally pays dividends twice per year, including an interim dividend and a year-end dividend. Toyota’s articles of incorporation provide
that retained earnings can be distributed as dividends pursuant to a resolution of its board of directors. Toyota’s board of directors resolves to pay
year-end dividends to shareholders and registered pledgees of record as of March 31, the record date, in each year.

In addition to these year-end dividends, Toyota may pay an interim dividend in the form of cash distributions from its distributable surplus to
holders of stock and pledgees of stock of record as of September 30, the record date, in each year by a resolution of its board of directors.

In addition, under the Companies Act, dividends may be paid to shareholders and pledgees of record as of any record date, other than those
specified above, as set forth by Toyota’s articles of incorporation or as determined by its board of directors from time to time. Under the Companies Act,
dividends may be distributed in cash or (except in the case of interim dividends mentioned in the second preceding paragraph) in kind, subject to
limitations on distributable surplus and to certain other conditions.

Dividends — Distributable Amount

Under the Companies Act, Toyota is permitted to make distributions of surplus to the extent that the aggregate book value of the assets to be
distributed to shareholders does not exceed the distributable amount provided for by the Companies Act and the ordinance of the Ministry of Justice as
at the effective date of such distribution of surplus.

The amount of surplus at any given time shall be the amount of Toyota’s assets and the book value of Toyota’s treasury stock after subtracting and
adding the amounts of items provided for by the Companies Act and

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the ordinance of the Ministry of Justice, and the amount of surplus distributable for dividends is calculated by adding to and subtracting from this
amount the amounts of items provided for by the Companies Act and the ordinance of the Ministry of Justice.

Dividends — Prescription
Under its articles of incorporation, Toyota is not obligated to pay any dividends in cash which are left unclaimed for a period of three years after
the date on which they first became payable.

Capital Accounts
The amount of the cash or assets paid or contributed by subscribers for new shares (with certain exceptions) is required to be accounted for as
stated capital, although Toyota may account for an amount not exceeding one-half of such cash or assets as additional paid-in capital.

Under the Companies Act, Toyota may reduce its additional paid-in capital and legal reserve without limitation on the amount to be reduced,
generally, by a resolution of a general shareholders’ meeting and if so decided by the same resolution, may account for the whole or any part of the
amount of the reduction of additional paid-in capital as stated capital. The whole or any part of surplus which may be distributed as dividends may also
be transferred to stated capital by a resolution of a general shareholders’ meeting.

Stock Splits
Toyota may at any time split the outstanding shares into a greater number of shares by a resolution of the board of directors. Toyota must give
public notice of the stock split, specifying a record date for the stock split, not less than two weeks prior to the record date.

Consolidation of Shares
Toyota may at any time consolidate shares in issue into a smaller number of shares by a special shareholders resolution (as defined in “Voting
Rights”). When a consolidation of shares is to be made, Toyota must give public notice of certain matters two weeks prior to the effective date of the
consolidation.

Japanese Unit Share System

General. Consistent with the requirements of the Companies Act, Toyota’s articles of incorporation provide that 100 shares constitute one “unit.”
Although the number of shares constituting a unit is included in the articles of incorporation, any amendment to the articles of incorporation reducing
(but not increasing) the number of shares constituting a unit or eliminating the provisions for the unit of shares may be made by a resolution of the board
of directors rather than by a special shareholders resolution, which is otherwise required for amending the articles of incorporation.

Voting Rights under the Unit Share System. Under the unit share system, shareholders have one voting right for each unit of shares that they
hold. Any number of shares less than a full unit will carry no voting rights.

Purchase by Toyota of Shares Constituting Less Than a Unit. A holder of shares constituting less than a full unit may require Toyota to purchase
those shares at their market value in accordance with the provisions of Toyota’s share handling regulations and the Companies Act.

Voting Rights
Toyota holds its ordinary general shareholders’ meeting each year. In addition, Toyota may hold an extraordinary general shareholders’ meeting
whenever necessary by giving at least two weeks’ advance notice.

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Under the Companies Act, notice of any shareholders’ meeting must be given to each shareholder having voting rights or, in the case of a non-resident
shareholder, to his or her resident proxy or mailing address in Japan in accordance with Toyota’s share handling regulations, at least two weeks prior to
the date of the meeting.

Holders of common stock shall have voting rights exercisable at a general shareholders’ meeting. A holder of shares constituting one or more
whole units is entitled to one vote per unit of shares subject to the limitations on voting rights set forth in this paragraph. In general, under the
Companies Act, a resolution can be adopted at a general shareholders’ meeting by a majority of the shares having voting rights represented at the
meeting. The Companies Act and Toyota’s articles of incorporation require a quorum for the election of members of the board of directors and audit &
supervisory board members of not less than one-third of the total number of outstanding shares having voting rights. Toyota’s shareholders are not
entitled to cumulative voting in the election of members of the board of directors. A corporate shareholder, the management of which is substantially
under Toyota’s control as provided by an ordinance of the Ministry of Justice, either through the holding of voting rights or for any other reason, does
not have voting rights.

Under the Companies Act, Toyota shall implement the electronic provision measures (“Electronic Provision”) for the information contained in the
reference materials, etc. for general shareholders’ meetings.

The convocation notice of shareholders’ meeting must set forth the information contained in the reference materials, etc. for general shareholders’
meetings being provided through the Electronic Provision and the URL of the website used for the Electronic Provision, in addition to the place, the
time and the purpose of the meeting. The information contained in the reference materials, etc. for general shareholders’ meetings must be posted on a
website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the convocation notice of shareholders’ meeting
is dispatched until the date on which three months have elapsed from the meeting. In general, any shareholder is entitled to request printed paper copies
of the information contained in the reference materials, etc. for general shareholders’ meetings by the record date for voting rights at the relevant general
shareholders’ meeting.

Shareholders may exercise their voting rights by attending the general shareholders’ meeting or in writing by mail. Shareholders who choose to
exercise their voting rights by mail must fill out and return to Toyota the voting right exercise form enclosed with the convocation notice of the general
shareholders’ meeting by the date specified in such convocation notice. In addition, from the general shareholders’ meeting for fiscal 2009, shareholders
may exercise their voting rights through the internet. Shareholders electing to exercise their voting rights through the internet must log on to the
“Website to Exercise Voting Rights” using the login ID and temporary password provided in the voting right exercise form enclosed with the
convocation notice and submit their votes by a date specified in the convocation notice, following instructions appearing on the website. Institutional
investors may also use the Electronic Proxy Voting Platform operated by Investor Communications Japan to exercise their voting rights through the use
of the Internet, if such institutional investor applies to use the platform in advance. Shareholders may also exercise their voting rights through proxies,
provided that those proxies are also shareholders who have voting rights. Toyota may refuse a shareholder having two or more proxies attend a general
shareholders’ meeting.

The Companies Act provides that a quorum of at least one-third of outstanding shares with voting rights must be present at a shareholders’
meeting to approve any material corporate actions such as:
(1) any amendment of the articles of incorporation with certain exceptions in which a shareholders’ resolution is not required;
(2) acquisition of its own shares from a specific party;
(3) consolidation of shares;
(4) any issue or transfer of its shares at a “specially favorable” price (or any issue of stock acquisition rights or bonds with stock
acquisition rights at “specially favorable” conditions by Toyota) to any persons other than shareholders;

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(5) the removal of an audit & supervisory board member;

(6) the exemption of liability of a director or audit & supervisory board member with certain exceptions;
(7) a reduction of stated capital which meets certain requirements with certain exceptions;
(8) a distribution of in-kind dividends which meets certain requirements;
(9) dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is not required;
(10) the transfer of the whole or a material part of the business;
(11) the transfer in entirety or in part of shares or equity interest of a subsidiary under certain conditions;
(12) the taking over of the entire business of any other corporation with certain exceptions in which a shareholders’ resolution is not
required;
(13) share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain exceptions in
which a shareholders’ resolution is not required;
(14) company split with certain exceptions in which a shareholders’ resolution is not required; or
(15) share delivery with certain exceptions in which a shareholders’ resolution is not required.

At least two-thirds of the shares having voting rights represented at the meeting must approve these actions.

The voting rights of holders of ADSs are exercised by the Depositary based on instructions from those holders.

Rights to be Allotted Shares

Shareholders have no preemptive rights under Toyota’s articles of incorporation. Under the Companies Act, the board of directors may, however,
determine that shareholders shall be given rights to be allotted shares or stock acquisition rights on request in connection with a particular issue or
transfer of shares, or issue of stock acquisition rights, respectively. In this case, such rights must be given on uniform terms to all shareholders as of a
specified record date by at least two weeks’ prior public notice to shareholders of the record date.

Rights to be allotted shares are nontransferable. However, a shareholder may be allotted stock acquisition rights without consideration thereto, and
may transfer such rights.

Liquidation Rights
In the event of a liquidation of Toyota, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among
the shareholders or registered pledgees in proportion to the respective number of shares they own.

Liability to Further Calls or Assessments

All of Toyota’s currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable.

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for all shares. Mitsubishi UFJ Trust and Banking Corporation’s office is
located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8212 Japan. Mitsubishi UFJ Trust and Banking Corporation maintains Toyota’s register
of shareholders and records transfers of record ownership (in the case of common stock, upon receiving notification from JASDEC).

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Record Date
The close of business on March 31 is the record date for Toyota’s year-end dividends, if paid. A holder of shares constituting one or more whole
units who is recorded or registered as a holder on Toyota’s register at the close of business as of March 31 is also entitled to exercise shareholders’
voting rights at the ordinary general shareholders’ meeting with respect to the business year ending on March 31. The close of business on September 30
of each year is the record date for interim dividends, if paid. In addition, Toyota may set a record date for determining the shareholders entitled to other
rights and for other purposes by giving at least two weeks’ prior public notice.

The shares generally trade ex-dividend or ex-rights on the Japanese stock exchanges on the business day preceding a record date (or if the record
date is not a business day, one business day prior thereto), for the purpose of dividends or rights offerings.

Acquisition by Toyota of Shares

Toyota may acquire its own shares (i) through a stock exchange on which such shares are listed or by way of tender offer (pursuant to an ordinary
resolution of a general shareholders’ meeting or a resolution of the board of directors), (ii) by purchase from a specific party (pursuant to a special
resolution of a general shareholders’ meeting) or (iii) from a subsidiary of Toyota (pursuant to a resolution of the board of directors). When such
acquisition of shares is made by Toyota from a specific party other than a subsidiary of Toyota, any other shareholder may make a demand to a
representative director, more than five calendar days prior to the relevant shareholders’ meeting, that Toyota also purchase the shares held by such
holder. However, the acquisition of its own shares at a price not exceeding the market price to be provided under an ordinance of the Ministry of Justice
will not trigger the right of any shareholder to include him/her as the seller of his/her shares in such proposed purchase.

Any acquisition of shares must satisfy certain requirements that the total amount of the acquisition price may not exceed the amount of the
distributable dividends. See “Item 10. Additional Information — 10.B Memorandum and Articles of Association — Dividends.”

Shares acquired by Toyota may be held by it for any period or may be cancelled by resolution of the board of directors. Toyota may also transfer
to any person the shares held by it, subject to a resolution of the board of directors, and subject also to other requirements applicable to the issuance of
new shares. Toyota may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the
purpose of acquiring another company by way of merger, share exchange or corporate split through exchange of treasury stock for shares or assets of the
acquired company.

The Companies Act generally prohibits any subsidiary of Toyota from acquiring shares of Toyota.

Report of Substantial Shareholdings

The Financial Instruments and Exchange Law of Japan and regulations under the Law require any person who has become a holder (together with
its related persons) of more than 5% of the total issued shares of a company listed on any Japanese stock exchange (including ADSs representing such
shares) to file with the Director of a competent Local Finance Bureau, within five business days, a report concerning those shareholdings. A similar
report must also be filed to reflect any change of 1% or more in any shareholding or any change in material matters set out in reports previously filed.
Any such report shall be filed with the Director of a competent Local Finance Bureau through the Electronic Disclosure for Investor’s Network
(“EDINET”) system. For this purpose, shares issuable to a shareholder upon exercise of stock acquisition rights are taken into account in determining
both the number of shares held by that stock acquisition rights holder and the company’s total issued shares.

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10.C MATERIAL CONTRACTS

All material contracts concluded by Toyota during the two years preceding this filing were entered into in the ordinary course of business.

10.D EXCHANGE CONTROLS

The following is a general summary of major Japanese foreign exchange control regulations applicable to holders of shares of capital stock or
voting rights (including ADSs) of Toyota, and to others intending to consummate other actions such as obtaining consent from other investors holding
voting rights and consenting to certain proposals at a general shareholders meeting, who are “exchange non-residents” or “foreign investors,” as
described below. The statements regarding Japanese foreign exchange control regulations set forth below are based on the laws and regulations in force
and as interpreted by the Japanese authorities as of the date of this annual report and are subject to subsequent changes in the applicable Japanese laws
or interpretations thereof. This summary is not exhaustive of all possible foreign exchange control considerations that may apply to a particular investor,
and potential investors are advised to satisfy themselves as to the overall foreign exchange control consequences of the acquisition, ownership and
disposition of shares of capital stock or voting rights of Toyota by consulting their own advisors.

The Foreign Exchange and Foreign Trade Act of Japan (Act No. 228 of 1949, as amended, the “FEFTA”) and the cabinet orders and ministerial
ordinances thereunder (collectively, the “Foreign Exchange Regulations”) govern the acquisition and holding of shares of capital stock and voting rights
of Toyota by “exchange non-residents” and by “foreign investors.” The Foreign Exchange Regulations currently in effect do not, however, affect
transactions between exchange non-residents to purchase or sell shares outside Japan using currencies other than Japanese yen.

Exchange non-residents are:

(i) individuals who do not reside in Japan; and
(ii) corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as residents of Japan. Conversely,
branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Foreign investors are:

(i) individuals who are exchange non-residents;
(ii) corporations or other organizations that are organized under the laws of foreign countries or whose principal offices are located outside of
Japan;
(iii) Japanese corporations of which 50% or more of their total voting rights are held directly or indirectly by individuals who are exchange
non-residents and/or corporations or other organizations falling within (i) and/or (ii) above;
(iv) partnerships under the Civil Code of Japan (Act No. 89 of 1896, as amended) established to invest in corporations, limited partnerships for
investment under the Limited Partnership Act for Investment of Japan (Act No. 90 of 1998, as amended), or any other similar partnerships
under foreign law, of which (a) 50% or more of the total contributions are made by individuals and/or corporations falling within (i), (ii),
(iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations or (b) a majority of the general
partners are individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the
Foreign Exchange Regulations; and

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(v) corporations or other organizations, a majority of whose officers, or officers having the power of representation, are individuals who are
exchange non-residents.

Acquisition of Shares
In general, the acquisition of shares of a Japanese company (such as the shares of capital stock of Toyota) by an exchange non-resident from a
resident of Japan is not subject to any prior filing requirements (other than those relating to an “inward direct investment” set out below). In certain
limited circumstances, however, the Minister of Finance may require prior approval of an acquisition of this type. While prior approval, as described
above, is not required in general, in the case where a resident of Japan transfers shares of a Japanese company (such as the shares of capital stock of
Toyota) for consideration exceeding ¥100 million to an exchange non-resident, the resident of Japan who transfers the shares is required to report the
transfer to the Minister of Finance within 20 days from the date of the transfer or the date of receipt of payment, whichever comes later, unless (i) the
transfer was made through a bank or financial instruments business operator licensed or registered under Japanese law or other entity prescribed by the
Foreign Exchange Regulations acting as an agent or intermediary or (ii) the acquisition constitutes an “inward direct investment” described below.

Inward Direct Investment in Shares of Listed Companies

On May 8, 2020, an amendment to the Foreign Exchange Regulations came into effect. Upon the full implementation of the Amendment as of
June 7, 2020, the requirements and procedures regarding the prior notifications of inward direct investments to the Minister of Finance and any other
competent Ministers under the FEFTA, were amended. After the implementation of the Amendment, Japanese listed companies are classified into the
following categories:
(i) companies engaged in businesses excluding certain businesses designated by the Foreign Exchange Regulations as designated businesses
(the “Designated Businesses”);
(ii) companies engaged in Designated Businesses designated by the Foreign Exchange Regulations as core sector businesses (the “Core Sector
Designated Businesses”); and
(iii) corporations engaged in Designated Businesses other than the Core Sector Designated Businesses (the “Non-Core Sector Designated
Businesses”).

For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies Japanese listed companies
into the above categories. According to the list published by the Minister of Finance as of April 24, 2023, the businesses which are currently engaged in
by Toyota are classified as category (ii) i.e., the Core Sector Designated Businesses above.

Definition of Inward Direct Investment

If a foreign investor acquires shares or voting rights of a Japanese company that is listed on a Japanese stock exchange (such as the shares of
capital stock of Toyota) and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 1%
or more of the issued shares or the total number of voting rights of the relevant company, such acquisition constitutes an “inward direct investment.” In
addition, an acquisition of the authority to exercise, or instruct to exercise, voting rights held by other shareholders that results in the foreign investor, in
combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of voting rights of the relevant company
constitutes an “inward direct investment.” Furthermore, if a foreign investor manages, on a discretionary basis, shares or voting rights of a Japanese
company that is listed on a Japanese stock exchange and in combination with any existing management, directly or indirectly manages 1% or more of
the issued shares or the total number of voting rights of the relevant company, such discretionary investment management generally constitutes an
“inward direct investment.”

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In addition to the acquisitions of shares or voting rights described above, if a foreign investor (i) is granted the authority to exercise proxy voting
rights on behalf of other shareholders of the relevant company regarding certain matters which may control substantially or have a material influence on
the management of such company, such as the election or removal of directors, or (ii) obtains consent from another foreign investor holding the voting
rights of the relevant company to exercise the voting rights of such company jointly, and, in each case, as a result of these arrangements, the number of
the voting rights directly or indirectly held by the foreign investor, including the total number of the voting rights subject to such proxy, or the sum of
the number of the voting rights directly or indirectly held by the foreign investor and such other foreign investors subject to such joint voting agreement,
as the case may be, is 10% or more of the total number of voting rights of the relevant company, each such arrangement regarding voting rights
(hereinafter referred to as a “voting arrangement”) also constitutes an “inward direct investment.” Additionally, if a foreign investor who directly or
indirectly holds 1% or more of the total voting rights of a Japanese listed company consents, at a general meeting of shareholders, to certain proposals
having a material influence on the management of such company such as (i) election of such foreign investor or its related persons (as defined in the
Foreign Exchange Regulations) as directors or audit & supervisory board members of the relevant company or (ii) transfer or discontinuation of its
business, such consent will also constitute an “inward direct investment.”

Prior Notification Requirements

If a foreign investor intends to consummate an “inward direct investment” as described above, in certain circumstances, such as where the foreign
investor is in a country that is not listed on an exemption schedule in the Foreign Exchange Regulations or where that Japanese company is engaged (as
Toyota is currently) in one or more Designated Businesses, prior notification of the relevant inward direct investment must be filed with the Minister of
Finance and any other competent Ministers.

However, a foreign investor seeking to consummate an “inward direct investment” may be eligible for the exemptions, if certain conditions are
met.

In the case of an acquisition (including investment discretionary management) of shares or voting rights or the authority to exercise, directly or
through instructions, voting rights of a Japanese listed company that is engaged (as Toyota is currently) in one or more Core Sector Designated
Businesses, the foreign investor may be exempted from the prior notification requirement, if, as a result of such acquisition, the foreign investor directly
or indirectly holds less than 10% of the total number of issued shares or voting rights of the relevant company, and such foreign investor complies with
the following conditions:
(i) the foreign investor or its closely-related persons (as defined in the Foreign Exchange Regulations) will not become directors or audit &
supervisory board members of the relevant company;
(ii) the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Regulations) at a general meeting of
shareholders, including transfer or discontinuation of the Designated Businesses of the relevant company;
(iii) the foreign investor will not access non-public technical information in relation to the Designated Businesses of the relevant company, or
take certain other actions that may lead to the leak of such non-public technical information (as prescribed in the Foreign Exchange
Regulations);
(iv) the foreign investor will not attend, and will not cause any persons designated by it to attend, meetings of the relevant company’s board of
directors, or meetings of committees having authority to make important decisions, in respect of the Core Sector Designated Businesses of
the relevant company; and
(v) the foreign investor will not make, and will not cause any persons designated by it to make, proposals to such board or committees or their
members in writing or electronic form requesting any response or actions by certain deadlines in respect of the Core Sector Designated
Businesses of the relevant company.

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In addition, in the case of an acquisition (including investment discretionary management) of shares or voting rights or the authority to exercise,
either directly or through instructions, voting rights of a Japanese listed company that is engaged in one or more Non-Core Sector Designated
Businesses, the foreign investor may be exempted from the prior notification requirement, including in the case where, as a result of such acquisition,
the foreign investor holds 10% or more of the total number of issued shares or the total number of voting rights of the relevant company, which would
have required prior notification, if such foreign investor complies with the conditions (i) through (iii) above (the “Exemption Conditions”).

Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign Exchange Regulations
(including (a) investors who have records of certain sanctions due to violations of the FEFTA and (b) certain investors who are state-owned enterprises
or other related entities excluding those who are accredited by the Minister of Finance), in no event may such foreign investor be eligible for the
exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors described in the foregoing sentence, falls
under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) and complies with the Exemption
Conditions, such foreign investor may be eligible for the exemptions, even if the acquisition results in such foreign investor’s directly or indirectly
holding 10% or more of the total number of issued shares or voting rights of a corporation engaged in one or more Core Sector Designated Businesses.

In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed company engaged one or more Designated
Businesses or consents to a proposal at a general meeting of shareholders of such company, in each case, that constitutes an “inward direct investment”
as described above, in certain circumstances, prior notification of the relevant inward direct investment must be filed with the Minister of Finance and
any other competent Ministers. However, the exemptions from the prior notification requirements may be available in the cases where the relevant
voting arrangement is regarding matters other than certain matters which may control substantially or have a material influence on the management of
the relevant company, such as the election or removal of directors, which would have required prior notification.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification requirements.

Procedures for Prior Notification

If such prior notification is filed, the proposed inward direct investment may not be consummated until after 30 days have passed from the date of
filing, although this screening period may be shortened to two weeks unless such Ministers deem it necessary to review the proposed inward direct
investment. The Ministers may extend the screening period up to five months if they deem it necessary to review the proposed inward direct investment
and may recommend any modification or abandonment of the proposed inward direct investment and, if the foreign investor does not accept such
recommendation, the Ministers may order the modification or abandonment of such inward direct investment. In addition, if the Ministers consider the
proposed inward direct investment to be an inward direct investment that is likely to cause damage to the national security of Japan and, if a foreign
investor (i) consummates such inward direct investment without filing the prior notification described above; (ii) consummates such inward direct
investment before the expiration of the screening period described above; (iii) in connection with such inward direct investment, makes false statements
in the prior notification described above; or (iv) does not follow the recommendation or order issued by the Ministers to modify or abandon such inward
direct investment, the Ministers may order such foreign investor to dispose of all or part of the shares acquired or take other measures.

Post Facto Reporting Requirements

A foreign investor who consummates an inward direct investment as described above relating to a Japanese listed company that is engaged in one
or more Designated Businesses, but is not subject to the prior notification

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requirements described above due to the exemptions from such prior notification requirements, in general, must file a report of the relevant inward direct
investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese company within 45 days of such
inward direct investment when, as a result of such acquisition, the foreign investor (excluding, in the cases of (i) and (ii) below, a foreign investor who
falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations)) directly or indirectly holds (i) 1% or
more but less than 3% of the total number of issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total number of
issued shares or voting rights, for the first time, or (iii) 10% or more of the total number of issued shares or voting rights.

In addition, if a foreign investor consummates the inward direct investment described above through the acquisition (including investment
discretionary management) of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed
company that is not engaged in the Designated Businesses (which is not subject to the prior notification requirements described above) and, as a result
of such acquisition, such foreign investor holds 10% or more of shares or voting rights of the total number of issued shares or voting rights of the
relevant company, such foreign investor must file a report of the relevant inward direct investment with the Minister of Finance and any other competent
Ministers having jurisdiction over such Japanese company within 45 days of such inward direct investment.

Additionally, if a foreign investor consummates the inward direct investment described above through a voting arrangement with respect to a
Japanese listed company that is not engaged in the Designated Businesses (which is not subject to the prior notification requirements described above),
such foreign investor must file a report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having
jurisdiction over such Japanese company within 45 days of such inward direct investment.

Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification requirements.

Dividends and Proceeds of Sale

Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares held by non-residents of Japan may in
general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which Toyota’s ADSs are
issued, the Depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars
to the United States, to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after
deduction of applicable withholding taxes) to the holders of ADSs.

10.E TAXATION
The following discussion is a general summary of the principal U.S. federal income and Japanese national tax consequences of the acquisition,
ownership and disposition of shares of common stock or ADSs. This summary does not purport to address all material tax consequences that may be
relevant to holders of shares of common stock or ADSs, and does not take into account the specific circumstances of any particular investors, some of
which (such as tax-exempt entities, banks, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings, regulated investment companies, real estate investment trusts, partnerships and other pass-through entities,
investors liable for the U.S. alternative minimum tax, investors that own or are treated as owning 10% or more of Toyota’s stock (by vote or value),
investors that hold shares of common stock or ADSs as part of a straddle, hedge, conversion transaction or other integrated transaction and U.S. Holders
(as defined below) whose functional currency is not the U.S. dollar) may be subject to special tax rules. This summary is based on the tax laws and
regulations of the United States and Japan, judicial decisions, published rulings and administrative pronouncements all as in effect on the date hereof, as
well as on the current income tax convention between the United States and Japan (the “Treaty”),

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as described below, all of which are subject to change (possibly with retroactive effect), and to differing interpretations.

For purposes of this discussion, a “U.S. Holder” is any beneficial owner of shares of common stock or ADSs that, for U.S. federal income tax
purposes, is:
1. an individual who is a citizen or resident of the United States;
2. a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the
United States, any state thereof, or the District of Columbia;
3. an estate the income of which is subject to U.S. federal income tax without regard to its source; or
4. a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or that has a valid
election in effect under applicable Treasury regulations to be treated as a U.S. person.

An “Eligible U.S. Holder” is a U.S. Holder that:

1. is a resident of the United States for purposes of the Treaty;
2. does not maintain a permanent establishment in Japan (a) with which the shares of common stock or ADSs are effectively connected
and through which the U.S. Holder carries on or has carried on business, or (b) of which the shares of common stock or ADSs form
part of the business property; and
3. is eligible for benefits under the Treaty with respect to income and gain derived in connection with the shares of common stock or
ADSs.

This summary does not address any aspects of U.S. federal tax law other than income taxation and does not discuss any aspects of Japanese
taxation other than income taxation, as limited to national taxes, inheritance and gift taxation. This summary also does not cover any state or local, or
non-U.S., non-Japanese tax considerations. Investors are urged to consult their tax advisors regarding the U.S. federal, state and local and Japanese and
other tax consequences of acquiring, owning and disposing of shares of common stock or ADSs. In particular, where relevant, investors are urged to
confirm their status as Eligible U.S. Holders with their tax advisors and to discuss with their tax advisors any possible consequences of their failure to
qualify as Eligible U.S. Holders. In addition, this summary is based in part upon the representations of the Depositary and the assumption that each
obligation in the deposit agreement, and in any related agreement, will be performed in accordance with its terms.

In general, for purposes of the Treaty and for U.S. federal income and Japanese income tax purposes, owners of American Depositary Receipts
evidencing ADSs will be treated as the owners of the shares of common stock represented by those ADSs, and exchanges of shares of common stock for
ADSs, and exchanges of ADSs for shares of common stock, will not be subject to U.S. federal income or Japanese income tax.

The discussion below is intended for general information only and does not constitute a complete analysis of all tax consequences relating to
ownership of shares of common stock or ADSs. Prospective purchasers of shares of common stock or ADSs should consult their own tax advisors
concerning the tax consequences of their particular situations.

Japanese Taxation
The following is a summary of the principal Japanese tax consequences (limited to national taxes) to non-residents of Japan or non-Japanese
corporations without permanent establishments in Japan (“non-resident Holders”) who are holders of shares of common stock or of ADSs of Toyota. The
following information regarding taxation in Japan is based on the tax treaties and tax laws in force and their interpretation by Japan’s

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tax authorities as of the date of this annual report. Tax laws and treaties and their interpretations may change (including with retroactive effect). Toyota
will not revise this summary on the basis of any such change occurring after the date of this annual report.

Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese corporations. Stock splits are, in general,
not taxable events.

In the absence of an applicable income tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing an
exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-resident
Holders is generally 20.42 percent, provided that, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of
common stock or ADSs of Toyota) to non-resident Holders, other than any non-resident Holder who is an individual holding three percent or more of the
total issued shares of the relevant Japanese corporation, the aforementioned 20.42 percent withholding tax rate is reduced to 15.315 percent for
dividends due and payable on or before December 31, 2037. These rates include a special additional withholding tax (2.1 percent of the original
withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake.

At the date of this annual report, Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is
reduced, in most cases to 15 percent, ten percent or five percent for portfolio investors (15 percent under the income tax treaties in force with, among
other countries, Canada, Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway and Singapore, ten percent under the
income tax treaties with, among other countries, Australia, Austria, Belgium, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the
U.K. and the United States, and five percent under the income tax treaties with, among other countries, Spain).

Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paid by a Japanese corporation to an
Eligible U.S. Holder that is a portfolio investor is generally reduced to ten percent of the gross amount actually distributed, and dividends paid by a
Japanese corporation to an Eligible U.S. Holder that is a pension fund (as defined in the Treaty) are exempt from Japanese income tax by way of
withholding or otherwise, provided that such dividends are not derived from the carrying on of a business, directly or indirectly, by such pension fund.

If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Toyota to any particular non-resident Holder is
lower than the withholding tax rate otherwise applicable under Japanese tax law or if any particular non-resident Holder is exempt from Japanese
income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who
is entitled to a reduced rate of or exemption from Japanese withholding tax on the payment of dividends on shares of common stock by Toyota is
required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for
Reconstruction on Dividends (together with any other required forms and documents) in advance through the withholding agent to the relevant tax
authority before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. In
addition, a simplified special filing procedure is available for non-resident Holders to claim treaty benefits of exemption from or reduction of Japanese
withholding tax by submitting a Special Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income
Tax for Reconstruction on Dividends of Listed Stock (together with any other required forms and documents). With respect to ADSs, this reduced rate or
exemption is applicable if the Depositary or its agent submits, together with other documents, two Special Application Forms (one before payment of
dividends, the other within eight months after the recording date concerning such payment of dividends) to the Japanese tax authority. To claim this
reduced rate or exemption, any relevant non-resident Holder of ADSs will be required to file proof of taxpayer status, residence and beneficial
ownership (as applicable) and to provide other information or documents as may be required by the Depositary. A non-resident Holder who is entitled,
under an applicable

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income tax treaty, to a reduced treaty rate lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the
withholding tax, but fails to submit the required application in advance, will be entitled to claim the refund of Japanese taxes withheld in excess of the
rate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the entire
amount of Japanese tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) by complying with a
certain subsequent filing procedure. Toyota does not assume any responsibility to ensure withholding at the reduced rate, or exemption therefrom, for
non-resident Holders who would be so eligible under an applicable tax treaty, but where the required procedures as stated above are not followed.

Gains derived from the sale of shares of common stock or ADSs outside Japan by a non-resident Holder holding such shares of common stock or
ADSs as portfolio investors are, in general, not subject to Japanese income tax or corporation tax under Japanese law. In addition, Eligible U.S. Holders
are exempt from Japanese income or corporation tax with respect to such gains under the Treaty so long as filings required under Japanese law are made.

Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired from another individual shares of
common stock or ADSs as a legatee, heir or donee, even though neither the individual, nor the deceased, nor donor is a Japanese resident.

Holders of shares of common stock or ADSs should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. Holders,
the possible application of the Estate and Gift Tax Treaty between the United States and Japan.

U.S. Federal Income Taxation

U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to U.S. Holders that hold shares of common stock
or ADSs as capital assets (generally, for investment purposes).

Taxation of Dividends
Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any distribution made by Toyota in
respect of shares of common stock or ADSs (without reduction for Japanese withholding taxes) will constitute a taxable dividend to the extent paid out
of current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The U.S. dollar amount of such a dividend
generally will be included in the gross income of a U.S. Holder, as ordinary income, when actually or constructively received by the U.S. Holder, in the
case of shares of common stock, or by the Depositary, in the case of ADSs. Dividends paid by Toyota will not be eligible for the dividends-received
deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

Dividends received on shares and ADSs of certain foreign corporations by non-corporate U.S. investors may be subject to U.S. federal income tax
at lower rates than other types of ordinary income if certain conditions are met. Dividends received by non-corporate U.S. Holders with respect to shares
of common stock or ADSs of Toyota are expected to be eligible for these reduced rates of tax. U.S. Holders should consult their own tax advisors
regarding the eligibility of such dividends for a reduced rate of tax.

The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese yen/U.S. dollar exchange rate in effect on the
date that the dividend is included in the gross income of the U.S. Holder, regardless of whether the payment is converted into U.S. dollars on that date.
Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is included

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in the gross income of a U.S. Holder through the date that payment is converted into U.S. dollars (or otherwise disposed of) will be treated as U.S.-
source ordinary income or loss. U.S. Holders should consult their own tax advisors regarding the calculation and U.S. federal income tax treatment of
foreign currency gain or loss.

To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of shares of common stock or ADSs exceeds
Toyota’s current and accumulated earnings and profits, as determined under U.S. federal income tax principles, the distribution first will be treated as a
tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in those shares or ADSs, and thereafter will be treated as U.S.-source
capital gain.

Distributions of additional shares of common stock that are made to U.S. Holders with respect to their shares of common stock or ADSs, and that
are part of a pro rata distribution to all of Toyota’s shareholders, generally will not be subject to U.S. federal income tax.

For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect of shares of common stock or ADSs will
constitute income from sources outside the United States, and will generally be “passive category income” or, in the case of certain U.S. Holders,
“general category income.” Any Japanese withholding tax imposed in respect of a Toyota dividend may be claimed as a credit against the U.S. federal
income tax liability of a U.S. Holder, subject to a number of complex limitations and conditions, including those introduced by recently issued U.S.
Treasury regulations that apply to foreign income taxes paid or accrued in taxable years beginning on or after December 28, 2021. A U.S. Holder’s use
of a foreign tax credit with respect to any such Japanese income or withholding taxes would generally not be allowed unless such U.S. Holder elects
benefits under an applicable income tax treaty with respect to such tax. A U.S. Holder who does not elect to claim a credit for any creditable foreign
income taxes paid during the taxable year may instead claim a deduction in the computation of such U.S. Holder’s taxable income. Special rules
generally will apply to the calculation of foreign tax credits in respect of dividend income that qualifies for preferential U.S. federal income tax rates.
Additionally, special rules apply to individuals whose foreign source income during the taxable year consists entirely of “qualified passive income” and
whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return). Further, under some
circumstances, a U.S. Holder that:
(i) has held shares of common stock or ADSs for less than a specified minimum period; or
(ii) is obligated to make payments related to Toyota dividends,
will not be allowed a foreign tax credit for Japanese taxes imposed on Toyota dividends.

U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Taxation of Capital Gains and Losses

In general, upon a sale or other taxable disposition of shares of common stock or ADSs, a U.S. Holder will recognize gain or loss for U.S. federal
income tax purposes in an amount equal to the difference between the amount realized on the sale or other taxable disposition and the U.S. Holder’s
adjusted tax basis in those shares of common stock or ADSs. A U.S. Holder generally will have an adjusted tax basis in a share of common stock or an
ADS equal to its U.S. dollar cost. Subject to the PFIC rules discussed below, gain or loss recognized on the sale or other taxable disposition of shares of
common stock or ADSs generally will be capital gain or loss and, if the U.S. Holder’s holding period for those shares or ADSs exceeds one year, will be
long-term capital gain or loss. Non-corporate U.S. Holders, including individuals, currently are eligible for preferential rates of U.S. federal income tax
in respect of long-term capital gains. Under U.S. federal income tax law, the deduction of capital losses is subject to limitations. Any gain or loss
recognized by a U.S. Holder in respect of the sale or other disposition of shares of common stock or ADSs generally will be treated as U.S.-source
income or loss for U.S. foreign tax credit purposes.

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Deposits and withdrawals of common stock in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax
purposes.

Passive Foreign Investment Companies

A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying
look-through rules, either (1) at least 75% of its gross income is passive income or (2) on average at least 50% of the gross value of its assets is
attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents and gains from commodities and securities transactions. The PFIC determination is made annually and generally is
based on the value of a non-U.S. corporation’s assets (including goodwill) and composition of its income.

Toyota does not believe that it was a PFIC for U.S. federal income tax purposes for its taxable year ended March 31, 2023, and currently intends
to continue its operations in such a manner that it will not become a PFIC in the future. Because the PFIC determination is made annually and the
application of the PFIC rules to a corporation such as Toyota (which among other things is engaged in leasing and financing through several
subsidiaries) is not entirely clear, no assurances can be made regarding determination of its PFIC status in the current or any future taxable year. If
Toyota is determined to be a PFIC, U.S. Holders could be subject to additional U.S. federal income taxes on gain recognized with respect to the shares
of common stock or ADSs and on certain distributions. In addition, an interest charge may apply to the portion of the U.S. federal income tax liability on
such gains or distributions treated under the PFIC rules as having been deferred by the U.S. Holder. Moreover, dividends that a non-corporate U.S.
Holder receives from Toyota will not be eligible for the reduced U.S. federal income tax rates on dividends described above if Toyota is a PFIC either in
the taxable year of the dividend or the preceding taxable year. If a U.S. Holder owns shares of common stock or ADSs in any taxable year in which
Toyota is a PFIC, such U.S. Holder generally would be required to file Internal Revenue Service (“IRS”) Form 8621 (or other form specified by the U.S.
Department of the Treasury) on an annual basis, subject to certain exceptions based on the value of PFIC stock held. Toyota will inform U.S. Holders if
it believes that it will be classified as a PFIC in any taxable year.

Prospective investors should consult their own tax advisors regarding the potential application of the PFIC rules to shares of common stock or
ADSs.

Non-U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to beneficial owners of shares of common stock or
ADSs that are neither U.S. Holders, nor partnerships, nor entities taxable as partnerships for U.S. federal income tax purposes (“Non-U.S. Holders”).

A Non-U.S. Holder generally will not be subject to any U.S. federal income or withholding tax on distributions received in respect of shares of
common stock or ADSs unless the distributions are effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the
United States (and, if an applicable tax treaty requires, are attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder).

A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale or other disposition of shares of
common stock or ADSs, unless:
(i) the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder within the United States (and, if an
applicable tax treaty requires, is attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder); or
(ii) the Non-U.S. Holder is an individual who was present in the United States for 183 or more days in the taxable year of the disposition
and other conditions are met.

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Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder, and, if an income tax treaty applies and so requires, is
attributable to a U.S. permanent establishment or fixed base of the Non-U.S. Holder, generally will be taxed in the same manner as the income of a U.S.
Holder. In addition, under certain circumstances, any effectively connected earnings and profits realized by a corporate Non-U.S. Holder may be subject
to an additional “branch profits tax” at the rate of 30% or at a lower rate that may be prescribed by an applicable income tax treaty.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to dividends paid to a U.S. Holder in respect of shares of common stock or ADSs, and to
the proceeds received upon the sale, exchange or redemption of the shares of common stock or ADSs within the United States by U.S. Holders.
Furthermore, backup withholding may apply to those amounts (currently at a 24% rate) if a U.S. Holder fails to provide an accurate taxpayer
identification number to certify that such U.S. Holder is not subject to backup withholding or to otherwise comply with the applicable requirements of
the backup withholding requirements.

Dividends paid to a Non-U.S. Holder in respect of shares of common stock or ADSs, and proceeds received upon the sale, exchange or
redemption of shares of common stock or ADSs by a Non-U.S. Holder, generally are exempt from information reporting and backup withholding under
current U.S. federal income tax law. However, a Non-U.S. Holder may be required to provide certification of non-U.S. status in order to obtain that
exemption.

Persons required to establish their exempt status generally must provide such certification under penalty of perjury on IRS Form W-9, entitled
Request for Taxpayer Identification Number and Certification, in the case of U.S. persons, and on IRS Form W-8BEN, entitled Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or IRS Form W-8BEN-E, entitled Certificate of Status of
Beneficial Owner for United States Tax Withholding and Reporting (Entities) (or other appropriate IRS Form W-8), in the case of non-U.S. persons.
Backup withholding is not an additional tax. The amount of backup withholding imposed on a payment generally may be claimed as a credit against the
holder’s U.S. federal income tax liability, provided that the required information is properly furnished to the IRS in a timely manner.

In addition, certain U.S. Holders who are individuals that hold certain foreign financial assets (which may include shares of common stock or
ADSs) are required to report information relating to such assets, subject to certain exceptions. U.S. Holders should consult their tax advisors regarding
the effect, if any, of this legislation on their ownership and disposition of shares of common stock or ADSs.

THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE NATIONAL TAX CONSEQUENCES SET OUT ABOVE IS INTENDED
FOR GENERAL INFORMATION PURPOSES ONLY. PROSPECTIVE PURCHASERS OF COMMON STOCK OR ADSs ARE URGED TO
CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING OR
DISPOSING OF COMMON STOCK OR ADSs, BASED ON THEIR PARTICULAR CIRCUMSTANCES.

10.F DIVIDENDS AND PAYING AGENTS

Not applicable.

10.G STATEMENT BY EXPERTS

Not applicable.

10.H DOCUMENTS ON DISPLAY

Toyota files annual reports on Form 20-F and reports on Form 6-K with the SEC. You may access this information through the SEC’s website
(https://www.sec.gov). In addition, Toyota’s reports, proxy statements

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and other information may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Copies of the
documents referred to herein may also be inspected at Toyota’s offices by contacting Toyota at 1 Toyota-cho, Toyota City, Aichi Prefecture 471-8571,
Japan, attention: Capital Strategy & Affiliated Companies, Finance Division, telephone number: +81-565-28-2121.

10.I SUBSIDIARY INFORMATION

Not applicable.

10.J ANNUAL REPORT TO SECURITY HOLDERS

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk
Toyota is exposed to market risk from changes in foreign currency exchange rates, interest rates, certain commodity and equity security prices. In
order to manage the risk arising from changes in foreign currency exchange rates and interest rates, Toyota enters into a variety of derivative financial
instruments.

A description of Toyota’s accounting policies for derivative instruments is included in note 3 to the consolidated financial statements and further
disclosure is provided in notes 20 and 21 to the consolidated financial statements.

Toyota monitors and manages these financial exposures as an integral part of its overall risk management program, which recognizes the
unpredictability of financial markets, and seeks to reduce the potentially adverse effects on Toyota’s operating results.

Market risk analyses of risks such as foreign exchange risk, interest rate risk, commodity price fluctuation risk and stock price fluctuation risk are
provided in note 19 to the consolidated financial statements.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A DEBT SECURITIES
Not applicable.

12.B WARRANTS AND RIGHTS

Not applicable.

12.C OTHER SECURITIES

Not applicable.

12.D AMERICAN DEPOSITARY SHARES

Fees and Charges for Holders of American Depositary Shares
The Bank of New York Mellon, as Depositary for the ADSs, collects its fees for delivery and surrender of ADSs directly from investors depositing
shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions
to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may
generally refuse to provide fee-attracting services until its fees for those services are paid.

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Persons depositing or withdrawing shares must pay: For:

$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) • Delivery of ADSs, including those resulting from a distribution,
sale or exercise of shares or rights or other property
• Surrender of ADSs for the purpose of withdrawal including if the
deposit agreement terminates
$0.05 (or less) per ADS • Any cash distribution to ADS registered holders
A fee equivalent to the fee that would be payable if securities distributed to • Distribution of securities or rights distributed to holders of
you had been shares and the shares had been deposited for delivery of ADSs deposited securities that are distributed by the Depositary to ADS
registered holders
$0.05 (or less) per ADS per year • General depositary services
Registration fees • Registration of transfer of shares on Toyota’s share register to or
from the name of the Depositary or its nominee or the custodian or
its nominee when shares are deposited or withdrawn
Fees and expenses of the Depositary • Cable (including SWIFT) and facsimile transmissions (when
expressly provided in the deposit agreement)
• Converting foreign currency to U.S. dollars
Taxes and other governmental charges the Depositary or the custodian have • As necessary
to pay on any ADS or share underlying an ADS
Any other charges payable by the Depositary, the custodian or their • As necessary
respective agents in connection with the servicing of the deposited securities

Fees Incurred in Fiscal 2023

For fiscal 2023, the Depositary paid to Toyota, or paid to a third party at Toyota’s instruction, an aggregate of $890,021.33 for standard
out-of-pocket maintenance costs for the ADSs (consisting of the expenses of postage and envelopes for mailing annual reports, printing and distributing
dividend checks, stationery, postage, facsimile, and telephone calls), Toyota’s continuing annual stock exchange listing fees with respect to the ADSs,
expenses relating to Toyota’s annual general shareholders’ meeting that are incurred with respect to Toyota’s ADS holders and 50% of the net dividend
fees collected by the Depositary.

Fees to be Paid in the Future

With regards to the ADS program, the Depositary has agreed to pay the standard out-of-pocket maintenance costs for the ADSs, which includes
the expenses of postage and envelopes for mailing annual reports, printing and distributing dividend checks, stationery, postage, facsimile and telephone
calls. It has also agreed to pay for investor relations expenses, the continuing annual stock exchange listing fees with respect to the ADSs, and any other
program related expenses. The limit on the amount of expenses for which the Depositary will pay is the sum of $300,000 annually. In addition, the
Depositary has agreed to pay Toyota 50% of the net dividend fees collected by the Depositary during each annual period towards the aforementioned
expenses.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.

ITEM 15. CONTROLS AND PROCEDURES

(a) DISCLOSURE CONTROLS AND PROCEDURES
Toyota performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of fiscal
2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Form 20-F that Toyota files under the
Exchange Act is accumulated and communicated to its management, including the chief executive officer and the principal accounting and financial
officer, to allow timely decisions regarding required disclosure. The disclosure controls and procedures also ensure that the Form 20-F that it files under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The
evaluation was performed under the supervision of Toyota’s President and Representative Director, who concurrently serves as CEO, and the member of
the board of directors who concurrently serves as CFO. Toyota’s disclosure controls and procedures are designed to provide reasonable assurance of
achieving its objectives. Managerial judgment was necessary to evaluate the cost-benefit relationship of possible controls and procedures. The President
and Representative Director as well as the member of the board of directors have concluded that Toyota’s disclosure controls and procedures are
effective at the reasonable assurance level.

(b) MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Toyota’s management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS. Toyota’s internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of Toyota’s
assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
IFRS, and that Toyota’s receipts and expenditures are being made only in accordance with authorizations of Toyota’s management and
members of the board of directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Toyota’s assets
that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

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Toyota’s management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in “Internal
Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that Toyota’s internal control over financial reporting was effective as of March 31, 2023.

PricewaterhouseCoopers Aarata LLC, an independent registered public accounting firm that audited the consolidated financial statements included
in this report, has also audited the effectiveness of Toyota’s internal control over financial reporting as of March 31, 2023, as stated in its report included
herein.

(c) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

Toyota’s independent registered public accounting firm, PricewaterhouseCoopers Aarata LLC, has issued an audit report on the effectiveness of
Toyota’s internal control over financial reporting. This report appears in Item 18.

(d) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in Toyota’s internal control over financial reporting during fiscal 2023 that have materially affected, or are reasonably
likely to materially affect, Toyota’s internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Toyota maintains an audit & supervisory board system, in accordance with the Companies Act. Toyota’s audit & supervisory board is comprised
of six audit & supervisory board members, three of whom are outside audit & supervisory board members. Each audit & supervisory board member has
been appointed at Toyota’s meetings of shareholders and has certain statutory powers independently, including auditing the business affairs and accounts
of Toyota.

Toyota’s audit & supervisory board has determined that it does not have an “audit committee financial expert” serving on the audit & supervisory
board. The qualifications for, and powers of, the audit & supervisory board member delineated in the Companies Act are different from those anticipated
for any audit committee financial expert. Audit & supervisory board members have the authority to be given reports from a certified public accountant
or an accounting firm concerning audits, including technical accounting matters. At the same time, each audit & supervisory board member has the
authority to consult internal and external experts on accounting matters. Each audit & supervisory board member must fulfill the requirements under
Japanese laws and regulations and otherwise follow Japanese corporate governance practices and, accordingly, Toyota’s audit & supervisory board has
confirmed that it is not necessarily in Toyota’s best interest to nominate as audit & supervisory board member a person who meets the definition of audit
committee financial expert. Although Toyota does not have an audit committee financial expert on its audit & supervisory board, Toyota believes that
Toyota’s current corporate governance system, taken as a whole, including the audit & supervisory board members’ ability to consult internal and
external experts, is fully equivalent to a system having an audit committee financial expert on its audit & supervisory board.

ITEM 16B. CODE OF ETHICS

Toyota has adopted a code of ethics that applies to its members of the board of directors and operating officers, including its principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of Toyota’s code of ethics is
included as an exhibit to this annual report on Form 20-F.

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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers Aarata LLC has audited the financial statements of Toyota included in this annual report on Form 20-F.

The following table presents the aggregate fees for professional services and other services rendered by PricewaterhouseCoopers Aarata LLC and
the various network and member firms of PricewaterhouseCoopers to Toyota in fiscal 2022 and fiscal 2023.

Yen in millions
2022 2023
Audit Fees(1) 5,460 6,617
Audit-related Fees(2) 52 83
Tax Fees(3) 351 375
All Other Fees(4) 181 177
Total 6,045 7,251

(1) Audit Fees consist of fees billed for the annual audit services engagement and other audit services, which are those services that only the external
auditor reasonably can provide, and include the services of annual audit, quarterly reviews and assessment and reviews of the effectiveness of
internal controls over financial reporting of Toyota and its subsidiaries and affiliated companies; the services associated with SEC registration
statements or other documents issued in connection with securities offerings such as comfort letters and consents; and consultations as to the
accounting or disclosure treatment of transactions or events.
(2) Audit-related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of
its financial statements or that are traditionally performed by the external auditor, and mainly include services such as agreed-upon or expanded
audit procedures; and financial statement audits of employee benefit plans.
(3) Tax Fees include fees billed for tax compliance services, including services such as tax planning, advice and compliance of federal, state, local and
international tax; the review of tax returns; assistance with tax audits and appeals; tax-only valuation services including transfer pricing; expatriate
tax assistance and compliance.
(4) All Other Fees primarily include fees billed for risk management advisory services; services providing information related to automotive market
conditions; and other advisory services.

Policies and Procedures of the Audit & Supervisory Board

Below is a summary of the current policies and procedures of the audit & supervisory board for the pre-approval of audit and permissible
non-audit services performed by Toyota’s independent public accountants.

Under the policy, specified operating officers or managers submit a request for general pre-approval of audit and permissible non-audit services
for the following fiscal year, which shall include details of the specific services and estimated fees for the services, to the audit & supervisory board,
which reviews and determines whether or not to grant the request in advance. Upon the general pre-approval of the audit & supervisory board, the
specified operating officers or managers are not required to obtain any specific pre-approval for audit and permissible non-audit services so long as
those services fall within the scope of the general pre-approval provided.

The audit & supervisory board makes a further determination of whether or not to grant a request to revise the general pre-approval for the
applicable fiscal year if such request is submitted by specified operating officers or managers. Such request may include (i) adding any audit or
permissible non-audit services other than the ones listed in the general pre-approval and (ii) obtaining services that are listed in the general pre-approval
but of

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which the total fee amount exceeds the amount affirmed by the general pre-approval. The determination of whether or not to grant a request to revise the
general pre-approval noted in the foregoing may alternatively be made by an audit & supervisory board member (full time), who is designated in
advance by a resolution of the audit & supervisory board, in which case such audit & supervisory board member (full time) shall report such decision at
the next meeting of the audit & supervisory board. The performance of audit and permissible non-audit services and the payment of fees are subject to
review by the audit & supervisory board at least once every fiscal half year.

None of the audit related fees, tax fees or all other fees described in the table above were approved by the audit & supervisory board pursuant to
the de minimis exception provided by paragraph(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Toyota does not have an audit committee. Toyota is relying on the general exemption contained in Rule 10A-3(c)(3) under the Exchange Act,
which provides an exemption from the NYSE’s listing standards relating to audit committees for foreign companies like Toyota that have an audit &
supervisory board. Toyota’s reliance on Rule 10A-3(c)(3) does not, in its opinion, materially adversely affect the ability of its audit & supervisory board
to act independently and to satisfy the other requirements of Rule 10A-3.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table sets forth purchases of Toyota’s common stock by Toyota and its affiliated purchasers during fiscal 2023:

(c) (d)
Total Maximum
Number of Number of
Shares Shares
Purchased as that May
Part of Yet Be
(a) Total Publicly Purchased
Number of (b) Average Announced Under the
Shares Price Paid per Plans or Plans or
Period Purchased(1) Share (Yen)(1) Programs(2) Programs(2)
April 1, 2022 – April 30, 2022 37,148,615 2,153 37,148,100 —
May 1, 2022 – May 31, 2022 6,967,285 2,215 6,966,800 —
June 1, 2022 – June 30, 2022 12,251,130 2,115 12,250,400 —
July 1, 2022 – July 31, 2022 34,807,025 2,129 34,805,800 —
August 1, 2022 – August 31, 2022 1,074 2,138 0 —
September 1, 2022 – September 30, 2022 72,151 1,993 71,200 —
October 1, 2022 – October 31, 2022 43,144,565 1,983 43,143,200 —
November 1, 2022 – November 30, 2022 7,415,950 1,996 7,415,100 —
December 1, 2022 – December 31, 2022 20,987,270 1,939 20,986,200 —
January 1, 2023 – January 31, 2023 18,869,135 1,840 18,868,300 —
February 1, 2023 – February 28, 2023 16,258,940 1,887 16,258,200 —
March 1, 2023 – March 31, 2023 15,631,375 1,862 15,630,600 —
Total 213,554,515 — 213,543,900 —

(1) A portion of the above purchases were made as a result of holders of shares constituting less than one unit, which is 100 shares of common stock,
requesting Toyota to purchase shares that are a fraction of a unit, in accordance with Toyota’s share handling regulations. Toyota is required to
comply with such requests pursuant to the Companies Act. See “Item 10. Additional Information — 10.B Memorandum and Articles of

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Association — Japanese Unit Share System.” The number of shares purchased not pursuant to publicly announced plans or programs conducted in
fiscal 2023 is 10,615.
(2) Toyota announced on May 11, 2022 that it would repurchase up to 140 million shares of its common stock between June 17, 2022 to
September 30, 2022 at a total maximum purchase price of 200 billion yen, in order to return to shareholders the profits derived in fiscal 2022.
Toyota also announced on September 21, 2022 that it would extend the term of such repurchase of its common stock from September 30, 2022 to
November 1, 2022. Toyota further announced on November 1, 2022 that it would repurchase up to 110 million shares of its common stock
between November 2, 2022 to May 12, 2023 at a total maximum purchase price of 150 billion yen in order to return to shareholders the profits
derived in the first half of fiscal 2023.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

Significant Differences in Corporate Governance Practices between Toyota and U.S. Companies Listed on the NYSE
Pursuant to home country practices exemptions granted by the NYSE, Toyota is permitted to follow certain corporate governance practices
complying with Japanese laws, regulations and stock exchange rules in lieu of the NYSE’s listing standards. The SEC approved changes to the NYSE’s
listing standards related to corporate governance practices of listed companies (the “NYSE Corporate Governance Rules”) in November 2003, as further
amended in November 2004. Toyota is exempt from the approved changes, except for requirements that (a) Toyota’s audit & supervisory board satisfies
the requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (b) Toyota must disclose significant
differences in its corporate governance practices as compared to those followed by domestic companies under the NYSE listing standards, (c) Toyota’s
principal executive officer must notify the NYSE in writing after any executive officer of Toyota becomes aware of any non-compliance with (a) and
(b), and (d) Toyota must submit annual and interim written affirmations to the NYSE. Toyota’s corporate governance practices and those followed by
domestic companies under the NYSE Corporate Governance Rules have the following significant differences:

1. Members of the Board of Directors. Toyota currently does not have any members of the board of directors who will be deemed an
“independent director” as required under the NYSE Corporate Governance Rules for U.S. listed companies. Unlike the NYSE Corporate Governance
Rules, the Companies Act does not require Japanese companies with an audit & supervisory board such as Toyota to have any independent directors on
its board of directors. While the NYSE Corporate Governance Rules require that the non-management directors of each listed company meet at regularly
scheduled executive sessions without management, Toyota currently has no non-management member on its board of directors. Unlike the NYSE
Corporate Governance Rules, the Companies Act does not require, and accordingly Toyota does not have, an internal corporate organ or committee
comprised solely of independent directors.
The Companies Act requires Toyota to have outside members of the board of directors under the Companies Act. Toyota currently has four outside
members of the board of directors. An “outside” member of the board of directors refers to:
(a) a person who is not, and has never been during the ten year period before becoming an outside member of the board of directors, an
executive director (a member of the board of directors who engages in the execution of business), executive officer, manager or employee
(collectively, “Executive Director, etc.”) of Toyota or its subsidiaries;
(b) if a person was a member of the board of directors, accounting counselor (in the case that an accounting counselor is a legal entity, an
employee of such entity who is in charge of its affairs) or

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audit & supervisory board member (excluding those who have ever been Executive Directors, etc.) of Toyota or any of its subsidiaries at
any time during the ten year period before becoming an outside member of the board of directors, such person who has not been an
Executive Director, etc. of Toyota or any of its subsidiaries during the ten year period before becoming a member of the board of directors,
accounting counselor or audit & supervisory board member; and
(c) a person who is not a spouse or relative within the second degree of kinship of any member of the board of directors or manager or other
key employee of Toyota.

Such qualifications for an “outside” member of the board of directors are different from the director independence requirements under the NYSE
Corporate Governance Rules.

In addition, pursuant to the regulations of the Japanese stock exchanges, Toyota is required to have one or more “independent director(s)/audit &
supervisory board member(s),” defined under the relevant regulations of the Japanese stock exchanges as “outside directors” or “outside audit &
supervisory board members” (as defined under the Companies Act), who are unlikely to have any conflicts of interests with Toyota’s general
shareholders, and is also required to make efforts to have at least one “independent director(s)/audit & supervisory board member(s)” who is also a
director. Each of the outside members of the board of directors of Toyota satisfies the “independent director/audit & supervisory board member”
requirements under the regulations of the Japanese stock exchanges. The Japanese Corporate Governance Code provides that certain listed companies,
including Toyota, should appoint at least one third of their directors as “independent outside directors” as defined based on the criteria for assessing
director independence established by Toyota in line with the independence standards of the Japanese stock exchanges. The content of the criteria for
assessing director independence established by Toyota is the same as that of the independence standards of the Japanese stock exchanges, and each of
the outside members of the board of directors of Toyota satisfies the “independent outside director” requirements under such independence standards.
The definition of “independent director/ audit & supervisory board member” and “independent outside director” is different from that of the definition of
independent director under the NYSE Corporate Governance Rules.

2. Committees. Under the Companies Act, Toyota has elected to structure its corporate governance system as a company with audit & supervisory
board members who are under a statutory duty to monitor, review and report on the management of the affairs of Toyota. Toyota, as with other Japanese
companies with an audit & supervisory board, does not have certain committees that are required of U.S. listed companies subject to the NYSE
Corporate Governance Rules, including those that are responsible for director nomination, corporate governance and executive compensation. However,
members of Toyota’s Executive Appointment Meeting, a majority of whom are outside directors, discuss recommendations to the board of directors
concerning the appointment and dismissal of members of the board of directors and the Executive Appointment Meeting discuss the details of the
proposals to audit & supervisory board. Members of the Executive Compensation Meeting, a majority of whom are outside directors, review the
remuneration system for members of board of directors and senior management as well as determine the amount of remuneration for each member of
the board of directors. The Japanese Corporate Governance Code provides that certain listed companies, including Toyota, generally should have the
majority of the members of each of certain committees be independent directors, and those committees of Toyota satisfy that principle.

Pursuant to the Companies Act, Toyota’s board of directors nominates and submits a proposal for the appointment of members of the board of
directors for shareholder approval. The shareholders vote on such nomination at the general shareholders’ meeting. The Companies Act requires that the
limits or calculation formula of the remuneration, bonus and any other benefits in compensation for the execution of duties (“remuneration, etc.”) of
directors, the kind of remuneration, etc. (in case that the remuneration, etc. are other than cash (excluding shares and stock acquisition rights)) to be
received by directors, and the limits of remuneration, etc. that are shares and stock acquisition rights to be granted to directors as well as the limits of
remuneration, etc. to be paid to audit & supervisory board members must be determined by a resolution of the

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general shareholders’ meeting, unless their remuneration, etc. is provided for in the articles of incorporation. The distribution of remuneration, etc.,
among each member of the board of directors is broadly delegated to the board of directors and the distribution of remuneration among each audit &
supervisory board member is determined by consultation among the audit & supervisory board members.

3. Audit Committee. Toyota avails itself of paragraph (c)(3) of Rule 10A-3 of the Exchange Act, which provides a general exemption from the
audit committee requirements to a foreign private issuer with an audit & supervisory board, subject to certain requirements which continue to be
applicable under Rule 10A-3.

Pursuant to the requirements of the Companies Act, Toyota elects its audit & supervisory board members through a resolution adopted at a general
shareholders’ meeting. Toyota currently has six audit & supervisory board members, which exceeds the minimum number of audit & supervisory board
members required pursuant to the Companies Act.

Unlike the NYSE Corporate Governance Rules, the Companies Act, among others, does not require audit & supervisory board members to
establish an expertise in accounting or financial management nor are they required to present other special knowledge and experience. Therefore, none
of Toyota’s audit & supervisory board members has “an expertise in accounting or financial management” as set forth in the NYSE Corporate
Governance Rules. The Japanese Corporate Governance Code indicates that persons with appropriate experience and skills as well as necessary
knowledge of finance, accounting, and laws should be appointed as audit & supervisory board members, and in particular, one or more audit &
supervisory board members who have sufficient knowledge of finance and accounting matters should be appointed. Toyota has appointed persons who
are able to provide opinions and advice regarding management based on their broader experience and discretion beyond finance and accounting. Under
the Companies Act, the audit & supervisory board may determine the auditing policies and methods of investigating the conditions of Toyota’s business
and assets, and may resolve other matters concerning the execution of the audit & supervisory board member’s duties. The audit & supervisory board
also prepares auditors’ reports and gives consent to proposals of the nomination of audit & supervisory board members. Further, the audit & supervisory
board makes decisions concerning proposals relating to the appointment and dismissal of accounting auditors; it also has the authority to dismiss the
accounting auditor when certain matters specified under the Companies Act occur.

Toyota currently has three outside audit & supervisory board members under the Companies Act. Under the Companies Act, at least half of the
audit & supervisory board members must be an “outside” audit & supervisory board member, which is any person who satisfies all of the following
requirements:
(a) the person has never been a member of the board of directors, accounting counselor (in the case that an accounting counselor is a legal
entity, an employee of such entity who is in charge of its affairs), executive officer, manager or employee of Toyota or its subsidiaries
during the ten year period before becoming an outside audit & supervisory board member;
(b) if the person was an audit & supervisory board member of Toyota or any of its subsidiaries at any time during the ten year period before
becoming an outside audit & supervisory board member, such person has not been a member of the board of directors, accounting
counselor (in the case that an accounting counselor is a legal entity, an employee of such entity who is in charge of its affairs), executive
officer, manager or employee of Toyota or any of its subsidiaries during the ten year period before becoming an audit & supervisory board
member of Toyota or any of its subsidiaries; and
(c) the person is not a spouse or relative within the second degree of kinship of any member of the board of directors or manager or other key
employee of Toyota.

Such qualifications for an “outside” audit & supervisory board member are different from the audit committee independence requirement under
the NYSE Corporate Governance Rules.

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Each of the outside audit & supervisory board members of Toyota satisfies the “independent director/ audit & supervisory board member”
requirements under the regulations of the Japanese stock exchanges, as described above in “1. Members of the Board of Directors.”

4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is not required to adopt the Japanese Corporate
Governance Code under Japanese laws and regulations, including the Companies Act, the Financial Instruments and Exchange Law of Japan and stock
exchange rules. However, if Toyota does not comply with the Japanese Corporate Governance Code, it is required to explain the reasons why it does not
do so in accordance with the regulations of the Japanese stock exchanges. In addition, Toyota is required to resolve at the board of directors matters
relating to a system, which is required under the ordinance of the Ministry of Justice (“internal control system” or “naibu-tosei”), to ensure the execution
of duties of the members of the board of directors to comply with laws, regulations and articles of incorporation, and any other systems to ensure the
adequacy of the business, and to disclose such matters resolved, policies and the present status of its corporate governance in its business reports, annual
securities report and certain other disclosure documents in accordance with the regulations under the Financial Instruments and Exchange Law and stock
exchange rules in respect of timely disclosure.

5. Code of Business Conduct and Ethics. Similar to the NYSE Corporate Governance Rules, under the Japanese Corporate Governance Code,
Toyota is encouraged to adopt a code of conduct regarding ethical business activities for members of the board of directors, officers and employees.
Toyota has resolved matters relating to maintenance of an “internal control system,” or “naibu-tosei,” in order to ensure its employees comply with
laws, regulations and the articles of incorporation, etc., pursuant to the Companies Act, and Toyota maintains guidelines and internal regulations such as
“Guiding Principles at Toyota,” “Toyota Code of Conduct” and a code of ethics pursuant to Section 406 of the Sarbanes-Oxley Act. Please see “Code of
Ethics” for additional information.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this annual report on Form 20-F.

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TOYOTA MOTOR CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:2743) F-2
Consolidated statement of financial position at March 31, 2022 and 2023 F-4
Consolidated statement of income for the years ended March 31, 2021, 2022 and 2023 F-6
Consolidated statement of comprehensive income for the years ended March 31, 2021, 2022 and 2023 F-7
Consolidated statement of changes in equity for the years ended March 31, 2021, 2022 and 2023 F-8
Consolidated statement of cash flows for the years ended March 31, 2021, 2022 and 2023 F - 10
Notes to consolidated financial statements F - 11

All financial statements schedules are omitted because they are not applicable or the required information is shown in the financial statements or the
notes thereto.

Financial statements of 50% or less owned persons accounted for by the equity method have been omitted because none of them meets the significance
tests specified in Rule 3-09 of Regulation S-X.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Toyota Jidosha Kabushiki Kaisha
(“Toyota Motor Corporation”)

Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statement of financial position of Toyota Motor Corporation and its subsidiaries (collectively referred to as the “Company”) as of March 31,
2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended March 31, 2023,
including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31,
2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the
results of its operations and its cash flows for each of the three years in the period ended March 31, 2023 in conformity with International Financial Reporting Standards as issued by the
International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023,
based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 15(b). Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be
communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of

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critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Liabilities for the costs of recalls and other safety measures

As described in Notes 3 and 24 to the consolidated financial statements, the Company accrues for costs of recalls and other safety measures. As of March 31, 2023, estimated liabilities for the
costs of recalls and other safety measures totaled ¥1,194,156 million and were included in liabilities for quality assurance in the consolidated statement of financial position. The Company
generally measures the liabilities for recalls and other safety measures at the time of vehicle sales comprehensively by aggregate sales of various models in a certain period by geographical
regions. However, when circumstances warrant, the Company measures liabilities for costs of a particular recall or other safety measures using an individual model when they are probable
and reasonably estimable. Management calculates the liabilities for the costs of recalls and other safety measures that are determined comprehensively based on the accumulated amount of
repair cost paid per unit and pattern of actual payment occurrence.

The principal considerations for our determination that performing procedures relating to liabilities for the costs of recalls and other safety measures that are determined comprehensively is a
critical audit matter are 1) significant judgment and estimation was required by management when developing the liabilities which in turn led to a high degree of auditor judgment and
subjectivity in performing procedures to evaluate management’s assumptions; and 2) significant audit effort was necessary relating to testing the accumulated amount of repair cost paid per
unit and pattern of actual payment occurrence utilized in developing the estimate. In addition, the audit effort included the involvement of professionals with specialized skill and knowledge
to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to liabilities for the costs of recalls and other safety measures, including controls related to the determination of the significant
assumptions and data used to calculate the liabilities that are determined comprehensively. These procedures also included, among others: 1) testing management’s process for estimating the
liabilities, including evaluating the reasonableness of the significant assumptions; and 2) testing of the completeness and accuracy of the data used in the estimate. Professionals with
specialized skill and knowledge were used to assist in testing the liabilities by developing an independent range of reasonable estimated loss based on the Company’s data and independently
developed assumptions.

Allowance for Credit Losses—Retail finance receivables

As described in Notes 3, 8 and 19 to the consolidated financial statements, the Company measures an allowance for credit losses on its retail finance receivables by estimating the expected
credit losses at the reporting date. As of March 31, 2023, ¥274,871 million of the allowance for credit losses corresponding to ¥20,201,004 million of retail finance receivables was recorded
in the consolidated statement of financial position. The allowance for credit losses on retail finance receivables is measured based on a systematic, ongoing review and evaluation performed
as part of the credit risk evaluation process, historical loss experience, the size and composition of the portfolios, current economic events and conditions, the estimated fair value and
adequacy of collateral, forward-looking information including movements of the world economy and other pertinent factors. In calculating the expected credit losses, the Company uses the
probability of a default and the loss rate in the event of a default based on past experience and then reflects adjustments based on its forecasts of current and future economic conditions. Retail
finance receivables within the United States represent approximately half of the consolidated retail finance receivables as of March 31, 2023.
The principal considerations for our determination that performing procedures relating to the allowance for credit losses on retail finance receivables is a critical audit matter are 1) significant
judgment was required by management when determining assumptions of the probability of a default, the loss rate in the event of a default, and adjustments based on the forecasts of current
and future economic conditions used in the estimating of the allowance for credit losses, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures to
evaluate management’s assumptions and adjustments; 2) there was a high level of complexity in assessing audit evidence related to management’s estimate. In addition, the audit effort
included the involvement of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to the Company’s allowance for credit losses on retail finance receivables, including controls over data supporting the
assumptions, such as the probability of a default and the loss rate in the event of a default based on past experience, and adjustments used to determine the allowance. These procedures also
included, among others, testing management’s process for estimating the allowance, including evaluating the reasonableness of the assumptions and adjustments. Professionals with
specialized skill and knowledge were used to assist in evaluating the reasonableness of the assumptions and adjustments determined by management.

/s/ PricewaterhouseCoopers Aarata LLC

Nagoya, Japan
June 30, 2023
We have served as the Company’s auditor since 2006.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Yen in millions
Notes March 31, 2022 March 31, 2023
Assets
Current assets
Cash and cash equivalents 6 6,113,655 7,516,966
Trade accounts and other receivables 7 3,142,832 3,586,130
Receivables related to financial services 8 7,181,327 8,279,806
Other financial assets 9 2,507,248 1,715,675
Inventories 10 3,821,356 4,255,614
Income tax receivable 163,925 218,704
Other current assets 791,947 886,885
Total current assets 23,722,290 26,459,781
Non-current assets
Investments accounted for using the equity method 11 4,837,895 5,227,345
Receivables related to financial services 8 14,583,130 16,491,045
Other financial assets 9 9,517,267 10,556,431
Property, plant and equipment
Land 12 1,361,791 1,426,370
Buildings 12 5,284,620 5,464,811
Machinery and equipment 12 13,982,362 14,796,619
Vehicles and equipment on operating leases 12 6,781,229 6,774,427
Construction in progress 12 565,528 846,866
Total property, plant and equipment, at cost 12 27,975,530 29,309,093
Less - Accumulated depreciation and impairment losses 12 (15,648,890) (16,675,119)
Total property, plant and equipment, net 12 12,326,640 12,633,974
Right of use assets 13 448,412 491,368
Intangible assets 14 1,191,966 1,249,122
Deferred tax assets 15 342,202 387,427
Other non-current assets 23 718,968 806,687
Total non-current assets 43,966,482 47,843,399
Total assets 67,688,771 74,303,180

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION—(Continued)

Yen in millions
Notes March 31, 2022 March 31, 2023
Liabilities
Current liabilities
Trade accounts and other payables 16 4,292,092 4,986,309
Short-term and current portion of long-term debt 17 11,187,839 12,305,639
Accrued expenses 1,520,446 1,552,345
Other financial liabilities 18 1,046,050 1,392,397
Income taxes payable 826,815 404,606
Liabilities for quality assurance 24 1,555,711 1,686,357
Other current liabilities 1,413,208 1,632,063
Total current liabilities 21,842,161 23,959,715
Non-current liabilities
Long-term debt 17 15,308,519 17,074,634
Other financial liabilities 18 461,583 533,710
Retirement benefit liabilities 23 1,022,749 1,065,508
Deferred tax liabilities 15 1,354,794 1,802,346
Other non-current liabilities 544,145 603,052
Total non-current liabilities 18,691,790 21,079,251
Total liabilities 40,533,951 45,038,967
Shareholders’ equity
Common stock 25 397,050 397,050
Additional paid-in capital 25 498,575 498,728
Retained earnings 25 26,453,126 28,343,296
Other components of equity 25 2,203,254 2,836,195
Treasury stock 25 (3,306,037) (3,736,562)
Total Toyota Motor Corporation shareholders’ equity 25 26,245,969 28,338,706
Non-controlling interests 908,851 925,507
Total shareholders’ equity 27,154,820 29,264,213
Total liabilities and shareholders’ equity 67,688,771 74,303,180

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF INCOME

Yen in millions
For the year ended For the year ended For the year ended
Notes March 31, 2021 March 31, 2022 March 31, 2023
Sales revenues
Sales of products 26 25,077,398 29,073,428 34,367,619
Financial services 26 2,137,195 2,306,079 2,786,679
Total sales revenues 26 27,214,594 31,379,507 37,154,298
Costs and expenses
Cost of products sold 21,199,890 24,250,784 29,128,561
Cost of financial services 1,182,330 1,157,050 1,712,721
Selling, general and administrative 2,634,625 2,975,977 3,587,990
Total costs and expenses 25,016,845 28,383,811 34,429,273
Operating income 2,197,748 2,995,697 2,725,025
Share of profit (loss) of investments accounted for using the equity method 11 351,029 560,346 643,063
Other finance income 28 435,229 334,760 379,350
Other finance costs 28 (47,537) (43,997) (125,113)
Foreign exchange gain (loss), net 15,142 216,187 124,516
Other income (loss), net (19,257) (72,461) (78,109)
Income before income taxes 2,932,354 3,990,532 3,668,733
Income tax expense 15 649,976 1,115,918 1,175,765
Net income 2,282,378 2,874,614 2,492,967
Net income attributable to
Toyota Motor Corporation 2,245,261 2,850,110 2,451,318
Non-controlling interests 37,118 24,504 41,650
Net income 2,282,378 2,874,614 2,492,967

Yen
Earnings per share attributable to Toyota Motor Corporation
Basic 29 160.65 205.23 179.47
Diluted 29 158.93 205.23 179.47

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Yen in millions
For the year ended For the year ended For the year ended
Notes March 31, 2021 March 31, 2022 March 31, 2023
Net income 2,282,378 2,874,614 2,492,967
Other comprehensive income, net of tax
Items that will not be reclassified to profit (loss)
Net changes in revaluation of financial assets measured at fair value
through other comprehensive income 25 387,427 (49,242) 99,223
Remeasurements of defined benefit plans 25 216,272 136,250 65,153
Share of other comprehensive income of equity method investees 11,25 80,472 113,641 (77,148)
Total of items that will not be reclassified to profit (loss) 684,172 200,648 87,228
Items that may be reclassified subsequently to profit (loss)
Exchange differences on translating foreign operations 25 403,636 902,844 676,042
Net changes in revaluation of financial assets measured at fair value
through other comprehensive income 25 (83,503) (154,174) (115,738)
Share of other comprehensive income of equity method investees 11,25 8,172 193,811 180,181
Total of items that may be reclassified subsequently to profit (loss) 328,305 942,480 740,485
Total other comprehensive income, net of tax 25 1,012,476 1,143,129 827,713
Comprehensive income 3,294,854 4,017,742 3,320,681
Comprehensive income for the period attributable to
Toyota Motor Corporation 3,217,806 3,954,350 3,251,090
Non-controlling interests 77,048 63,392 69,591
Comprehensive income 3,294,854 4,017,742 3,320,681

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended March 31, 2021

Yen in millions
Toyota Motor
Additional Other Corporation Non- Total
Common paid-in Retained components Treasury shareholders’ controlling shareholders’
Notes stock capital earnings of equity stock equity interests equity
Balances at April 1, 2020 397,050 489,334 22,234,061 585,549 (3,087,106) 20,618,888 720,124 21,339,012
Comprehensive income
Net income — — 2,245,261 — — 2,245,261 37,118 2,282,378
Other comprehensive income, net of tax 25 — — — 972,546 — 972,546 39,930 1,012,476
Total comprehensive income — — 2,245,261 972,546 — 3,217,806 77,048 3,294,854
Transactions with owners and other
Dividends paid 25 — — (625,514) — — (625,514) (36,598) (662,112)
Repurchase of treasury stock 25 — — — — (118) (118) — (118)
Reissuance of treasury stock 25 — 15,041 — — 185,544 200,585 — 200,585
Change in scope of consolidation — — — — — — 102,588 102,588
Equity transactions and other — (7,099) — — — (7,099) 20,620 13,521
Total transactions with owners and other — 7,942 (625,514) — 185,426 (432,147) 86,610 (345,537)
Reclassification to retained earnings 25 — — 250,369 (250,369) — — — —
Balances at March 31, 2021 397,050 497,275 24,104,176 1,307,726 (2,901,680) 23,404,547 883,782 24,288,329

For the year ended March 31, 2022

Yen in millions
Toyota Motor
Additional Other Corporation Non- Total
Common paid-in Retained components Treasury shareholders’ controlling shareholders’
Notes stock capital earnings of equity stock equity interests equity
Balances at April 1, 2021 397,050 497,275 24,104,176 1,307,726 (2,901,680) 23,404,547 883,782 24,288,329
Comprehensive income
Net income — — 2,850,110 — — 2,850,110 24,504 2,874,614
Other comprehensive income, net of tax 25 — — — 1,104,240 — 1,104,240 38,889 1,143,129
Total comprehensive income — — 2,850,110 1,104,240 — 3,954,350 63,392 4,017,742
Transactions with owners and other
Dividends paid 25 — — (709,872) — — (709,872) (51,723) (761,595)
Repurchase of treasury stock 25 — — — — (404,718) (404,718) — (404,718)
Reissuance of treasury stock 25 — 227 — — 362 588 — 588
Equity transactions and other — 1,074 — — — 1,074 13,400 14,473
Total transactions with owners and other — 1,300 (709,872) — (404,357) (1,112,928) (38,323) (1,151,252)
Reclassification to retained earnings 25 — — 208,712 (208,712) — — — —
Balances at March 31, 2022 397,050 498,575 26,453,126 2,203,254 (3,306,037) 26,245,969 908,851 27,154,820

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY—(Continued)

For the year ended March 31, 2023

Yen in millions
Toyota Motor
Additional Other Corporation Non- Total
Common paid-in Retained components Treasury shareholders’ controlling shareholders’
Notes stock capital earnings of equity stock equity interests equity
Balances at April 1, 2022 397,050 498,575 26,453,126 2,203,254 (3,306,037) 26,245,969 908,851 27,154,820
Comprehensive income
Net income — — 2,451,318 — — 2,451,318 41,650 2,492,967
Other comprehensive income, net of tax 25 — — — 799,772 — 799,772 27,941 827,713
Total comprehensive income — — 2,451,318 799,772 — 3,251,090 69,591 3,320,681
Transactions with owners and other
Dividends paid 25 — — (727,980) — — (727,980) (84,986) (812,966)
Repurchase of treasury stock 25 — — — — (431,099) (431,099) — (431,099)
Reissuance of treasury stock 25 — 334 — — 573 907 — 907
Equity transactions and other — (181) — — — (181) 32,052 31,871
Total transactions with owners and other — 152 (727,980) — (430,526) (1,158,353) (52,934) (1,211,287)
Reclassification to retained earnings 25 — — 166,831 (166,831) — — — —
Balances at March 31, 2023 397,050 498,728 28,343,296 2,836,195 (3,736,562) 28,338,706 925,507 29,264,213

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS

Yen in millions
For the year ended For the year ended For the year ended
Notes March 31, 2021 March 31, 2022 March 31, 2023
Cash flows from operating activities
Net income 2,282,378 2,874,614 2,492,967
Depreciation and amortization 1,644,290 1,821,880 2,039,904
Interest income and interest costs related to financial services, net (236,862) (354,102) (694,331)
Share of profit (loss) of investments accounted for using the equity method (351,029) (560,346) (643,063)
Income tax expense 649,976 1,115,918 1,175,765
Changes in operating assets and liabilities, and other (1,063,562) (1,130,667) (1,502,482)
(Increase) decrease in trade accounts and other receivables 5,027 118,652 (532,432)
(Increase) decrease in receivables related to financial services (1,243,648) (1,213,234) (1,760,288)
(Increase) decrease in inventories (242,769) (725,285) (350,550)
(Increase) decrease in other current assets (163,473) 71,314 (61,538)
Increase (decrease) in trade accounts and other payables 384,142 152,399 712,400
Increase (decrease) in other current liabilities 282,197 410,546 545,666
Increase (decrease) in retirement benefit liabilities 55,281 60,419 21,213
Other, net (140,319) (5,478) (76,953)
Interest received 776,748 835,739 1,516,404
Dividends received 294,520 347,387 460,351
Interest paid (459,181) (418,043) (593,216)
Income taxes paid, net of refunds (810,117) (809,763) (1,297,224)
Net cash provided by (used in) operating activities 2,727,162 3,722,615 2,955,076
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others (1,213,903) (1,197,266) (1,450,196)
Additions to equipment leased to others (2,275,595) (2,286,893) (1,907,356)
Proceeds from sales of fixed assets excluding equipment leased to others 40,542 37,749 56,436
Proceeds from sales of equipment leased to others 1,371,699 1,542,132 1,659,161
Additions to intangible assets (278,447) (346,085) (348,280)
Additions to public and corporate bonds and stocks (2,729,171) (2,427,911) (1,150,214)
Proceeds from sales of public and corporate bonds and stocks 1,020,533 282,521 393,982
Proceeds upon maturity of public and corporate bonds 1,041,385 1,920,116 939,747
Other, net 33 (1,661,218) 1,898,143 207,829
Net cash provided by (used in) investing activities (4,684,175) (577,496) (1,598,890)
Cash flows from financing activities
Increase (decrease) in short-term debt 17 (1,038,438) (579,216) 239,689
Proceeds from long-term debt 17 9,656,216 8,122,678 9,276,918
Payments of long-term debt 17 (5,416,376) (8,843,665) (8,353,033)
Dividends paid to Toyota Motor Corporation common shareholders 25 (625,514) (709,872) (727,980)
Dividends paid to non-controlling interests (36,598) (51,723) (84,986)
Reissuance (repurchase) of treasury stock 199,884 (404,718) (431,099)
Other, net — — 24,310
Net cash provided by (used in) financing activities 2,739,174 (2,466,516) (56,180)
Effect of exchange rate changes on cash and cash equivalents 220,245 334,195 103,305
Net increase (decrease) in cash and cash equivalents 1,002,406 1,012,798 1,403,311
Cash and cash equivalents at beginning of year 6 4,098,450 5,100,857 6,113,655
Cash and cash equivalents at end of year 6 5,100,857 6,113,655 7,516,966

The accompanying notes are an integral part of these consolidated financial statements.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Reporting entity
TMC is a limited liability, joint-stock company located in Japan, and TMC’s principal executive offices are registered in Toyota City, Aichi
Prefecture. The consolidated financial statements of the group consist of TMC, its consolidated subsidiaries (collectively, “Toyota”) and their interests in
associates and joint ventures.

Toyota and its associates are primarily engaged in the design, manufacture, and sale of sedans, minivans, compact cars, SUVs, trucks and related
parts and accessories throughout the world. In addition, Toyota and its associates provide financing, vehicle leasing and certain other financial services
primarily to its dealers and their customers to support the sales of vehicles and other products manufactured by Toyota and its associates.

2. Basis of preparation
(1) Compliance with international financial reporting standards
Toyota’s consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB.

The consolidated financial statements were approved on June 30, 2023 by President, member of the Board of Directors Koji Sato and CFO,
member of the Board of Directors Yoichi Miyazaki.

(2) Basis of measurement

Toyota’s consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities measured
at fair value and assets and liabilities associated with defined benefit plans indicated in “3. Significant accounting policies”.

(3) Functional currency and presentation currency

The consolidated financial statements are presented in Japanese yen, which is the functional currency of TMC. All financial information presented
in Japanese yen has been rounded to the nearest million Japanese yen, except when otherwise indicated. Amounts may not sum to totals due to rounding.

3. Significant accounting policies

Basis of consolidation -
(1) Subsidiaries
The consolidated financial statements include the accounts of TMC, its subsidiaries that are controlled by TMC, and those structured entities that
are controlled by Toyota. Toyota controls an entity when Toyota is exposed or has rights to variable returns from involvement with the entity, and has the
ability to affect those returns by using its power over the entity.

The financial statements of subsidiaries have been adjusted in order to ensure consistency with the accounting policies adopted by Toyota as
necessary. All significant intercompany balances and transactions as well as the unrealized profit have been eliminated in consolidation.

Changes in a subsidiary’s ownership interests that do not result in a loss of control are accounted for as equity transactions. When control over a
subsidiary is lost, any gain or loss on the disposal of the interest sold is recognized in profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Associates and joint ventures

Associates are entities over which Toyota has a significant influence over the decisions on financial and operating policies, but does not have
control or joint control.

Joint ventures are entities over which two or more parties including Toyota have joint control, based on a contractual arrangement, and financial
and business decisions about the relevant activities of which require unanimous consent of the parties that have joint control.

Investments in associates and joint ventures are accounted for using the equity method. The financial statements of associates and joint ventures
have been adjusted in order to ensure consistency with the accounting policies adopted by Toyota as necessary.

When the use of the equity method is discontinued from the date when the investees are determined to be no longer associates or joint ventures,
any gain or loss on such disposal of the investment is recognized in profit or loss.

Foreign currency translation -

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(1) Foreign currency transactions
Foreign currency transactions are translated into the respective functional currencies of Toyota at the exchange rates prevailing when such
transactions occur. All foreign currency receivables and payables are translated into the respective functional currencies at the applicable exchange rates
at the end of the reporting period. Non-monetary assets and liabilities in foreign currencies that are measured at fair value are translated into the
functional currency using the exchange rate on the date when the fair value was measured. Gains or losses on exchange differences arising from
settlement of foreign currency receivables and payables or on their translations at the end of the reporting date are recognized in profit or loss.
Furthermore, exchange differences arising from equity financial assets measured at fair value through other comprehensive income is recognized as
other comprehensive income.

(2) Foreign operations

All assets and liabilities of foreign subsidiaries, associates and joint ventures (collectively, “foreign operations”) that use a functional currency
other than Japanese yen are translated into Japanese yen at the exchange rates at the end of the reporting period. All revenues and expenses of foreign
operations are translated into Japanese yen at the average exchange rate for the period unless the exchange rate fluctuates widely. Exchange differences
arising from such translations are recognized in other comprehensive income and accumulated in other components of equity in the consolidated
statement of financial position. When a foreign operation is disposed of, and control, significant influence or joint control over the foreign operation is
lost, the cumulative amount of exchange differences relating to the foreign operation is reclassified from equity to profit or loss.

Cash and cash equivalents -

Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments that are readily convertible to cash and are
subject to insignificant risk of changes in value with three months or less maturities from the acquisition date.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial instruments -
(1) Financial assets
(i) Initial recognition and measurement
Toyota initially recognizes financial assets when it becomes a party to a contract and except for derivatives, classifies financial assets into
“financial assets measured at amortized cost”, “debt and equity financial assets measured at fair value through other comprehensive income” or
“financial assets measured at fair value through profit or loss”. The sale or purchase of financial assets that occurred in the normal course of business are
recognized and derecognized at the trade date.

Financial assets classified as being measured at fair value through profit or loss are measured at fair value, but other financial assets are initially
recognized and measured at fair value adding transaction costs directly attributable to acquisition. Trade receivables that do not contain significant
financial elements are measured at the transaction price.

(a) Financial assets measured at amortized cost

Toyota classifies a financial asset as measured at amortized cost if both of the following conditions are met:

The asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

(b) Debt financial assets measured at fair value through other comprehensive income
Debt financial assets are measured at fair value through other comprehensive income only if it meets both of the following conditions:

The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

(c) Equity financial assets measured at fair value through other comprehensive income
For equity financial assets such as shares held mainly for the purpose of maintaining or enhancing business relationships with investees are
irrevocably designated at initial recognition, as financial assets measured at fair value through other comprehensive income.

(d) Financial assets measured at fair value through profit or loss

Financial assets other than (a) to (c) are classified as financial assets measured at fair value through profit or loss.

(ii) Subsequent measurement

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After initial recognition, financial assets are measured based on the following classification.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(a) Financial assets measured at amortized cost

Financial assets measured at amortized cost are measured at amortized cost using the effective interest method.

(b) Debt financial assets measured at fair value through other comprehensive income
Subsequent changes in fair value of the financial assets are recognized as other comprehensive income. Impairment gains or losses, interest
income and foreign exchange gains and losses are recognized in profit or loss. When the financial assets are derecognized, the cumulative gain or loss
recognized in other comprehensive income is reclassified from other components of equity to profit or loss.

(c) Equity financial assets measured at fair value through other comprehensive income
Subsequent changes in fair value of the financial assets are recognized as other comprehensive income. When the financial assets are
derecognized, the cumulative gain or loss recognized through other comprehensive income is reclassified from other components of equity to retained
earnings. Dividends from equity financial assets are recognized in profit or loss.

(d) Financial assets measured at fair value through profit or loss

Subsequent changes in the fair value of the financial assets are recognized in profit or loss.

(iii) Impairment of financial assets

An allowance for credit losses is provided for expected credit losses on financial assets that are measured at amortized cost as well as debt
financial assets measured at fair value through other comprehensive income. An allowance for credit losses is also provided for expected credit losses on
loan commitments or financial guarantee agreements that are off-balance sheet credit exposures.

At the end of the reporting period, Toyota assesses whether the credit risk on financial assets have significantly increased since initial recognition.
At the end of the reporting period, if Toyota identifies a significant increase in credit risk, allowances for credit losses are measured as being equal to the
amount of expected credit losses that would result from default events that are possible over the expected life of a financial asset. At the end of the
reporting period, if the credit risk for a financial instrument has not increased significantly since its initial recognition, allowances for credit losses are
measured as being equal to the amount of the expected credit losses caused by default events that may occur within 12 months from the end of the
reporting period.

For accounts receivable that are included in “Trade accounts and other receivables” and finance lease receivables, the allowance is continuously
measured at amounts equal to expected credit losses over the expected life of financial assets.

The amount of expected credit losses is measured as the present value of all cash short falls resulting from the difference between the cash flows
due to Toyota in accordance with the contract and cash flows that Toyota expects to receive, and such amount is recognized in profit or loss. A reversal
of the allowance for credit losses resulting from a reduction in the amount of expected credit losses is recognized in profit or loss.

If there is objective evidence of impairment such as significant financial difficulty of a borrower, or a default or delinquency by a borrower,
interest income is measured applying the effective interest method to the

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

net carrying amount of the financial asset (after deducting the allowance for credit loss). Financial assets are written off either partially or fully when
there is no reasonable expectation of recovering a financial asset in its entirely or a portion thereof.

(iv) Derecognition of financial assets

Toyota derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when Toyota transfers the contractual
right to receive cash flows from financial assets in transactions in which substantially all the risks and rewards of ownership of the asset are transferred
to another entity. Even if Toyota transfers a financial asset, it neither transfers nor holds substantially all the risks and rewards of ownership of such
transferred financial asset. Further, in cases where Toyota continues to control such a transferred financial asset, Toyota recognizes the retained interest
on such financial asset and the relevant liabilities that might possibly be paid in association therewith.

(2) Financial liabilities

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(i) Initial recognition and measurement
Toyota initially measures financial liabilities other than derivatives at fair value less transaction costs directly attributable to the issuance of
financial liabilities.

(ii) Subsequent measurement

Toyota subsequently measures financial liabilities at amortized cost using the effective interest method. Amortization under the effective interest
method and gain or losses on derecognition are recognized as finance income or costs and recognized in profit or loss.

(iii) Derecognition of financial liabilities

Toyota derecognizes financial liabilities when the financial liabilities expire, that is, when the liability identified in the contract expires due to
performance, discharges, cancels, or expires.

(3) Derivative financial instruments

Toyota employs derivative financial instruments, including forward foreign exchange contracts, foreign currency options, interest rate swaps,
interest rate currency swap agreements and interest rate options, to manage its exposure to fluctuations in interest rates and foreign currency exchange
rates. All derivative transactions are measured at fair value as assets or liabilities.

Toyota does not use derivative financial instruments for speculative or trading purposes.

Finance receivables -
Finance receivables recorded on Toyota’s consolidated statement of financial position are net of any unearned financial income and deferred
origination costs and the allowance for credit losses. Deferred origination costs are amortized so as to approximate a level rate of return over the term of
the related contracts.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The determination of finance receivable portfolios is based primarily on the qualitative consideration of the nature of Toyota’s business operations
and finance receivables. The three portfolios within finance receivables are as follows:

(1) Retail receivables portfolio

The retail receivables portfolio consists of retail installment sales contracts acquired mainly from dealers (“auto loans”) including credit card
loans. These contracts acquired must first meet specified credit standards. Thereafter, Toyota retains responsibility for contract collection and
administration.

The contract periods of auto loans primarily range from 2 to 7 years. Toyota acquires security interests in the vehicles financed and has the right to
repossess vehicles if customers fail to meet their contractual obligations. Almost all auto loans are non-recourse, which relieves the dealers from
financial responsibility in the event of repossession.

Toyota manages the retail receivables portfolio as one portfolio based on common risk characteristics associated with the underlying finance
receivables, the similarity of the credit risks, and the quantitative materiality.

(2) Finance lease receivables portfolio

Finance lease receivables are related to new vehicle lease contracts. The contract periods of these primarily range from 2 to 5 years. Lease
contracts acquired must first meet specified credit standards after which Toyota assumes ownership of the leased vehicle. Toyota is responsible for
contract collection and administration during the lease period.

Toyota is generally permitted to take possession of the vehicle upon a default by the lessee. The residual value is estimated at the time the vehicle
is first leased. Vehicles returned to Toyota at the end of their leases are sold by auction.

Toyota manages the finance lease receivables portfolio as one portfolio based on common risk characteristics associated with the underlying
finance receivables and the similarity of the credit risks.

(3) Wholesale and other dealer loan receivables portfolio

Toyota provides wholesale financing to qualified dealers to finance inventories. Toyota acquires security interests in vehicles financed at
wholesale. In cases where additional security interests would be required, Toyota takes dealership assets or personal assets, or both, as additional
security. If a dealer defaults, Toyota has the right to liquidate any assets acquired.

Toyota also makes term loans to dealers for business acquisitions, facilities refurbishment, real estate purchases and working capital requirements.
These loans are typically secured with liens on real estate, other dealership assets and/or personal assets of the dealers.

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Toyota manages the wholesale and other dealer loan receivables portfolio as one portfolio based on the risk characteristics associated with the
underlying finance receivables.

Allowance for credit losses on finance receivables -

The allowance for credit losses on finance receivables is measured at the portfolio level, based on a systematic, ongoing review and evaluation
performed as part of the credit risk evaluation process, historical loss

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

experience, the size and composition of the portfolios, current economic events and conditions, the estimated fair value and adequacy of collateral,
forward-looking information including movements of the world economy and other pertinent factors. Furthermore, portfolios are grouped based on
similarities of risk characteristics, such as product and collateral classes, when calculating expected credit losses in the aggregate.

(1) Retail receivables portfolio

With respect to retail receivables, Toyota reviews whether the credit risk on finance receivables has increased significantly. To evaluate the risk,
Toyota uses the changes for the possibility of a credit loss occurring or days in arrears as an index. Toyota assesses the significant increases in credit risk
when contractual payments are more than 30 days past due. When the credit risk on finance receivables has not increased significantly since initial
recognition, Toyota measures the loss allowance for that finance receivables at an amount equal to 12-month expected credit losses at the reporting date.

Meanwhile, Toyota measures the loss allowance for finance receivables at an amount equal to the lifetime expected credit losses if the credit risk
on that finance receivables has increased significantly since initial recognition at the reporting date. Toyota calculates the loss allowance for finance
receivables at an amount equal to the lifetime expected credit losses by considering historical credit loss experience and future collectability, when there
is evidence that finance receivables is credit-impaired such as a breach of contract due to default or delayed contractual payments.

In calculating expected credit losses, Toyota uses the probability of a default and the loss rate in the event of a default based on past experience
and then reflects its forecasts of current and future economic conditions.

Suspension of payment over a certain period of time and or situations which contractual obligations are not being met are considered as being in
default in accordance with internal management rules.

(2) Finance lease receivables portfolio

With respect to the finance lease receivables portfolio, Toyota always measures loss allowance at an amount equal to lifetime expected credit
losses. Suspension of payment over a certain period of time and/or situations which contractual obligations are not being met are considered as being in
default in accordance with internal management rules.

(3) Wholesale and other dealer loan receivables portfolio

With respect to the wholesale and other dealer loan receivables portfolio, receivables are sorted primarily by credit qualities based on internal risk
assessments. Toyota reviews the change of the segment as an index whether the credit risk on finance receivables has increased significantly since initial
recognition to assess these receivables for credit risk. Toyota assesses the significant increases in credit risk when contractual payments are more than 30
days past due. If the credit risk on finance receivables has not increased significantly since initial recognition, Toyota measures the loss allowance for
that finance receivables at an amount equal to 12-month expected credit losses at the reporting date.

Meanwhile, Toyota measures the loss allowance for finance receivables at an amount equal to the lifetime expected credit losses if the credit risk
on that finance receivables has increased significantly since initial recognition at the reporting date. Toyota calculates the loss allowance for finance
receivables at an amount equal to the lifetime expected credit losses by considering historical credit loss experience and future collectability, when there
is evidence that finance receivables are credit-impaired such as a debtor’s worsened financial conditions, breach of contract due to default or delayed
contractual payments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In calculating expected credit losses, Toyota uses the probability of a default and the loss rate in the event of a default based on past experience
and then reflects its forecasts of current and future economic conditions.

Suspension of payment over a certain period of time and/or situations where contractual obligations are not being met are considered as defaults in
accordance with internal management rules.

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Although Toyota considers the allowance for credit losses on finance receivables to be adequate based on information currently available,
additional provisions may be necessary due to (i) changes in management estimates and assumptions about asset impairments, (ii) information that
indicates changes in expected future cash flows, or (iii) changes in economic and other events and conditions. Future changes in the economy that
impact the consumer confidence such as increasing interest rates and a rise in the unemployment rate as well as higher debt balances, coupled with
deterioration in actual and expected used vehicle values, could negatively affect future operating results of the financial services operations.

Inventories -
Inventories are valued at cost, not in excess of net realizable value. Net realizable value is the estimated selling price in the ordinary course of
business less the estimated original cost and estimated selling expense to product completion. The cost of inventories includes purchase costs,
conversion costs and other costs incurred in bringing the inventories to their present location and condition. The cost is determined principally by using
the weighted-average method.

Property, plant and equipment -

Property, plant and equipment is measured based on the cost model and carried at its cost less accumulated depreciation and impairment losses.
Expenditures relating to major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current
operations as incurred. Depreciation of property, plant and equipment, except for land that is not subject to depreciation, is calculated on the straight-line
method over the estimated useful life of the respective assets according to general class, type of structure and use. The estimated useful lives range from
2 to 65 years for buildings and from 2 to 20 years for machinery and equipment.

The depreciation method, useful lives and residual values of property, plant and equipment are reviewed annually at each fiscal year end, and
adopted prospectively, if applicable.

Vehicles and equipment on operating leases to third parties are originated by dealers and acquired by certain consolidated subsidiaries. Such
subsidiaries are also the lessors of certain property that they acquire directly. Vehicles and equipment on operating leases are depreciated on a straight-
line method over the lease term, generally from 2 to 5 years, to the estimated residual value. Incremental direct costs incurred in connection with the
acquisition of lease contracts are capitalized and amortized on a straight-line method over the lease term.

Toyota is exposed to risk of loss on the disposition of off-lease vehicles to the extent that sales proceeds are not sufficient to cover the carrying
value of the leased asset at lease termination. Toyota evaluates at the end of each reporting period the estimated residual value to cover probable
estimated losses related to unguaranteed residual values on its owned portfolio. The estimate is calculated considering projected vehicle return rates and
projected loss severity. Factors considered in the determination of projected return rates and loss severity include historical and market information on
used vehicle sales, trends in lease returns and new car markets, and general economic conditions. Toyota evaluates the foregoing factors, develops
several potential loss scenarios, and evaluates the estimated residual value to determine whether it is considered adequate to cover the probable range of
losses.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

By evaluating estimated residual value, Toyota reflects in depreciation the amount it considers to be appropriate in relation to the estimated losses
on its owned portfolio.

Intangible assets -
Intangible assets are measured based on the cost model and carried at their cost less accumulated amortization and impairment losses.

The estimated useful lives and the amortization method of intangible assets are reviewed annually at each fiscal year end, and adopted
prospectively, if appropriate.

(1) Capitalized development cost

Development expenditure for a product is capitalized only when there is a technical and commercial feasibility of completing the development,
Toyota has the intention, ability and sufficient resources to use the outcome of the development, it is probable that the outcome will generate a future
economic benefit, and the cost can be measured reliably.

Capitalized development cost is amortized using the straight-line method over the expected product life cycle of the developed product ranging
mainly from 5 to 10 years.

(2) Other intangible assets

Other intangible assets mainly consist of software for internal use and amortized using the straight-line method over their estimated useful lives,
mainly 5 years. Goodwill is not material to Toyota’s consolidated statement of financial position.

Impairment of non-financial assets -

At the end of the reporting period, the carrying amount of non-financial assets other than inventories and deferred tax assets are assessed to
determine whether or not there is any indication of impairment. If there is such an indication, the recoverable amount of such an asset or a cash-
generating unit is estimated. An impairment loss would be recognized when the carrying amount of an asset or a cash-generating unit exceeds the

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estimated discounted cash flows expected to result from the use of the assets and its eventual disposition. The amount of the impairment loss to be
recorded is calculated by the excess of the carrying amount of the assets over its recoverable amount.

Leases -
At the inception of a contract, Toyota assesses whether the contract is, or contains, a lease.

(1) Lessee
Toyota recognizes a right of use asset and a lease liability at the lease commencement date. The cost of the right of use asset is measured at the
amount of the initial measurement of the lease liability by adjusting any lease payments made or before the commencement date. Lease liability is
initially measured at the present value of the lease payments that are not paid as of the commencement date.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

After the commencement date, Toyota applies a cost model and subsequently depreciates the right of use asset using a straight-line method from
the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. Lease liability is measured at
amortized cost using the effective interest method. In the consolidated statement of financial position, lease liability is included in short-term and long-
term debt. Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the
remaining balance of the lease liability and recognized in profit or loss over the lease term.

Many lease contracts relating to land and buildings entered into by Toyota include extension options that can be exercisable by Toyota as lessee
for various purposes, such as to ensure business flexibility. Toyota assesses whether it is reasonably certain to exercise an extension option, and if it
assesses it to be reasonably certain, the extension option is included in the lease term.

Toyota recognizes the lease payments associated with lease terms of 12 months or less as an expense on a straight-line basis over the lease term.

(2) Lessor
With respect to lessor lease transactions, Toyota determines at the commencement of the lease whether each lease is a finance lease or operating
lease.

A lease is classified as a finance lease if it transfers substantially all of the risks and rewards incidental to the ownership of an underlying asset.
Otherwise leases are classified as operating leases.

Toyota recognizes the operating lease payments in profit or loss on a straight-line basis over the lease term.

Employee benefit obligations -

Toyota has both defined benefit and defined contribution plans for employees’ retirement benefits.

(1) Defined benefit plan

The present value of defined benefit obligations and service cost are principally determined for each plan using the projected unit credit method.
The net defined benefit liability (asset) is the present value of the defined benefit obligations less the fair value of plan assets. Current service cost and
net interest on the net defined benefit liability (asset) are recognized as net income (loss) on the statement of net income.

Past service cost is recognized in profit or loss upon occurrence.

Toyota recognizes the difference arising from remeasurement of the net defined benefit liability (asset) including actuarial gains and losses in
other comprehensive income when it is incurred and reclassifies it immediately to retained earnings.

(2) Defined contribution plan

For defined contribution plans, when the employees render services, the contribution payables are recognized in profit or loss.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Liabilities for quality assurance -

Toyota generally warrants its products against certain manufacturing and other defects. Provisions for product warranties are provided for specific
periods of time and/or usage of the product and vary depending upon the nature of the product, the geographic location of the sale and other factors. The
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accrued warranty costs represent management’s best estimate at the time of sale of the total costs that Toyota will incur to repair or replace product parts
that fail while still under warranty. The amount of accrued estimated warranty costs is primarily based on historical experience of product failures as
well as current information on repair costs. An estimate of warranty claim accrued for each fiscal year is calculated based on the estimate of warranty
claim per unit. The estimate of warranty claim per unit is calculated comprehensively by dividing the actual amounts of warranty claim by the number of
sales units for the fiscal year.

Toyota accrues for costs of recalls and other safety measures, as well as product warranty cost described above. Toyota generally measures such
“liabilities for recalls and other safety measures” at the time of vehicle sales comprehensively by aggregate sales of various models in a certain period by
geographical regions. However, when circumstances warrant, Toyota measures “liabilities for a particular recall or other safety measures” using an
individual model when they are probable and reasonably estimable.

The portion of “liabilities for recalls and other safety measures” recorded in the consolidated statement of financial position is calculated
comprehensively based on the “expected liability for the cost of recalls and other safety measures” in consideration of the “accumulated amount of
repair cost paid”. As such, this liability is evaluated every period based on new data and are adjusted as appropriate. Toyota calculates these liabilities for
units sold in the current period and each of the past 10 fiscal years, and aggregates such liabilities in determining the final liability amount.

The “expected liability for the cost of recalls and other safety measures” are calculated by multiplying the “sales unit” by the “expected average
repair cost per unit”. The “expected average repair cost per unit” is calculated based on dividing the “accumulated amount of repair cost paid per unit”
by the “pattern of payment occurrences”. The “pattern of payment occurrence” represents a ratio that shows the measure of payment occurrence over 10
years based on actual payments with regard to units sold within 10 years.

Factors that may cause a difference between the amount accrued comprehensively at the time of vehicle sale and actual payment on individual
recalls and other safety measures mainly include actual cost of recalls and safety measures during the period being significantly different from the
accumulated amount of repair cost paid per unit (generally comprised of parts and labor) and the actual pattern of payment occurrence during the period
being significantly different from the pattern of the payment occurrence in the past. Such differences are considered as part of our estimation process for
future recalls and other safety measures.

Liabilities for product warranties and liabilities for recalls and other safety measures have been combined into “Liabilities for quality assurance”
in the consolidated statement of financial position. Product warranty costs and costs of recalls and other safety measures are included in cost of products
sold in the consolidated statement of income.

The foregoing evaluations are inherently uncertain, as they require material estimates as described above. Consequently, actual warranty costs
may differ from the estimated amounts and could require additional warranty provisions. If these factors require a significant increase in Toyota’s
accrued estimated warranty costs, it would negatively affect future operating results of the automotive operations.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue recognition -
In the automotive operations, performance obligations are considered to be satisfied when completed vehicles and parts are delivered to the agreed
locations with dealers. For parts for production, it is when they are loaded on a ship or delivered to manufacturing companies. We do not have any
material significant payment terms as payment is received at or shortly after the point of sale.

Toyota’s sales incentive programs principally consist of cash payments to dealers calculated based on total vehicle volume or vehicle unit sales of
certain models sold by a dealer during a certain period of time. Toyota accrues these incentives as revenue reductions upon the sale of a vehicle
corresponding to the program by the amount determined in the related incentive program utilizing the most likely outcome method.

The sale of certain vehicles includes a contractual right, which entitles customers to free vehicle maintenance. We use an observable price to
determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. Such revenues
from free maintenance contracts are deferred and recognized as revenue over the period of the contract in proportion to the costs expected to be incurred
in satisfying the obligations under the contract.

Revenues from the sales of vehicles under which Toyota conditionally guarantees the minimum resale value are recognized on a pro rata basis
from the date of sale to the first exercise date of the guarantee in accordance with lease accounting. The underlying vehicles of these transactions are
recorded as assets and are depreciated in accordance with Toyota’s depreciation policy.

Interest income from financial services is recognized using the effective interest method. Revenues from operating leases are recognized on a
straight-line basis over the lease term.

If the period between satisfaction of the performance obligation and receipt of consideration is expected to be within one year or less, as a
practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

Income taxes -
Income tax expenses are presented as the aggregate amount of current taxes and deferred taxes.

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Deferred tax assets and deferred tax liabilities are recognized for future tax consequences attributable to temporary differences between the
carrying amount of assets or liabilities in the consolidated statement of financial position and the tax base of the assets or liabilities and carryforwards of
unused tax losses and tax credits.

Deferred tax assets are recognized for all future deductible amounts, to the extent that it is probable that we will have sufficient profit to utilize the
benefit of future deductible amounts.

Deferred tax liabilities for taxable temporary differences arising from investments in subsidiaries, associates, and interest in joint ventures are
recognized in principle. However, they are not recognized when Toyota is able to control the timing of the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply in the period when the assets are realized or
the liabilities are settled, based on the tax rates and tax laws enacted or substantively enacted at the end of the reporting period. The measurement of
deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which Toyota expects, at the end of
reporting period, to recover or settle the carrying amount of its assets and liabilities.

Earnings per share attributable to Toyota Motor Corporation -

Basic earnings per share attributable to Toyota Motor Corporation is calculated by dividing net income attributable to Toyota Motor Corporation
by the weighted-average number of common shares outstanding with adjustment for treasury stock during the reporting period. Diluted earnings per
share attributable to Toyota Motor Corporation is calculated by dividing net income attributable to Toyota Motor Corporation by the weighted-average
number of common shares outstanding taking into consideration the effect of dilutive securities.

New accounting standards and interpretations not yet adopted -

None of new or revised standards and interpretations that have been issued as of the date of approval of the consolidated financial statements but
have not yet been adopted by Toyota have a significant effect on the consolidated financial statements.

4. Significant accounting judgments and estimates

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates, and
assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities. Actual results could differ from these estimates. These estimates and underlying assumptions are reviewed on a
continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates were revised and in any future periods
affected.

Information about important estimation and judgments that have significant effects on the amounts recognized in the consolidated financial
statements is as follows:
Scope of subsidiaries, associates, and joint ventures (Note 3 “Basis of consolidation”)
Intangible assets incurred by research and development (Note 3 “Intangible assets”)

Information about accounting estimates and assumption that affect the application of accounting policies and the reported amounts of assets and
liabilities, and financial statements based on IFRS is as follows:
Liabilities for quality assurance (Note 3 “Liabilities for quality assurance” and Note 24)
Allowance for credit losses on finance receivables (Note 3 “Allowance for credit losses on finance receivables” and Note 19 (2))
Impairment of non-financial assets (Note 3 “Impairment of non-financial assets” and Note 12)
Employee benefit obligations (Note 3 “Employee benefit obligations” and Note 23)
Fair value measurements (Note 21)
Recoverability of deferred tax assets (Note 3 “Income taxes” and Note 15)

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Segment information
(1) Outline of reporting segments
The operating segments reported below are the segments of Toyota for which separate financial information is available and for which operating
income/loss amounts are evaluated regularly by executive management in deciding how to allocate resources and in assessing performance.

The major portions of Toyota’s operations on a worldwide basis are derived from the Automotive and Financial services business segments. The
Automotive segment designs, manufactures and distributes sedans, minivans, compact cars, SUVs, trucks and related parts and accessories. The
Financial services segment consists primarily of financing and vehicle leasing operations to assist in the merchandising of Toyota’s products as well as
other products. The All other segment includes telecommunications and other businesses.

(2) Segment information

As of and for the year ended March 31, 2021

Yen in millions
Inter-segment
Elimination/
Financial Unallocated
Automotive services All other Amount Consolidated
Sales revenues
Revenues from external customers 24,597,846 2,137,195 479,553 — 27,214,594
Inter-segment revenues and transfers 53,706 25,042 572,812 (651,560) —
Total 24,651,552 2,162,237 1,052,365 (651,560) 27,214,594
Operating expenses 23,044,391 1,666,645 967,015 (661,205) 25,016,845
Operating income 1,607,161 495,593 85,350 9,645 2,197,748
Total assets 21,412,034 28,275,239 2,720,720 9,859,147 62,267,140
Investments accounted for using the equity method 3,698,990 71,336 248,814 141,664 4,160,803
Depreciation and amortization 893,704 715,757 34,829 — 1,644,290
Capital expenditures 1,341,032 2,151,455 76,370 40,843 3,609,699

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and for the year ended March 31, 2022

Yen in millions
Inter-segment
Elimination/
Financial Unallocated
Automotive services All other Amount Consolidated
Sales revenues
Revenues from external customers 28,531,993 2,306,079 541,436 — 31,379,507
Inter-segment revenues and transfers 73,745 17,947 588,441 (680,133) —
Total 28,605,738 2,324,026 1,129,876 (680,133) 31,379,507
Operating expenses 26,321,448 1,667,025 1,087,575 (692,237) 28,383,811
Operating income 2,284,290 657,001 42,302 12,104 2,995,697
Total assets 24,341,737 31,681,472 3,091,011 8,574,551 67,688,771
Investments accounted for using the equity method 4,354,085 79,414 258,750 145,646 4,837,895
Depreciation and amortization 1,026,834 761,801 33,245 — 1,821,880
Capital expenditures 1,422,429 2,156,339 51,200 (18,381) 3,611,587

As of and for the year ended March 31, 2023

Yen in millions
Inter-segment
Elimination/
Financial Unallocated
Automotive services All other Amount Consolidated
Sales revenues
Revenues from external customers 33,776,870 2,786,679 590,749 — 37,154,298
Inter-segment revenues and transfers 43,131 22,968 634,194 (700,293) —
Total 33,820,000 2,809,647 1,224,943 (700,293) 37,154,298

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Operating expenses 31,639,363 2,372,131 1,121,492 (703,713) 34,429,273
Operating income 2,180,637 437,516 103,451 3,420 2,725,025
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 26,321,858 35,525,441 2,946,994 9,508,887 74,303,180
Investments accounted for using the equity method 4,717,231 92,903 272,752 144,460 5,227,345
Depreciation and amortization 1,205,687 799,156 35,062 — 2,039,904
Capital expenditures 1,688,114 1,786,373 38,748 (17,015) 3,496,219

Accounting policies applied by each segment is in conformity with those of Toyota’s consolidated financial statements. Transfers between industry
segments are made in accordance with terms and conditions in the ordinary course of business.

Unallocated amounts included in assets represent assets held for corporate purpose, which mainly consist of cash and cash equivalents and
financial assets measured at fair value through other comprehensive income, and the balances as of March 31, 2021, 2022 and 2023 are
¥11,344,879 million, ¥10,020,460 million and ¥11,101,175 million, respectively.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) Consolidated Financial Statements on Non-Financial Services Businesses and Financial Services Business
The financial data below presents separately Toyota’s non-financial services and financial services businesses.
(i) Consolidated Statement of Financial Position on Non-Financial Services Businesses and Financial Services Business

Yen in millions
March 31, 2022 March 31, 2023
Assets
(Non-Financial Services Businesses)
Current assets
Cash and cash equivalents 4,299,522 5,548,398
Trade accounts and other receivable 3,184,782 3,594,057
Other financial assets 2,028,649 849,779
Inventories 3,821,356 4,255,614
Other current assets 746,134 749,078
Total current assets 14,080,444 14,996,926
Non-current assets
Property, plant and equipment 7,302,017 7,729,000
Other 15,769,015 17,337,727
Total non-current assets 23,071,032 25,066,727
Total assets 37,151,476 40,063,653
(Financial Services Business)
Current assets
Cash and cash equivalents 1,814,133 1,968,568
Trade accounts and other receivable 206,588 286,960
Receivables related to financial services 7,181,327 8,279,806
Other financial assets 1,058,620 1,680,242
Other current assets 221,738 362,660
Total current assets 10,482,407 12,578,237
Non-current assets
Receivables related to financial services 14,583,130 16,491,045
Property, plant and equipment 5,024,625 4,904,975
Other 1,591,311 1,551,183
Total non-current assets 21,199,065 22,947,204
Total assets 31,681,472 35,525,441
(Elimination)
Elimination of assets (1,144,177) (1,285,914)
(Consolidated)
Total assets 67,688,771 74,303,180

Note: Assets in non-financial services include unallocated corporate assets.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Yen in millions
March 31, 2022 March 31, 2023
Liabilities
(Non-Financial Services Businesses)
Current liabilities
Trade accounts and other payables 4,023,857 4,689,034
Short-term and current portion of long-term debt 1,041,557 1,170,114
Accrued expenses 1,421,194 1,446,697
Income taxes payable 695,888 361,000
Other current liabilities 2,778,172 3,266,095
Total current liabilities 9,960,668 10,932,939
Non-current liabilities
Long-term debt 1,538,884 1,553,622
Retirement benefit liabilities 1,004,558 1,047,430

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Other non-current liabilities 1,830,146 1,867,028
Total non-current liabilities 4,373,588 4,468,080
Total liabilities 14,334,256 15,401,019
(Financial Services Business)
Current liabilities
Trade accounts and other payables 477,550 547,511
Short-term and current portion of long-term debt 10,576,910 11,583,602
Accrued expenses 124,088 128,994
Income taxes payable 130,927 43,607
Other current liabilities 1,414,606 1,841,562
Total current liabilities 12,724,080 14,145,275
Non-current liabilities
Long-term debt 13,882,650 15,627,943
Retirement benefit liabilities 18,190 18,078
Other non-current liabilities 722,257 1,135,862
Total non-current liabilities 14,623,097 16,781,883
Total liabilities 27,347,177 30,927,158
(Elimination)
Elimination of liabilities (1,147,482) (1,289,211)
(Consolidated)
Total liabilities 40,533,951 45,038,967
Shareholders’ equity
(Consolidated) Total Toyota Motor Corporation shareholders’ equity 26,245,969 28,338,706
(Consolidated) Non-controlling interests 908,851 925,507
(Consolidated) Total shareholders’ equity 27,154,820 29,264,213
(Consolidated) Total liabilities and shareholders’ equity 67,688,771 74,303,180

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(ii) Consolidated Statement of Income on Non-Financial Services Businesses and Financial Services Business

Yen in millions
For the year ended For the year ended For the year ended
March 31, 2021 March 31, 2022 March 31, 2023
(Non-Financial Services Businesses)
Sales revenues 25,103,190 29,104,564 34,409,011
Cost of revenues 21,199,915 24,250,860 29,132,715
Selling, general and administrative 2,206,205 2,518,182 2,990,316
Operating income 1,697,070 2,335,522 2,285,980
Other income (loss), net 742,785 998,001 943,777
Income before income taxes 2,439,855 3,333,522 3,229,757
Income tax expense 528,413 944,594 1,040,864
Net income 1,911,442 2,388,928 2,188,893
Net income attributable to
Toyota Motor Corporation 1,875,467 2,369,399 2,152,509
Non-controlling interests 35,975 19,529 36,384
(Financial Services Business)
Sales revenues 2,162,237 2,324,026 2,809,647
Cost of revenues 1,202,277 1,178,509 1,741,117
Selling, general and administrative 464,368 488,517 631,014
Operating income 495,593 657,001 437,516
Other income (loss), net (3,090) 16 (5,013)
Income before income taxes 492,503 657,017 432,503
Income tax expense 121,536 171,327 134,903
Net income 370,967 485,690 297,600
Net income attributable to
Toyota Motor Corporation 369,824 480,716 292,334
Non-controlling interests 1,143 4,974 5,266
(Elimination)
Elimination of net income (30) (4) 6,475
(Consolidated)
Net income 2,282,378 2,874,614 2,492,967
Net income attributable to

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Toyota Motor Corporation 2,245,261 2,850,110 2,451,318
Non-controlling interests 37,118 24,504 41,650

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(iii) Consolidated Statement of Cash Flows on Non-Financial Services Businesses and Financial Services Business

Yen in millions
For the year ended For the year ended For the year ended
March 31, 2021 March 31, 2022 March 31, 2023
(Non-Financial Services Businesses)
Cash flows from operating activities
Net income 1,911,442 2,388,928 2,188,893
Depreciation and amortization 928,533 1,060,079 1,240,749
Share of profit (loss) of investments accounted for using the equity method (345,374) (552,515) (633,324)
Income tax expense 528,413 944,594 1,040,864
Changes in operating assets and liabilities, and other (262,407) (572,082) 463,871
Interest received 123,606 100,118 234,945
Dividends received 290,618 342,646 454,752
Interest paid (35,371) (40,780) (28,206)
Income taxes paid, net of refunds (505,260) (544,887) (1,280,341)
Net cash provided by (used in) operating activities 2,634,200 3,126,101 3,682,203
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others (1,203,662) (1,186,900) (1,439,724)
Additions to equipment leased to others (142,217) (151,456) (147,792)
Proceeds from sales of fixed assets excluding equipment leased to others 38,575 36,219 54,572
Proceeds from sales of equipment leased to others 46,461 45,183 44,195
Additions to intangible assets (271,274) (335,436) (333,295)
Additions to public and corporate bonds and stocks (2,511,346) (1,904,588) (503,977)
Proceeds from sales of public and corporate bonds and stocks and upon maturity of public and
corporate bonds 1,982,302 1,989,345 892,814
Other, net (1,339,372) 1,856,069 236,351
Net cash provided by (used in) investing activities (3,400,534) 348,436 (1,196,856)
Cash flows from financing activities
Increase (decrease) in short-term debt 213,716 (164,899) 142,688
Proceeds from long-term debt 1,662,593 513,371 474,535
Payments of long-term debt (170,373) (1,818,653) (637,982)
Dividends paid to Toyota Motor Corporation common shareholders (625,514) (709,872) (727,980)
Dividends paid to non-controlling interests (34,840) (49,629) (79,782)
Reissuance (repurchase) of treasury stock 199,884 (404,718) (431,099)
Other, net — — 21,458
Net cash provided by (used in) financing activities 1,245,465 (2,634,401) (1,238,161)
Effect of exchange rate changes on cash and cash equivalents 112,588 185,237 1,690
Net increase (decrease) in cash and cash equivalents 591,719 1,025,373 1,248,876
Cash and cash equivalents at beginning of year 2,682,431 3,274,149 4,299,522
Cash and cash equivalents at end of year 3,274,149 4,299,522 5,548,398

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Yen in millions
For the year ended For the year ended For the year ended
March 31, 2021 March 31, 2022 March 31, 2023
(Financial Services Business)
Cash flows from operating activities
Net income 370,967 485,690 297,600
Depreciation and amortization 715,757 761,801 799,156
Interest income and interest costs related to financial services, net (241,016) (360,837) (703,971)
Share of profit (loss) of investments accounted for using the equity method (5,655) (7,831) (9,739)
Income tax expense 121,536 171,327 134,903
Changes in operating assets and liabilities, and other (780,798) (623,051) (1,958,779)
Interest received 661,272 742,364 1,291,100
Dividends received 3,901 4,740 5,599
Interest paid (431,939) (384,006) (574,650)
Income taxes paid, net of refunds (304,856) (264,876) (16,883)
Net cash provided by (used in) operating activities 109,168 525,321 (735,664)
Cash flows from investing activities
Additions to fixed assets excluding equipment leased to others (10,240) (10,366) (10,472)
Additions to equipment leased to others (2,133,378) (2,135,437) (1,759,564)

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Proceeds from sales of fixed assets excluding equipment leased to others 1,967 1,530 1,865
Proceeds from sales of equipment leased to others 1,325,238 1,496,949 1,614,965
Additions to intangible assets (7,173) (10,650) (14,985)
Additions to public and corporate bonds and stocks (217,825) (523,323) (646,237)
Proceeds from sales of public and corporate bonds and stocks and upon maturity of
public and corporate bonds 79,616 213,291 440,915
Other, net (35,893) 113,635 (30,385)
Net cash provided by (used in) investing activities (997,688) (854,370) (403,898)
Cash flows from financing activities
Increase (decrease) in short-term debt (1,517,259) (488,495) 171,293
Proceeds from long-term debt 8,043,141 7,800,854 8,892,261
Payments of long-term debt (5,332,573) (7,142,750) (7,868,820)
Dividends paid to non-controlling interests (1,757) (2,094) (5,204)
Other, net — — 2,853
Net cash provided by (used in) financing activities 1,191,551 167,516 1,192,382
Effect of exchange rate changes on cash and cash equivalents 107,657 148,958 101,615
Net increase (decrease) in cash and cash equivalents 410,688 (12,575) 154,436
Cash and cash equivalents at beginning of year 1,416,020 1,826,707 1,814,133
Cash and cash equivalents at end of year 1,826,707 1,814,133 1,968,568
(Consolidated)
Effect of exchange rate changes on cash and cash equivalents 220,245 334,195 103,305
Net increase (decrease) in cash and cash equivalents 1,002,406 1,012,798 1,403,311
Cash and cash equivalents at beginning of year 4,098,450 5,100,857 6,113,655
Cash and cash equivalents at end of year 5,100,857 6,113,655 7,516,966

F-30

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) Geographic information

As of and for the year ended March 31, 2021

Yen in millions
Inter-segment
Elimination/
North Unallocated
Japan America Europe Asia Other Amount Consolidated
Sales revenues
Revenues from external customers 8,587,193 9,325,950 2,968,289 4,555,897 1,777,266 — 27,214,594
Inter-segment revenues and transfers 6,361,739 165,853 166,200 489,398 95,630 (7,278,820) —
Total 14,948,931 9,491,803 3,134,489 5,045,295 1,872,895 (7,278,820) 27,214,594
Operating expenses 13,799,715 9,090,442 3,026,518 4,609,354 1,813,048 (7,322,232) 25,016,845
Operating income 1,149,217 401,361 107,971 435,940 59,847 43,413 2,197,748
Total assets 19,674,666 20,138,715 5,074,409 6,548,343 3,469,635 7,361,372 62,267,140
Non-current assets 5,232,862 5,705,770 751,245 896,542 461,723 — 13,048,143

As of and for the year ended March 31, 2022

Yen in millions
Inter-segment
Elimination/
North Unallocated
Japan America Europe Asia Other Amount Consolidated
Sales revenues
Revenues from external customers 8,214,740 10,897,946 3,692,214 5,778,115 2,796,493 — 31,379,507
Inter-segment revenues and transfers 7,776,696 268,534 175,633 752,452 131,690 (9,105,004) —
Total 15,991,436 11,166,479 3,867,847 6,530,566 2,928,183 (9,105,004) 31,379,507
Operating expenses 14,567,991 10,600,695 3,704,874 5,858,216 2,690,014 (9,037,980) 28,383,811
Operating income 1,423,445 565,784 162,973 672,350 238,169 (67,024) 2,995,697
Total assets 21,502,155 23,353,812 5,711,271 7,461,812 4,309,248 5,350,474 67,688,771
Non-current assets 5,501,046 6,251,499 891,146 977,235 537,631 — 14,158,559

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of and for the year ended March 31, 2023

Yen in millions
Inter-segment
Elimination/
North Unallocated
Japan America Europe Asia Other Amount Consolidated
Sales revenues
Revenues from external customers 9,122,282 13,509,027 4,097,537 7,076,922 3,348,530 — 37,154,298
Inter-segment revenues and transfers 8,460,914 334,874 176,198 967,984 123,663 (10,063,633) —
Total 17,583,196 13,843,901 4,273,735 8,044,906 3,472,193 (10,063,633) 37,154,298
Operating expenses 15,681,733 13,918,637 4,216,276 7,330,455 3,240,832 (9,958,659) 34,429,273
Operating income (loss) 1,901,463 (74,736) 57,460 714,451 231,362 (104,974) 2,725,025
Total assets 23,241,334 26,024,734 6,813,474 7,908,520 4,726,373 5,588,745 74,303,180
Non-current assets 5,658,859 6,255,561 1,042,726 1,031,057 565,377 — 14,553,580

“Other” consists of Central and South America, Oceania, Africa and the Middle East.

Non-current assets do not include financial instruments, deferred tax assets, net defined benefit assets and rights arising under insurance contracts.

The above amounts are aggregated by region based on the location of the country where TMC or consolidated subsidiaries are located. Transfers
between geographic areas are made in accordance with terms and conditions in the ordinary course of business.

Unallocated amounts included in assets represent assets held for corporate purpose, which mainly consist of cash and cash equivalents and
financial assets measured at fair value through other comprehensive income, and the balances as March 31, 2021, 2022 and 2023 are
¥11,344,879 million, ¥10,020,460 million and ¥11,101,175 million, respectively.

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(5) Sales revenues by location of external customers
In addition to the disclosure requirements under IFRS, Toyota discloses this information in order to provide financial statements users with
valuable information.

Yen in millions
For the years ended March 31,
2021 2022 2023
Japan 6,820,590 6,425,184 6,742,304
North America 9,437,314 10,953,472 13,578,084
Europe 2,734,152 3,495,785 3,970,857
Asia 5,057,397 6,017,646 7,150,555
Other 3,165,141 4,487,420 5,712,497
Total 27,214,594 31,379,507 37,154,298

“Other” consists of Central and South America, Oceania, Africa and the Middle East, etc.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Cash and cash equivalents

Cash and cash equivalents consist of the following:

Yen in millions
March 31,
2022 2023
Cash and deposits 4,630,882 5,948,297
Negotiable certificate of deposit and other 1,482,773 1,568,669
Total 6,113,655 7,516,966

7. Trade accounts and other receivables

Trade accounts and other receivables consist of the following:

Yen in millions
March 31,
2022 2023
Accounts and notes receivables 2,466,398 2,757,412
Other receivables 716,558 870,398
Allowance for doubtful accounts (40,124) (41,679)
Total 3,142,832 3,586,130

Trade accounts and other receivables which are unconditional rights to considerations are classified as financial assets measured at amortized cost.
Receivables from contracts with customers correspond to “Accounts and notes receivables” and the balance as of April 1, 2021 is ¥2,301,976 million.

The changes in the allowance for doubtful accounts consist of the following:

Yen in millions
For the years ended March 31,
2022 2023
Allowance for doubtful accounts at beginning of year 97,378 110,793
Provision for doubtful accounts, net of reversal 10,649 8,844
Write-offs (1,239) (3,496)
Other 4,005 5,487
Allowance for doubtful accounts at end of year 110,793 121,628

“Other” includes currency translation adjustments.

A portion of the allowance for doubtful accounts is attributed to certain non-current receivable balances which are reported as other financial
assets under non-current assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Finance receivables
Finance receivables consist of the following:

Yen in millions
March 31,
2022 2023
Retail 17,647,440 20,201,004
Finance leases 2,347,941 2,503,369
Wholesale and other dealer loans 2,904,216 3,461,421
Total 22,899,597 26,165,794
Deferred origination costs 328,792 359,743
Less - Unearned income (1,172,007) (1,418,272)
Less - Allowance for credit losses
Retail (230,104) (274,871)
Finance leases (36,985) (36,920)
Wholesale and other dealer loans (24,836) (24,622)
Total finance receivables, net 21,764,457 24,770,851
Current assets 7,181,327 8,279,806
Non-current assets 14,583,130 16,491,045
Total finance receivables, net 21,764,457 24,770,851

Finance receivables were geographically distributed as follows: in North America 55.0%, in Europe 13.3%, in Asia 12.9%, in Japan 7.3% and in
Other 11.5% as of March 31, 2022, and in North America 56.9%, in Europe 14.0%, in Asia 12.0%, in Japan 6.3% and in Other 10.8% as of March 31,
2023.

Finance receivables are classified as financial assets measured at amortized cost.

The contractual maturity of retail receivables, future lease payments to be received for finance leases, the contractual maturity of wholesale
receivables and other dealer loans are as follows:

Yen in millions
March 31, 2022
Finance Wholesale and other
Retail leases dealer loans
Within 1 year 5,276,853 639,493 1,640,995
Between 1 and 2 years 3,988,650 482,368 319,847
Between 2 and 3 years 3,338,910 367,680 240,727
Between 3 and 4 years 2,546,568 198,789 161,717
Between 4 and 5 years 1,487,397 68,092 133,286
Later than 5 years 1,009,062 14,680 407,643
Total 17,647,440 1,771,102 2,904,216

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Yen in millions
March 31, 2023
Wholesale and
Finance other
Retail leases dealer loans
Within 1 year 5,822,035 736,347 2,101,711
Between 1 and 2 years 4,599,678 534,414 402,642
Between 2 and 3 years 3,930,516 402,625 266,593
Between 3 and 4 years 3,013,894 196,046 142,888
Between 4 and 5 years 1,737,460 64,676 145,964
Later than 5 years 1,097,422 13,540 401,622
Total 20,201,004 1,947,649 3,461,421

Finance leases receivables consist of the following:

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Yen in millions
March 31,
2022 2023
Lease payments 1,771,102 1,947,649
Estimated unguaranteed residual values 576,839 555,720
Total 2,347,941 2,503,369
Deferred origination costs 15,807 18,587
Less - Unearned income (190,954) (224,761)
Less - Allowance for credit losses (36,985) (36,920)
Finance leases receivables, net 2,135,809 2,260,275

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9. Other financial assets

Other financial assets consist of the following:

Yen in millions
March 31,
2022 2023
Financial assets measured at amortized cost
Time deposits 505,695 206,494
Other 680,199 766,455
Financial assets measured at fair value through profit or loss
Public and corporate bonds 159,186 193,816
Stocks 149,890 168,214
Derivatives 419,173 610,340
Other 465,801 496,052
Financial assets measured at fair value through other comprehensive income
Public and corporate bonds 6,302,719 6,409,119
Stocks 3,332,209 3,413,780
Other 9,644 7,838
Total 12,024,515 12,272,107
Current assets 2,507,248 1,715,675
Non-current assets 9,517,267 10,556,431
Total 12,024,515 12,272,107

Toyota has certain financial instruments, including financial assets and liabilities which arose in the normal course of business. These financial
instruments are executed with creditworthy financial institutions, and virtually all foreign currency contracts are denominated in U.S. dollars, euros and
other currencies of major developed countries. Financial instruments involve, to varying degrees, market risk as instruments are subject to price
fluctuations, and elements of credit risk in the event a counterparty should default. In the unlikely event the counterparties fail to meet the contractual
terms of a foreign currency or an interest rate instrument, Toyota’s risk is limited to the fair value of the instrument. Although Toyota may be exposed to
losses in the event of non-performance by counterparties on financial instruments, it does not anticipate significant losses due to the nature of its
counterparties. Counterparties to Toyota’s financial instruments represent, in general, international financial institutions. Additionally, Toyota does not
have a significant exposure to any individual counterparty. Toyota believes that the overall credit risk related to its financial instruments is not
significant.

Public and corporate bonds included in financial assets measured at fair value through other comprehensive income include securities loaned of
¥2,198,396 million and ¥2,192,934 million as of March 31, 2022 and 2023, respectively.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Major securities included in stocks measured at fair value through other comprehensive income as of March 31, 2022 and 2023 are as follows:

Yen in millions
March 31,
Issue 2022 2023
KDDI CORPORATION 1,268,762 1,296,639
NIPPON TELEGRAPH AND TELEPHONE CORPORATION 286,385 320,073
MS&AD Insurance Group Holdings, Inc. 209,318 216,053
HO TAI MOTOR CO., LTD. 142,002 156,014
Renesas Electronics Corporation 107,423 143,543

To facilitate the efficient and effective utilization of assets, Toyota derecognizes stocks measured at fair value through other comprehensive
income by way of sale. Fair value and total accumulated other comprehensive income at derecognition are as follows:

Yen in millions
For the years ended
March 31,
2022 2023
Total fair value 66,906 69,028
Accumulated other comprehensive income, net 27,861 35,124

10. Inventories

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Inventories consist of the following:

Yen in millions
March 31,
2022 2023
Products 2,012,243 2,317,143
Work in process 547,810 530,915
Raw materials 1,107,558 1,239,535
Supplies and other 153,745 168,021
Total 3,821,356 4,255,614

11. Investments accounted for using the equity method

Equity in associates and joint ventures is as follows:

Yen in millions
March 31,
2022 2023
Associates 3,926,267 4,169,573
Joint ventures 911,628 1,057,773
Total 4,837,895 5,227,345

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The combined information of investments accounted for using the equity method (total value of TMC’s interests) is as follows:

Yen in millions
For the years ended March 31,
2021 2022 2023
Net income
Associates 190,998 324,480 326,931
Joint ventures 160,031 235,866 316,132
Total 351,029 560,346 643,063
Other comprehensive income, net of tax
Associates 50,143 241,264 99,737
Joint ventures 38,501 66,187 3,295
Total 88,644 307,451 103,033
Comprehensive income
Associates 241,141 565,744 426,669
Joint ventures 198,532 302,053 319,428
Total 439,673 867,798 746,096

12. Property, plant and equipment

The changes in cost and accumulated depreciation and impairment losses are as follows:

(Cost)

Yen in millions
Vehicles and
Machinery and equipment on Construction
Land Buildings equipment operating leases in progress Total
Balance as of April 1, 2021 1,345,037 4,999,206 12,753,951 6,203,721 675,875 25,977,791
Additions 9,106 88,543 481,916 2,293,189 629,786 3,502,541
Sales or disposal (8,901) (57,743) (540,775) (2,334,129) (3,639) (2,945,187)
Reclassification from construction in progress 2,310 105,581 630,896 449 (739,235) —
Foreign currency translation adjustments 15,008 138,047 642,984 594,933 30,756 1,421,728
Other (769) 10,985 13,390 23,065 (28,014) 18,657
Balance as of March 31, 2022 1,361,791 5,284,620 13,982,362 6,781,229 565,528 27,975,530
Additions 14,990 75,098 433,393 1,916,239 934,847 3,374,566
Sales or disposal (14,680) (76,482) (599,825) (2,516,466) (13,684) (3,221,137)
Reclassification from construction in progress 50,494 88,625 480,805 167 (620,091) —
Foreign currency translation adjustments 10,458 67,274 437,649 524,175 13,503 1,053,058
Other 3,317 25,676 62,235 69,083 (33,236) 127,075
Balance as of March 31, 2023 1,426,370 5,464,811 14,796,619 6,774,427 846,866 29,309,093

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Accumulated depreciation and impairment losses)

Yen in millions
Vehicles and
Machinery and equipment on Construction
Land Buildings equipment operating leases in progress Total
Balance as of April 1, 2021 (4,497) (3,189,737) (10,005,275) (1,366,916) (213) (14,566,638)
Depreciation — (121,431) (788,685) (817,171) — (1,727,287)
Impairment losses — (2,527) (5,177) — — (7,705)
Sales or disposal 30 48,646 507,396 799,186 — 1,355,259
Foreign currency translation adjustments (351) (79,026) (461,159) (115,693) (24) (656,252)
Other (1,562) (31,522) (10,054) (3,073) (55) (46,266)
Balance as of March 31, 2022 (6,379) (3,375,598) (10,762,953) (1,503,668) (292) (15,648,890)
Depreciation — (148,981) (921,037) (856,921) — (1,926,939)
Impairment losses (393) (10,517) (17,358) — (2,846) (31,114)
Sales or disposal 150 63,448 559,467 860,708 — 1,483,773
Foreign currency translation adjustments (178) (39,793) (334,617) (96,936) (2) (471,526)
Other (513) (17,746) (53,167) (8,928) (71) (80,423)
Balance as of March 31, 2023 (7,313) (3,529,186) (11,529,666) (1,605,744) (3,210) (16,675,119)

Depreciation on “Property, plant and equipment” is included in “Cost of products sold” and “Selling, general and administrative” in the
consolidated statement of income.

Vehicles and equipment on operating leases consist of the following:

Yen in millions
March 31,
2022 2023
Vehicles 6,766,590 6,759,024
Equipment 14,639 15,403
6,781,229 6,774,427
Less - Accumulated depreciation (1,503,668) (1,605,744)
Vehicles and equipment on operating leases, net 5,277,561 5,168,683

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents future lease payments to be received for vehicles and equipments on operating leases:

Yen in millions
March 31,
2022 2023
Within 1 year 932,882 885,757
Between 1 and 2 years 641,683 497,218
Between 2 and 3 years 280,646 216,227
Between 3 and 4 years 75,915 59,004
Between 4 and 5 years 21,772 21,022
Later than 5 years 9,801 10,484
Total future rentals 1,962,699 1,689,712

The future lease payments to be received as shown above should not be considered indicative of future cash collections.

13. Right of use assets and lease liabilities

The breakdown of right of use assets is as follows:

Yen in millions
March 31,
2022 2023
Types of original assets
Land 67,927 64,717
Buildings 305,533 333,698

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Other 74,952 92,953
Total 448,412 491,368

The increase in the right of use assets for the years ended on March 31, 2022 and 2023 were ¥110,996 million and ¥116,298 million, respectively.

The breakdown of main gains and losses on lessee’s leases is as follows:

Yen in millions
March 31,
2022 2023
Depreciation of right of use assets
Land 8,660 5,217
Buildings 56,262 42,408
Other 26,293 36,566
Total 91,214 84,191
Interest expense on lease liabilities 4,074 5,429
Short-term leases 90,568 97,025
185,856 186,645

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the years ended March 31, 2022 and 2023, the total cash outflows for lessee leases were ¥149,521 million and ¥172,112 million, respectively.

The following is the maturity analysis of the total future lease payments and the adjustment to the present value:

Yen in millions
March 31,
2022 2023
Within 1 year 61,735 74,780
Between 1 and 5 years 146,452 179,026
Later than 5 years 258,474 254,096
Future lease payment, total 466,661 507,902
Less - Interest expense (45,733) (51,781)
Present value of lease payment, total 420,928 456,120
Current liabilities 56,136 66,870
Non-current liabilities 364,792 389,250
Present value of lease payment, total 420,928 456,120

14. Intangible assets

The carrying value of intangible assets is as follows:

Yen in millions
March 31,
2022 2023
Capitalized development costs 663,762 669,612
Software and other 528,204 579,510
Total 1,191,966 1,249,122

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The changes in cost and accumulated amortization of intangible assets are as follows:

(Cost)

Yen in millions
Capitalized
development costs Software and other Total
Balance as of April 1, 2021 1,104,142 727,874 1,832,016
Additions — 41,616 41,616
Internally developed 200,512 86,342 286,853

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Sales or disposal (163,419) (60,981) (224,400)
Foreign currency translation adjustments — 25,333 25,333
Other — 7,048 7,048
Balance as of March 31, 2022 1,141,234 827,232 1,968,466
Additions — 40,655 40,655
Internally developed 181,634 98,040 279,674
Sales or disposal (164,898) (38,473) (203,372)
Foreign currency translation adjustments 1,465 20,886 22,351
Other — 17,056 17,056
Balance as of March 31, 2023 1,159,435 965,395 2,124,830

(Accumulated amortization)

Yen in millions
Capitalized
development costs Software and other Total
Balance as of April 1, 2021 (472,966) (250,417) (723,382)
Amortization (167,926) (94,593) (262,518)
Sales or disposal 163,419 60,375 223,794
Foreign currency translation adjustments — (13,570) (13,570)
Other — (823) (823)
Balance as of March 31, 2022 (477,472) (299,028) (776,500)
Amortization (164,512) (112,965) (277,477)
Sales or disposal 152,161 37,901 190,062
Foreign currency translation adjustments — (10,533) (10,533)
Other — (1,261) (1,261)
Balance as of March 31, 2023 (489,823) (385,886) (875,708)

Amortization of intangible assets is included in “Cost of products sold” and “Selling, general and administrative” in the consolidated statement of
income. There is no material internally generated intangible assets except for capitalized development costs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15. Income taxes

(1) Deferred tax assets and liabilities
Significant components of deferred tax assets and liabilities are as follows:

Yen in millions
March 31,
2022 2023
Deferred tax assets
Defined benefit plan liabilities 141,186 120,007
Accrued expenses and liabilities for quality assurance 613,101 662,425
Other accrued employees’ compensation 128,461 127,668
Operating loss carryforwards for tax purposes 64,740 191,906
Allowance for doubtful accounts and credit losses 85,289 94,639
Property, plant and equipment and other assets 210,238 252,441
Other 491,167 463,250
Total deferred tax assets 1,734,181 1,912,336
Deferred tax liabilities
Changes in fair value of financial instruments measured in other comprehensive income (725,242) (737,156)
Undistributed earnings of foreign subsidiaries (51,888) (39,496)
Undistributed earnings of associates and joint ventures (1,026,027) (1,076,742)
Basis difference of acquired assets (63,189) (78,206)
Capitalized development costs (204,741) (201,120)
Lease transactions (468,894) (972,158)
Other (206,791) (222,378)
Total deferred tax liabilities (2,746,773) (3,327,255)
Net deferred tax assets and liabilities (1,012,592) (1,414,919)

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Of the changes in deferred tax assets and deferred tax liabilities for the years ended March 31, 2021, 2022 and 2023, the amount recognized as
income tax expense in the consolidated statement of income is as follows:

Yen in millions
For the years ended March 31,
2021 2022 2023
Defined benefit plan liabilities 12,473 4,203 802
Accrued expenses and liabilities for quality assurance (18,256) (40,761) 26,942
Other accrued employees’ compensation 3,125 (968) (2,745)
Operating loss carryforwards for tax purposes 1,265 38,119 116,344
Allowance for doubtful accounts and credit losses 6,042 (4,902) 4,474
Property, plant and equipment and other assets 4,468 (9,795) 24,850
Undistributed earnings of foreign subsidiaries 6,144 (33,349) 12,391
Undistributed earnings of associates and joint ventures 47,840 (71,405) (63,520)
Basis difference of acquired assets (18,302) (11,270) (12,075)
Capitalized development costs (1,762) (9,708) 4,003
Lease transactions 209,972 103,098 (487,702)
Other 23,104 111,603 44,144
Total 276,113 74,864 (332,091)

The deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset is recognized in the statement of
financial position:

Yen in millions
March 31,
2022 2023
Deductible temporary difference 709,204 968,060
Carryforwards of tax losses 518,385 712,357
Carryforwards of tax credit 46,306 115,809
Total 1,273,894 1,796,225

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The expected expiration date of the carryforwards of tax losses for which deferred tax assets are not recognized are as follows:

Yen in millions
March 31,
2022 2023
Within 5 years 4,049 75,839
Between 5 and 10 years 136,666 313,895
Later than 10 years 377,670 322,623
Total 518,385 712,357

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The expected expiration date of the carryforwards of tax credit for which deferred tax assets are not recognized are as follows:

Yen in millions
March 31,
2022 2023
Within 5 years 8,654 10,018
Between 5 and 10 years 9,865 18,107
Later than 10 years 27,787 87,684
Total 46,306 115,809

Of the temporary differences in investments in foreign subsidiaries, because management intends to reinvest undistributed earnings of foreign
subsidiaries to the extent not expected to be remitted in the foreseeable future, no deferred tax liability is recognized. As of March 31, 2022 and 2023,
the temporary differences totaled ¥4,799,506 million and ¥4,367,250 million, respectively, and Toyota estimates an additional deferred tax liability of
¥203,229 million and ¥202,488 million would be required, respectively, if the full amount of those undistributed earnings were remitted.

(2) Income tax expenses

The income tax expense for the years ended March 31, 2021, 2022 and 2023 consists of the following:

Yen in millions
For the years ended March 31,
2021 2022 2023
Current income tax expense:
TMC and domestic subsidiaries 403,230 672,077 758,772
Foreign subsidiaries 522,859 518,705 84,902
Total current 926,089 1,190,782 843,674
Deferred income tax expense (benefit):
TMC and domestic subsidiaries (23,792) 42,131 27,783
Foreign subsidiaries (252,321) (116,995) 304,308
Total deferred (276,113) (74,864) 332,091
Total income tax expense 649,976 1,115,918 1,175,765

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Toyota is subject to a number of different income taxes which, in the aggregate, indicate a statutory rate in Japan of approximately 30.9% for the
years ended March 31, 2021, 2022 and 2023. The statutory tax rates in effect for the year in which the temporary differences are expected to reverse are
used to calculate the tax effects of temporary differences which are expected to reverse in future years. Reconciliation of the differences between the
statutory tax rate and the average effective tax rate is as follows:

For the years ended March 31,

2021 2022 2023
Statutory tax rate 30.9% 30.9% 30.9%
Increase (reduction) in taxes resulting from:
Non-deductible expenses 0.5 0.6 0.8
Tax-exempt income (0.4) (0.3) (0.4)
Deferred tax liabilities on undistributed earnings of foreign subsidiaries 0.6 1.3 1.1
Effects of investments accounted for using the equity method (3.7) (4.3) (5.4)
Deferred tax liabilities on undistributed earnings of associates and joint ventures (0.2) 2.6 3.1
Change in unrecognized deferred tax assets 0.7 3.7 6.3
Tax credits (3.2) (2.7) (3.5)
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The difference between the statutory tax rate in Japan and that of foreign subsidiaries (3.5) (3.1) (1.5)
Unrecognized tax benefits adjustments (0.2) (0.3) 0.4
Other 0.6 (0.3) 0.3
Average effective tax rate 22.2% 28.0% 32.0%

16. Trade accounts and other payables

Trade accounts and other payables consists of the following:

Yen in millions
March 31,
2022 2023
Accounts and notes payables 3,168,084 3,819,334
Other payables 1,124,008 1,166,974
Total 4,292,092 4,986,309

Trade accounts and other payables are classified as financial liabilities measured at amortized cost.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17. Financial liabilities

(1) Financial liabilities
Financial liabilities consist of the following:

Yen in millions
Non-cash changes
Changes
in foreign
currency
As of exchange Changes As of
April 1, 2021 Cash flow Acquisitions Reclassification rates in fair value Other March 31, 2022
Current liabilities
Short-term debt 4,339,890 (579,216) — — 334,639 — 9,544 4,104,858
Current portion of long-term debt 7,584,337 (8,548,156) — 7,410,991 572,070 — 7,604 7,026,845
Current portion of long-term lease liabilities 47,120 (54,879) — 34,071 2,192 — 27,632 56,136
Class share 240,712 (240,630) — — — — (83) —
Current liabilities 12,212,060 (9,422,881) — 7,445,062 908,902 — 44,697 11,187,839
Non-current liabilities
Long-term debt 13,133,804 8,122,678 — (7,410,991) 1,095,463 — 2,773 14,943,727
Long-term lease liabilities 313,771 — 110,996 (34,071) 14,203 — (40,107) 364,792
Class share — — — — — — — —
Non-current liabilities 13,447,575 8,122,678 110,996 (7,445,062) 1,109,666 — (37,334) 15,308,519
Total 25,659,635 (1,300,203) 110,996 — 2,018,568 — 7,363 26,496,358
Derivatives 3,211 (12,026) — — 689 15,348 — 7,221

Yen in millions
Non-cash changes
Changes
in foreign
currency
As of exchange Changes As of
April 1, 2022 Cash flow Acquisitions Reclassification rates in fair value Other March 31, 2023
Current liabilities
Short-term debt 4,104,858 239,689 — — 231,700 — 13,926 4,590,173
Current portion of long-term debt 7,026,845 (8,283,375) — 8,380,467 467,956 — 56,704 7,648,596
Current portion of long-term lease liabilities 56,136 (69,658) — 39,311 1,424 — 39,657 66,870
Class share — — — — — — — —
Current liabilities 11,187,839 (8,113,344) — 8,419,778 701,080 — 110,286 12,305,639
Non-current liabilities
Long-term debt 14,943,727 9,276,918 — (8,380,467) 836,348 — 8,858 16,685,384
Long-term lease liabilities 364,792 — 116,298 (39,311) 9,277 — (61,807) 389,250
Class share — — — — — — — —
Non-current liabilities 15,308,519 9,276,918 116,298 (8,419,778) 845,626 — (52,949) 17,074,634
Total 26,496,358 1,163,574 116,298 — 1,546,706 — 57,337 29,380,273
Derivatives 7,221 77,098 — — (5,202) (141,475) — (62,359)

Short-term and long-term debt is classified as financial liabilities measured at amortized cost.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) Short-term debt

The breakdown of “Short-term debt” is as follows:

Yen in millions
March 31,
2022 2023
Short-term debt
(Principally from bank)
[Weighted average interest rate
2022 1.64%
2023 2.02%] 852,301 916,725
Commercial paper
[Weighted average interest rate
2022 0.38%
2023 3.81%] 3,252,556 3,673,447
4,104,858 4,590,173

(3) Long-term debt

The breakdown of “Long-term debt” is as follows:

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Yen in millions
March 31,
2022 2023
Unsecured loans
(Principally from bank)
[2022
Weighted average interest 1.83%
Due 2022 to 2042
2023
Weighted average interest 3.18%
Due 2023 to 2042] 4,990,165 5,719,366
Secured loans
(Principally financial receivables securitization)
[2022
Weighted average interest 1.02%
Due 2022 to 2034
2023
Weighted average interest 3.82%
Due 2023 to 2034] 3,902,766 5,266,411
Medium-term notes of consolidated subsidiaries
[2022
Weighted average interest 1.45%
Due 2022 to 2048

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Table of Contents
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Yen in millions
March 31,
2022 2023
2023
Weighted average interest 2.72%
Due 2023 to 2048] 10,257,689 10,561,816
Unsecured bonds of the parent
[2022
Weighted average interest 1.32%
Due 2022 to 2037
2023
Weighted average interest 1.29%
Due 2023 to 2037] 1,123,145 1,127,650
Unsecured bonds of consolidated subsidiaries
[2022
Weighted average interest 1.99%
Due 2022 to 2028
2023
Weighted average interest 2.54%
Due 2023 to 2028] 1,664,634 1,621,444
Secured bonds of consolidated subsidiaries
[2022
Weighted average interest 5.81%
Due 2022 to 2024
2023
Weighted average interest 6.53%
Due 2023 to 2026] 32,174 37,294
21,970,573 24,333,981
Less - Current portion due within one year (7,026,845) (7,648,596)
14,943,727 16,685,384

As of March 31, 2022 and 2023, the currencies of long-term debt are 52% and 53% in US dollars, 11% and 11% in Japanese yen, 13% and 13% in
Euros, 6% and 6% in Australian dollars, 4% and 3% in Canadian dollars, 14% and 14% in other currencies.

(4) Assets pledges as collateral

The breakdown of assets pledged as collateral mainly for loans of consolidated subsidiaries is as follows:

Yen in millions
March 31,
2022 2023
Property, plant and equipment 1,474,647 1,498,448
Other assets 3,582,826 5,459,877
Total 5,057,473 6,958,325

Other assets principally consist of securitized finance receivables.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Standard agreements with certain banks include provisions that collateral (including sums on deposit with such banks) or guarantees will be
furnished upon the banks’ request and that any collateral furnished, pursuant to such agreements or otherwise, will be applicable to all present or future
indebtedness to such banks.

(5) Interest expenses

The interest expenses for the fiscal year ended March 31, 2022 and 2023 are ¥410,197 million and ¥651,979 million, respectively. Interest
expenses related to the financial business is included in “cost of financial services” in the consolidated statement of income.

(6) Class shares

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TMC issued First Series Model AA Class Shares (the “Model AA Class Shares”) on July 24, 2015. Presented below is additional information
regarding the Model AA Class Shares:

Total number of shares issued : 47,100,000 shares

Issue price : 10,598 yen per share
Purchase price : 10,121.09 yen per share
Voting rights : Model AA Class Shares shall have voting rights. The number of shares constituting one unit with
respect to Model AA Class Shares shall be 100.
Restrictions on transfer : Model AA Class Shares shall have restrictions on transfer.
Dividends : (1) If the record date falls in the fiscal year ending on March 31, 2016 : 0.5% of the issue price
(2) If the record date falls in the fiscal year ending on March 31, 2017 through March 31, 2020 : the
annual dividend rate for the previous fiscal year plus 0.5% of the issue price
(3) If the record date falls in the fiscal year ending on March 31, 2021 or later : 2.5% of the issue price
Shareholder’s right : (1) Shareholder’s conversion right into Common Shares
Shareholders of the Model AA Class Shares may demand TMC to acquire all or a part of their
Model AA Class Shares in exchange for Common Shares on the first business day of April and
October of every year, starting October 1, 2020.
(2) Shareholder’s cash put option
Shareholders of the Model AA Class Shares may demand TMC to acquire all or a part of their
Model AA Class Shares in exchange for cash on the last business day of March, June, September
and December of each year, starting on September 1, 2020.
TMC’s right : TMC may acquire, on or after April 2, 2021, all of the outstanding Model AA Class Shares in exchange
for cash. At the Directors’ Meeting held on December 14, 2020, TMC has resolved to exercise its cash
call option to acquire all outstanding Model AA Class Shares and, subject to such acquisition, to cancel
all Model AA Class Shares pursuant to Article 178 of the Companies Act of Japan. The acquisition took
place on April 2, 2021, and the cancellation was completed on April 3, 2021.

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Table of Contents
TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18. Other financial liabilities

Other financial liabilities consist of the following:

Yen in millions
March 31,
2022 2023
Financial liabilities measured at amortized cost
Deposits received 723,363 1,015,094
Other 287,072 454,756
Financial liabilities measured at fair value through profit or loss
Derivatives 497,198 456,257
Total 1,507,633 1,926,107
Current liabilities 1,046,050 1,392,397
Non-current liabilities 461,583 533,710
Total 1,507,633 1,926,107

19. Financial risks

(1) Financial risk management policy
Toyota is exposed to various risks such as credit risk, liquidity risk, market risk (foreign currency risk, interest rate risk, commodity price
fluctuation risk and stock price fluctuation risk). To hedge the market risk, Toyota also uses derivative financial instruments such as forward exchange
contracts, interest rate swaps, commodity forwards transactions. With respect to the execution and management of derivative transactions, it follows the
company regulations that set out transaction authority, and it is a policy not to conduct speculative transactions using derivative financial instruments.

In addition, Toyota procures necessary funds (mainly bank borrowings and issuing corporate bonds) based on the capital expenditure plans, and
temporary surplus funds are managed with highly safe financial assets and short-term working capital is procured through bank borrowings and
commercial paper. As for liquidity risk concerning fund procurement, each company manages it by preparing a monthly cash flow plan, etc.

(2) Credit risk

Receivables related to financial services are exposed to the credit risk. The risk is arisen from the failure of customers or dealers to meet the terms
of their contracts with Toyota or otherwise fail to perform as agreed. Toyota manages its credit risk by defining risk management methods and
management systems for specific risks in accordance with the regulations on risk management. Based on such regulations, Toyota mitigates the credit
risk through periodical monitoring of the customer’s credit status and undertaking the maturity control and account balance control, while detecting
promptly any doubtful accounts caused by deterioration in the financial conditions.

Please see Note 3 “Allowance for credit losses on finance receivables” about measuring method of the expected credit losses on receivables
related to financial services.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The carrying amount after impairment of the financial assets presented in the consolidated financial statements, as well as guarantee obligations
and loan commitments that are set forth in the notes to the consolidated financial statements, are the maximum exposure to the credit risk of Toyota’s
financial assets that do not take into account the value of the acquired collateral. The allowance for credit exposures of loan commitments and financial
agreements is measured in the same way that the allowance for retail receivables is measured.

Retail receivables and financial lease receivables are being secured by vehicles as collateral. Wholesale receivables and other dealer loans are
secured by placing appropriate property as collateral. Also, during the reporting period, there is no change in the policy regarding collateral.

The net changes in the allowance for credit losses relating to the retail receivables are as follows:

Yen in millions
For the year ended March 31, 2022
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Allowance for credit loss at beginning of year 79,402 78,426 40,376 198,204

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Provision for credit loss, net of reversal 22,685 39,420 38,687 100,792
Charge-offs — — (41,331) (41,331)
Other (13,961) (18,381) 4,781 (27,561)
Allowance for credit loss at end of year 88,125 99,465 42,514 230,104

Yen in millions
For the year ended March 31, 2023
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Allowance for credit loss at beginning of year 88,125 99,465 42,514 230,104
Provision for credit loss, net of reversal 26,490 59,627 89,456 175,573
Charge-offs — — (91,215) (91,215)
Other (18,895) (34,225) 13,530 (39,591)
Allowance for credit loss at end of year 95,720 124,867 54,284 274,871

“Other” primarily includes reversal of allowance for credit loss due to the collection of retail receivables.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below shows the retail receivables segregated into aging categories based on the numbers of the days outstanding:

Yen in millions
March 31, 2022
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Current 15,753,211 1,083,642 — 16,836,854
Past due less than 90 days 283,753 405,941 17,655 707,350
Past due 90 days or more — 779 102,457 103,236
Total 16,036,965 1,490,363 120,112 17,647,440

Yen in millions
March 31, 2023
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Current 17,905,331 1,275,170 — 19,180,501
Past due less than 90 days 331,040 542,999 21,469 895,509
Past due 90 days or more — 416 124,580 124,995
Total 18,236,371 1,818,584 146,049 20,201,004

The net changes in the allowance for credit losses relating to the finance lease receivables are as follows:

Yen in millions
For the years ended March 31,
2022 2023
Allowance for credit loss at beginning of year 33,455 36,985
Provision for credit loss, net of reversal 11,107 14,926
Charge-offs (3,712) (7,233)
Other (3,865) (7,757)
Allowance for credit loss at end of year 36,985 36,920

“Other” primarily includes reversal of allowance for credit loss due to the collection of finance lease receivables.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below shows the finance lease receivables segregated into aging categories based on the numbers of the days outstanding:

Yen in millions
March 31,
2022 2023
Current 2,279,978 2,437,467
Past due less than 90 days 47,034 46,296
Past due 90 days or more 20,928 19,606
Total 2,347,941 2,503,369

The table below shows the net movement of the allowance for credit losses on wholesale receivables and other dealer loans.

Yen in millions
For the year ended March 31, 2022
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Allowance for credit loss at beginning of year 17,467 7,241 4,935 29,642
Provision for credit loss, net of reversal 5,198 1,566 1,177 7,941
Charge-offs — — (11) (11)
Other (8,317) (3,715) (705) (12,736)
Allowance for credit loss at end of year 14,349 5,092 5,396 24,836

Yen in millions
For the year ended March 31, 2023
Expected credit loss for the entire
period
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Allowance for credit loss at beginning of year 14,349 5,092 5,396 24,836
Provision for credit loss, net of reversal 3,517 1,780 551 5,847
Charge-offs — — — —
Other (3,225) (2,289) (547) (6,062)
Allowance for credit loss at end of year 14,640 4,582 5,399 24,622

“Other” primarily includes reversal of allowance for credit loss due to the collection of wholesale receivables and other dealer loans.

Toyota charges off the credit - impaired finance receivables when Toyota considers that all or part of it will not be collected. The amount of
receivables related to financial services which has been charged off but subject to ongoing collection activity was not significant for the years ended
March 31, 2022 and 2023.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The balances of the wholesale receivables and other dealer loan receivables portfolios by credit status, as well as loan commitments and financial
guarantee contracts, as of March 31, 2022 and 2023 are as follows.

The wholesale and other dealer loan receivables portfolio segment is segregated into following creditqualities below based on internal risk
assessments by dealers.

Performing: Account not classified as either

Credit Watch, At Risk or DefaultCredit Watch: Account designated for elevated attention

At Risk: Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors

Default: Account is not currently meeting contractual obligations, or we have temporarily waived certain contractual requirements

Yen in millions
March 31, 2022

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Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Wholesale and other dealer loan
Performing 2,730,860 — — 2,730,860
Credit Watch 20,842 97,353 — 118,196
At Risk — 32,299 699 32,998
Default — — 22,162 22,162
Loan commitments 10,050,817 69,393 90 10,120,300
Financial guarantee contracts 3,574,257 39,205 — 3,613,461
Total 16,376,776 238,251 22,952 16,637,978

Yen in millions
March 31, 2023
Lifetime expected credit loss
Expected credit Financial Credit-impaired
loss for receivable not financial
12 months credit-impaired receivable Total
Wholesale and other dealer loan
Performing 3,300,629 — — 3,300,629
Credit Watch 47,184 69,086 — 116,270
At Risk — 29,780 6,708 36,487
Default — — 8,034 8,034
Loan commitments 10,704,882 65,053 572 10,770,507
Financial guarantee contracts 3,536,796 37,260 — 3,574,056
Total 17,589,491 201,179 15,314 17,805,983

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the year ended March 31, 2022 and 2023, the amount of finance receivables the terms of which were modified due to deterioration in credit
conditions was not significant for any portfolio of finance receivables, and the amount of payment defaults on finance receivables so modified were not
significant for any portfolio of such receivables.

(3) Liquidity risk

To secure cash on hand necessary for carrying out the operation, Toyota appropriately borrows from the financial institutions and issues corporate
bonds or commercial paper, and there is a risk of failing to execute the payment on due date because of deterioration of fund procurement environment
etc.,.

Toyota manages liquidity risk by monitoring the fund demand of each group company as appropriate, preparing a monthly-based funding plan,
and comparing it with the daily cash flow. In addition to holding sufficient cash and cash equivalents in order to secure the liquidity and stability of
funds, to prepare for emergency situations such as the sudden fund demand and market liquidity deterioration, a commitment line has been set up.

The amounts of non-derivative financial liabilities and derivative financial liabilities by a remaining contract maturity period are as follows:

As of March 31, 2022

Yen in millions
Maturities
Contractual Between 1 and Between 3 and Later than
Book value cash flows Within 1 year 3 years 5 years 5 years
Non-derivative financial liabilities
Short-term debt 852,301 (865,873) (865,873) — — —
Commercial paper 3,252,556 (3,260,578) (3,260,578) — — —
Current portion of long-term debt 7,026,845 (7,238,356) (7,238,356) — — —
Long-term debt 14,943,727 (15,458,478) — (9,194,302) (4,501,420) (1,762,756)
Lease liabilities 420,928 (466,661) (61,735) (85,791) (60,661) (258,474)
Total 26,496,358 (27,289,948) (11,426,543) (9,280,094) (4,562,081) (2,021,230)
Derivative financial liabilities
Interest derivative 325,912 (346,482) (56,824) (112,352) (110,592) (66,715)
Currency derivative
In — 958,208 358,275 83,552 379,916 136,465
Out 171,286 (1,164,801) (475,869) (94,949) (420,302) (173,682)
Total 497,198 (553,075) (174,417) (123,748) (150,978) (103,932)
Total 26,993,557 (27,843,023) (11,600,961) (9,403,841) (4,713,059) (2,125,162)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2023

Yen in millions
Maturities
Contractual Between 1 and Between 3 and Later than
Book value cash flows Within 1 year 3 years 5 years 5 years
Non-derivative financial liabilities
Short-term debt 916,725 (941,708) (941,708) — — —
Commercial paper 3,673,447 (3,765,973) (3,765,973) — — —
Current portion of long-term debt 7,648,596 (8,067,346) (8,067,346) — — —
Long-term debt 16,685,384 (17,762,084) — (10,527,952) (5,609,531) (1,624,601)
Lease liabilities 456,120 (507,902) (74,780) (102,258) (76,769) (254,096)
Total 29,380,273 (31,045,012) (12,849,807) (10,630,210) (5,686,300) (1,878,696)
Derivative financial liabilities
Interest derivative 296,438 (315,269) (41,958) (155,214) (109,599) (8,498)
Currency derivative
In — 835,459 58,806 187,514 589,139 —
Out 159,819 (1,017,589) (90,525) (220,701) (706,363) —
Total 456,257 (497,400) (73,678) (188,401) (226,823) (8,498)
Total 29,836,530 (31,542,412) (12,923,485) (10,818,611) (5,913,123) (1,887,194)

Toyota has unused short-term lines of credit amounting to ¥2,534,291 million and ¥2,715,437 million of which ¥1,056,931 million and
¥1,153,342 million related to commercial paper programs as of March 31, 2022 and 2023, respectively. Under these programs, Toyota is authorized to
obtain short-term financing at prevailing interest rates for periods not in excess of 360 days.

As of March 31, 2022 and 2023, Toyota has unused long-term lines of credit amounting to ¥9,030,322 million and ¥9,461,614 million,
respectively.

(4) Foreign exchange risk

Toyota is subject to the foreign currency exposure through transactions in foreign currencies related to purchase, sale and finance associated with
conducting business worldwide. Toyota is exposed to fluctuations risks related to future profitability or assets and liabilities regarding operating cash
flow denominated in foreign currencies and various financial instruments. The most significant foreign currency exposure is primarily caused by the
U.S. dollar and the euro.

Toyota uses derivative financial instruments including foreign exchange forward contracts, foreign currency options, interest rate currency swap
agreements, and others, to manage the exposure to foreign currency exchange rate fluctuations.

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Toyota uses Value-at-risk analysis measurement (“VaR”) to assess the risk of exchange rate fluctuation. Potential impact of pre-tax cash flows on
VaR-integrated foreign currency positions (including derivatives) for the years ended March 31, 2022 and 2023 is as follows:

Yen in millions
VaR
Year-end Average Maximum Minimum
For the year ended March 31, 2022 257,600 241,825 263,600 214,800
For the year ended March 31, 2023 381,600 393,175 418,900 369,800

The Monte Carlo simulation method is used for Toyota’s VaR measurement, and measurement is based on a 95% confidence interval and a
ten-day holding period.

(5) Interest rate risk

In preceding with business activities, Toyota is exposed to interest rate risk due to fluctuation in market interest rates as it procures and invests
funds necessary for working capital and capital investment. To maintain a desirable level of exposure related to interest rate fluctuation risk and
minimize interest expense, Toyota conducts various financial instruments transactions.

Sensitivity analysis of Toyota’s interest rate risk associated with holding financial instruments if the interest rate increases by 1% is as follows. In
this analysis, all other variables are assumed to be constant.

Yen in millions
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For the years ended March 31,
2022 2023
Impact on income before income taxes (64,533) (42,476)
Impact on other comprehensive income, before tax effect (243,630) (238,820)

(6) Market price fluctuation risk

Toyota is exposed to risks arising from increased costs due to commodity price fluctuations, such as iron and steel, precious metals and
non-ferrous alloys used in the manufacture of automobiles. Toyota controls the price risk associated with the purchase of those commodities by
maintaining inventory at the minimum level.

Toyota is exposed to stock price fluctuation risk because it owns shares of companies that have business relationships mainly for promoting
smooth business activities. Toyota periodically reviews the fair values and financial situations of the business partner companies and, taking into
consideration the relationship with them, continually reviews the holding status. The impact on other comprehensive income, before tax effect when the
declared price of equity financial assets (shares) in active markets changes by 10% for the year ended March 31, 2022, and 2023 is ¥316,281 million and
¥321,472 million, respectively.

20. Derivative financial instruments

(1) Undesignated derivative financial instruments
Toyota uses foreign exchange forward contracts, foreign currency options, interest rate swaps, interest rate currency swap agreements, and interest
rate options, to manage its exposure to foreign currency exchange rate fluctuations and interest rate fluctuations from an economic perspective, and
Toyota is unable to or has elected not to apply hedge accounting. Toyota does not use derivatives for speculation or trading.

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(2) Fair value and gain and losses of derivatives

The fair values of the derivatives as of March 31, 2022 and 2023 are as follows:

Yen in millions
March 31,
2022 2023
Derivative assets
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap
Current assets
- Other financial assets 69,625 163,777
Non-current assets
- Other financial assets 333,683 404,593
Total 403,309 568,371
Foreign exchange forward and option contracts
Current assets
- Other financial assets 15,865 41,969
Non-current assets
- Other financial assets — —
Total 15,865 41,969

Total derivative assets 419,173 610,340

Yen in millions
March 31,
2022 2023
Derivative financial liabilities
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap
Current liabilities
- Other financial liabilities (87,926) (47,044)
Non-current liabilities
- Other financial liabilities (326,177) (383,184)
Total (414,102) (430,228)
Foreign exchange forward and option contracts
Current liabilities
- Other financial liabilities (83,096) (26,029)
Non-current liabilities
- Other financial liabilities — —
Total (83,096) (26,029)

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Total derivative liabilities (497,198) (456,257)

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The amount of underlying notional of derivatives as of March 31, 2022 and 2023 are as follows:

Yen in millions
March 31,
2022 2023
Derivative financial instruments not designated as hedging instruments:
Interest rate and currency swap 21,510,803 25,999,796
Foreign exchange forward and option contracts 2,976,488 3,176,566
Total 24,487,291 29,176,362

Undesignated derivative financial instruments are used to manage economic risks of fluctuations in foreign currency exchange rates and interest
rates of certain receivables and payables. Those economic risks are offset by changes in the fair value of undesignated derivative financial instruments.

The gain (loss) on derivative transactions as of March 31, 2021, 2022 and 2023 were ¥588 million, ¥773 million and ¥(129,782) million,
respectively. The amounts are included in cost of financial services and foreign exchange gain (loss), net.

Cash flows from transactions of derivative financial instruments are included in cash flows from operating activities in the consolidated statement
of cash flows.

(3) Credit risk related contingent features

Toyota enters into International Swaps and Derivatives Association Master Agreements with counterparties. These Master Agreements contain a
provision requiring either Toyota or the counterparty to settle the contract or to post assets to the other party in the event of a ratings downgrade below a
specified threshold.

The aggregate fair value amount of derivative financial instruments that contain credit risk related contingent features that are in a net liability
position after being offset by cash collateral as of March 31, 2022 and 2023 is ¥36,190 million and ¥12,623 million, respectively. The aggregate fair
value amount of assets that are already posted as cash collateral as of March 31, 2022 and 2023 is ¥99,718 million and ¥111,249 million, respectively. If
the ratings of Toyota decline below specified thresholds, the maximum amount of assets to be posted or for which Toyota could be required to settle the
contracts is ¥12,623 million as of March 31, 2023. See Note 22 for details.

21. Fair value measurements

(1) Definition of fair value hierarchy
In accordance with IFRS, Toyota classifies fair value measurement into the following three levels based on the observability and significance of
the inputs used.

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Fair value measurement based on inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities,
either directly or indirectly
Level 3: Fair value measurement based on models using unobservable inputs for the assets or liabilities

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(2) Method of fair value measurement

The fair value of assets and liabilities is determined using relevant market information and appropriate valuation methods.

The methods and assumptions for measuring the fair value of assets and liabilities are as follows:

(i) Cash and cash equivalents -

Cash equivalents include money market funds and other investments with original maturities of three months or less. In the normal course of
business, substantially all cash and cash equivalents and time deposits are highly liquid and are carried at amounts which approximate fair value due to
their short duration.

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(ii) Trade accounts and other receivables and Trade accounts and other payables -
These receivables and payables are carried at amounts which approximate fair value due to their short duration.

(iii) Receivables related to financial services -

The fair value of receivables related to financial services is estimated by discounting expected cash flows to present value using internal
assumptions, including prepayment speeds, expected credit losses and collateral value.

As unobservable inputs are utilized, the fair value of receivables related to financial services is classified as Level 3.

(iv) Other financial assets -

(Public and corporate bonds)

Public and corporate bonds include government bonds. Japanese bonds and foreign bonds, including U.S., European and other bonds, represent
26% and 74% (as of March 31, 2022) and 30% and 70% (as of March 31, 2023) of public and corporate bonds, respectively. Toyota primarily uses
quoted market prices for identical assets to measure the fair value of these securities.

(Stocks)
Listed stocks on the Japanese stock markets represent 85% (as of March 31, 2022) and 86% (as of March 31, 2023) of stocks that Toyota holds.
Toyota primarily uses quoted market prices for identical assets to measure fair value of these securities. Therefore, stocks with an active market are
classified as Level 1.

Fair value of stocks with no active market is measured by using the market approach or other appropriate methods. Therefore, stocks with no
active market are thus classified as Level 3.

Price book-value ratios (“PBR”) of comparable companies, discount ratios of discounted cash flow valuation method and others are the significant
unobservable inputs relating to the fair value measurement of stocks classified as Level 3. The fair value increases (decreases) as PBR of a comparable
company rises (declines) or the discount rate declines (rises). The estimated increase or decrease in fair value of stocks if the unobservable inputs were
to be replaced by other reasonable alternative assumptions are not significant.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

These estimates are based on valuation methods that are considered appropriate in each case. The significant assumptions involved in the
estimations include the financial condition and future prospects and trends of the investees and the outcome of the referenced transactions. Due to the
uncertain nature of these assumptions or by using different assumptions and estimates, the fair value may be impacted materially.

The shares classified as Level 3 are measured by the responsible department using quarterly available information in accordance with Toyota’s
consolidated financial accounting policies and reported to the supervisors along with the basis of the change in fair value.

(v) Derivative financial instruments -

Toyota employs derivative financial instruments, including foreign exchange forward contracts, foreign currency options, interest rate swaps,
interest rate currency swap agreements and interest rate options to manage its exposure to fluctuations in interest rates and foreign currency exchange
rates. Toyota primarily estimates the fair value of derivative financial instruments using industry-standard valuation models that require observable
inputs including interest rates and foreign exchange rates, and the contractual terms. The usage of these models does not require significant judgment to
be applied. These derivative financial instruments are classified as Level 2. In other certain cases when market data are not available, key inputs to the
fair value measurement include quotes from counterparties, and other market data. Toyota assesses the reasonableness of changes of the quotes using
observable market data. These derivative financial instruments are classified as Level 3. Toyota’s derivative fair value measurements consider
assumptions about counterparty and Toyota’s own non-performance risk, using such as credit default probabilities.

(vi) Short-term and long-term debt -

The fair values of short-term and long-term debt including the current portion, except for secured loans provided by securitization transactions
using special-purpose entities (“Loans Based on Securitization”), are estimated based on the discounted amounts of future cash flows using Toyota’s
current borrowing rates for similar liabilities. As these inputs are observable, the fair value of these debts is classified as Level 2.

The fair values of the Loans Based on Securitization are primarily estimated based on current market rates and credit spreads for debt with similar
maturities. Internal assumptions including prepayment speeds and expected credit losses are used to estimate the timing of cash flows to be paid on the
underlying securitized assets. In cases where these valuations utilize unobservable inputs, the fair value of the Loans Based on Securitization is
classified as Level 3.

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(3) Financial instrument measured at fair value on recurring basis

The following table summarizes the fair values of the assets and liabilities measured at fair value on a recurring basis. Transfers between levels of
the fair value are recognized at the date of the event or change in circumstances that caused the transfer:

Yen in millions
March 31, 2022
Level 1 Level 2 Level 3 Total
Other financial assets:
Financial assets measured at fair value through profit or loss
Public and corporate bonds 61,376 96,136 1,674 159,186
Stocks — — 149,890 149,890
Derivative financial instruments — 419,173 — 419,173
Other 307,446 158,355 — 465,801
Total 368,822 673,665 151,563 1,194,051
Financial assets measured at fair value through other comprehensive income
Public and corporate bonds 3,542,949 2,739,591 20,178 6,302,719
Stocks 3,162,805 — 169,404 3,332,209
Other 9,505 139 — 9,644
Total 6,715,259 2,739,730 189,583 9,644,571
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss
Derivative financial instruments — (497,198) — (497,198)
Total — (497,198) — (497,198)

Yen in millions
March 31, 2023
Level 1 Level 2 Level 3 Total
Other financial assets:
Financial assets measured at fair value through profit or loss
Public and corporate bonds 98,458 88,989 6,369 193,816

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Stocks — — 168,214 168,214
Derivative financial instruments — 610,340 — 610,340
Other 334,071 161,981 — 496,052
Total 432,529 861,310 174,583 1,468,422
Financial assets measured at fair value through other comprehensive income
Public and corporate bonds 3,976,333 2,405,823 26,963 6,409,119
Stocks 3,214,720 — 199,060 3,413,780
Other 7,838 — — 7,838
Total 7,198,891 2,405,823 226,023 9,830,736
Other financial liabilities:
Financial liabilities measured at fair value through profit or loss
Derivative financial instruments — (456,257) — (456,257)
Total — (456,257) — (456,257)

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(4) Changes in financial instruments classified as Level 3 and measured at fair value on recurring basis
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended
March 31, 2022 and 2023:

Yen in millions
For the year ended March 31, 2022
Public and corporate Derivative financial
bonds Stocks instruments Total
Balance at beginning of year 27,623 638,917 — 666,540
Total gains (losses)
Net income (loss) (44) 113,053 — 113,009
Other comprehensive income (loss) — 9,219 — 9,219
Purchases and issuances 968 2,362 — 3,330
Sales and settlements (4,020) (18,208) — (22,228)
Transfer to (from) Level 3 (7,067) (512,465) — (519,532)
Others 4,392 86,415 — 90,807
Balance at end of year 21,852 319,294 — 341,146
Unrealized gains or losses included in profit or loss on assets
held at March 31 (250) 113,053 — 112,803
Total (250) 113,053 — 112,803

Yen in millions
For the year ended March 31, 2023
Public and corporate Derivative financial
bonds Stocks instruments Total
Balance at beginning of year 21,852 319,294 — 341,146
Total gains (losses)
Net income (loss) (71) 9,551 — 9,481
Other comprehensive income (loss) — (10,881) — (10,881)
Purchases and issuances — 15,999 — 15,999
Sales and settlements (3,716) (14,055) — (17,771)
Transfer to (from) Level 3 5,471 (1,639) — 3,832
Others 9,795 49,004 — 58,800
Balance at end of year 33,332 367,274 — 400,606
Unrealized gains or losses included in profit or loss on assets
held at March 31 (63) 9,551 — 9,489
Total (63) 9,551 — 9,489

Net income (loss) in public and corporate bonds, stocks and derivative financial instruments, other than transactions related to financial services,
are each included in “Other finance income” and “Other finance costs” in the accompanying consolidated statement of income. Transactions related to
financial services are included in each of “Sales revenues—Financial services” and “Cost of financial services” in the consolidated statement of income.

In the reconciliation table above, derivative financial instruments are presented as net of assets and liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

“Others” includes foreign currency translation adjustments for the year ended March 31, 2022 and 2023.

Transfer to (from) Level 3 of stocks recognized in the year ended March 31, 2022 is due to the listing of investees.

(5) Financial assets and liabilities measured at amortized cost

The following table summarizes the carrying amount and the fair value of financial assets and liabilities measured on an amortized cost basis:

Yen in millions
March 31, 2022
Fair value
Carrying amount Level 1 Level 2 Level 3 Total
Receivables related to financial services 21,764,457 — — 22,074,593 22,074,593
Interest-bearing liabilities
Long-term debt (Including current portion) 21,970,573 — 17,899,087 3,824,531 21,723,618

Yen in millions
March 31, 2023
Fair value
Carrying amount Level 1 Level 2 Level 3 Total
Receivables related to financial services 24,770,851 — — 24,741,916 24,741,916
Interest-bearing liabilities
Long-term debt (Including current portion) 24,333,981 — 18,598,205 5,149,410 23,747,616

Of financial assets and liabilities that are measured on an amortized cost basis, those with carrying values that approximate fair value are excluded
from the table above.

22. Offsetting Financial Assets and Liabilities

The following table summarizes the amounts of financial assets and financial liabilities that are subject to an enforceable master netting agreement
or similar agreement but not set off because they do not meet some or all of the offsetting criteria for financial assets and financial liabilities. With
respect to financial instruments that may be offset in the future based on set-off rights associated with master netting agreements or similar agreements,
as well as the associated collateral, the set-off will be enforceable only when certain circumstances, such as when the counterparty cannot perform on its
obligations due to bankruptcy or other reasons, arise.

Yen in millions
March 31, 2022
Gross amounts of Amounts not offset
recognized
financial assets Collateral of
and financial Financial financial
liabilities instruments instruments Net amount
Other financial assets Derivatives 419,173 (182,288) (105,201) 131,685
Other financial liabilities Derivatives 497,198 (182,288) (111,283) 203,627

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Yen in millions
March 31, 2023
Gross amounts of Amounts not offset
recognized
financial assets Collateral of
and financial Financial financial
liabilities instruments instruments Net amount
Other financial assets Derivatives 610,340 (196,423) (206,087) 207,830
Other financial liabilities Derivatives 456,257 (196,423) (97,794) 162,040

The amounts offset, as presented in the consolidated statement of financial position, in accordance with the criteria for offsetting financial assets
and financial liabilities were immaterial.

23. Employee benefits

(1) Overview of post-employment benefit Plans
Upon terminations of employment, employees of TMC and subsidiaries in Japan are entitled, under the retirement plans of each company, to
lump-sum indemnities or pension payments, based on current rates of pay and lengths of service or the number of “points” mainly determined by those.

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Under normal circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement. Employees receive additional
benefits on involuntary retirement, including retirement at the age limit.

Effective October 1, 2004, TMC amended its retirement plan to introduce a “point” based retirement benefit plan. Under the new plan, employees
are entitled to lump-sum or pension payments determined based on accumulated “points” vested in each year of service.

There are three types of “points” that vest in each year of service consisting of “service period points” which are attributed to the length of service,
“job title points” which are attributed to the job title of each employee, and “performance points” which are attributed to the annual performance
evaluation of each employee. Under normal circumstances, the minimum payment prior to retirement age is an amount reflecting an adjustment rate
applied to represent voluntary retirement. Employees receive additional benefits upon involuntary retirement, including retirement at the age limit.

Effective October 1, 2005, TMC partly amended its retirement plan and introduced the quasi cash-balance plan under which benefits are
determined based on the variable-interest crediting rate rather than the fixed-interest crediting rate as was in the pre-amended plan.

TMC and most subsidiaries in Japan have contributory funded defined benefit pension plans, which are pursuant to the Corporate Defined Benefit
Pension Plan Law (CDBPPL). The contributions to the plans are funded with several financial institutions in accordance with the applicable laws and
regulations. These pension plan assets consist principally of common stocks, government bonds and insurance contracts.

Most foreign subsidiaries have pension plans or severance indemnity plans covering substantially all of their employees under which the cost of
benefits are currently invested or accrued. The benefits for these plans are based primarily on lengths of service and current rates of pay.

These post-employment benefit plans are exposed to general investment risk, interest rate risk and inflation risk.

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Pension costs and defined benefit obligations are dependent on assumptions used in calculating such amounts. These assumptions include discount
rates, retirement rate, salary increase rate, mortality rates and other factors. While management believes that the assumptions used are appropriate,
differences in actual experience or changes in assumptions may affect Toyota’s pension costs and obligations.

The most critical assumption impacting the calculation of pension costs and defined benefit obligations is the discount rates. Toyota determines
the discount rates mainly based on the rates of high quality fixed income bonds currently available and expected to be available during the period to
maturity of the defined benefit pension plans.

Toyota uses a March 31 measurement date for its post-employment benefit plans.

(2) Defined benefit obligations and plan assets

The changes in present value of defined benefit obligations and fair value of plan assets are as follows:

Yen in millions
For the years ended March 31,
2022 2023
Japanese plans Foreign plans Japanese plans Foreign plans
Present value of defined benefit obligations:
Benefit obligations at beginning of year 2,089,263 1,419,910 2,077,151 1,487,644
Current service cost 89,128 52,826 87,452 55,000
Interest cost 12,487 52,062 14,816 57,079
Remeasurements:
Changes in demographic assumptions 6,440 379 2,707 30,743
Changes in financial assumptions (46,113) (126,125) (120,279) (258,990)
Other 4,162 904 (9,673) 18,248
Past service cost 761 274 (1,419) 3,405
Plan participants’ contributions 1,392 3,063 1,523 3,575
Benefits paid (80,368) (42,615) (87,624) (60,614)
Acquisition and other — 126,966 — 87,173
Benefit obligations at end of year 2,077,151 1,487,644 1,964,655 1,423,263
Fair value of plan assets:
Plan assets at beginning of year 1,806,265 1,079,543 1,844,819 1,224,656
Interest income 11,261 51,614 13,576 48,386
Remeasurement
Actual return on plan assets, excluding interest income 34,543 (6,657) (8,619) (216,474)
Employer contributions 33,163 24,912 32,682 16,421
Plan participants’ contributions 1,392 3,063 1,523 3,575
Benefits paid (41,804) (31,823) (43,397) (34,017)
Acquisition and other — 104,004 — 66,849
Plan assets at end of year 1,844,819 1,224,656 1,840,586 1,109,394

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Effect of the asset ceiling — — — —
Net defined benefit liability (asset) 232,332 262,988 124,069 313,869

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The funded defined benefit obligations and the unfunded defined benefit obligations are as follows:

Yen in millions
March 31,
2022 2023
Japanese plans Foreign plans Japanese plans Foreign plans
Funded defined benefit obligations 1,559,686 1,187,595 1,466,825 1,076,433
Plan assets (1,844,819) (1,224,656) (1,840,586) (1,109,394)
Subtotal (285,133) (37,061) (373,761) (32,961)
Unfunded defined benefit obligations 517,465 300,049 497,830 346,830
Total 232,332 262,988 124,069 313,869

The net defined benefit liability (asset) recognized in the consolidated statement of financial position are comprised of the following:

Yen in millions
March 31,
2022 2023
Japanese plans Foreign plans Japanese plans Foreign plans
Retirement benefit liabilities 674,425 348,323 642,774 422,734
Other non-current assets (Retirement benefit assets) (442,094) (85,335) (518,705) (108,865)
Net amount recognized 232,332 262,988 124,069 313,869

(3) The major items of actuarial assumption

The weighted-average discount rates used to determine the present value of defined benefit obligations are as follows:

March 31,
2022 2023
Japanese plans Foreign plans Japanese plans Foreign plans
Discount rate 0.7% 3.5% 1.1% 5.0%

(4) Fair value of plan assets

Toyota’s policy and objective for plan asset management is to maximize returns on plan assets to meet future benefit payment requirements under
risks which Toyota considers permissible. Asset allocations under the plan asset management are determined based on plan asset management policies of
each plan which are established to achieve the optimized asset compositions in terms of the long-term overall plan asset management. When actual
allocations are not in line with target allocations, Toyota rebalances its investments in accordance with the policies. Prior to making individual
investments, Toyota performs in-depth assessments of corresponding factors including category of products, industry type, currencies and liquidity of
each potential investment under consideration to mitigate concentrations of risks such as market risk and foreign currency exchange rate risk. To assess
performance of the investments, Toyota establishes bench mark return rates for each individual investment, combines these individual bench mark rates
based on the asset composition ratios within each asset category, and compares the combined rates with the corresponding actual return rates on each
asset category.

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The following table summarizes the fair value of classes of plan assets.

Yen in millions
March 31, 2022
Japanese plans Foreign plans
Quoted prices in active Quoted prices in active
markets markets
Available Not available Total Available Not available Total
Stocks 549,385 — 549,385 195,067 — 195,067
Government bonds 112,568 — 112,568 132,172 — 132,172
Bonds (other) — 77,048 77,048 — 218,433 218,433
Commingled funds — 489,471 489,471 — 423,525 423,525
Insurance contracts — 220,027 220,027 — — —
Other 225,980 170,340 396,320 30,442 225,016 255,459
Total 887,933 956,886 1,844,819 357,681 866,975 1,224,656

Yen in millions
March 31, 2023
Japanese plans Foreign plans
Quoted prices in active Quoted prices in active
markets markets
Available Not available Total Available Not available Total
Stocks 440,946 — 440,946 177,564 — 177,564
Government bonds 108,570 15 108,585 121,568 — 121,568
Bonds (other) — 84,234 84,234 — 185,395 185,395
Commingled funds — 492,915 492,915 — 394,228 394,228
Insurance contracts — 209,261 209,261 — — —
Other 295,452 209,193 504,645 14,520 216,118 230,638
Total 844,968 995,618 1,840,586 313,652 795,742 1,109,394

“Other” consists of cash equivalents, other private placement investment funds and other assets.

(5) The sensitivity analysis

The following table illustrates the effects on defined benefit obligations of the change in weighted-average discount rates, assuming all other
assumptions are consistent.

Yen in millions
March 31,
2022 2023
Japanese Foreign Japanese Foreign
plans plans plans plans
0.5% decrease 172,402 127,889 153,466 237,478
0.5% increase (150,226) (118,899) (131,275) (234,242)

(6) Impact on future cash flow

Contributions to plan assets by TMC and some of its consolidated subsidiaries are determined by various factors such as employee salary levels
and years of service, funded status of plan assets, and actuarial

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calculations. In addition, according to the rules of the defined benefit corporate pension law, the corporate pension fund system recalculates the amount
of the balance every five years with the end date of the reporting period as the base date so that financial balance can be maintained in the future. TMC
and some of its consolidated subsidiaries may make a necessary contribution if the reserve amount is below the minimum reserve amount.

In the following year (the year ending March 31, 2024), Toyota expects to contribute ¥38,309 million for Japanese plans and ¥16,423 million for
Foreign plans to the post-employment benefit plans.

The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Yen in millions

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Years ending March 31, Japanese plans Foreign plans
2024 86,575 64,890
2025 83,631 67,621
2026 85,148 72,178
2027 88,761 77,576
2028 93,340 83,990
From 2029 to 2033 441,966 479,631
Total 879,421 845,886

(7) Benefit obligations for non-retirement pension for retirees and benefit obligations for absentee
Toyota’s U.S. subsidiaries provide certain health care and life insurance benefits to eligible retired employees. In addition, Toyota provides
benefits to certain former or inactive employees after employment, but before retirement. These benefits are provided through various insurance
companies, health care providers and others. The costs of these benefits are recognized over the period the employee provides credited service to Toyota.
Toyota’s obligation under these arrangements are not material.

(8) Payroll expenses

Payroll expenses included in “Cost of products sold” and “Selling, general and administrative” in the consolidated statement of income (including
expenses for post-employment benefit plans) for the years ended March 31, 2021, 2022 and 2023 are ¥3,281,292 million, ¥3,550,882 million and
¥3,985,518 million, respectively.

24. Liabilities for quality assurance

Toyota provides product warranties for certain defects mainly resulting from manufacturing based on warranty contracts with its customers at the
time of sale of products. Toyota accrues estimated warranty costs to be incurred in the future in accordance with the warranty contracts. In addition to
product warranties, Toyota initiates recalls and other safety measures to repair or to replace parts which might be expected to fail from products safety
perspectives or customer satisfaction standpoints. Toyota accrues for costs of recalls and other safety measures based on the amount estimated from
historical experience.

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Liabilities for product warranties and liabilities for recalls and other safety measures have been combined into “Liabilities for quality assurance”
in the consolidated statement of financial position due to the fact that both are liabilities for costs to repair or replace defects of vehicles and the amounts
incurred for recalls and other safety measures may affect the amounts incurred for product warranties and vice versa.

The net change in liabilities for quality assurance above for the years ended March 31, 2021, 2022 and 2023 consist of the following:

Yen in millions
For the years ended March 31,
2021 2022 2023
Liabilities for quality assurance at beginning of year 1,552,970 1,482,872 1,555,711
Additional provisions 345,563 362,180 400,419
Utilization (347,806) (278,094) (229,623)
Reversals (77,479) (32,124) (59,758)
Other 9,624 20,877 19,608
Liabilities for quality assurance at end of year 1,482,872 1,555,711 1,686,357

“Other” primarily includes the impact of currency translation adjustments and the impact of consolidation and deconsolidation of certain entities
due to changes in ownership interest.

The table below shows the net changes in liabilities for recalls and other safety measures which are comprised in liabilities for quality assurance
above for the years ended March 31, 2021, 2022 and 2023.

Yen in millions
For the years ended March 31,
2021 2022 2023
Liabilities for recalls and other safety measures at beginning of
year 1,104,711 1,093,689 1,171,213
Additional provisions 229,763 245,542 231,874
Utilization (228,044) (165,482) (178,124)
Reversals (16,199) (9,389) (35,643)
Other 3,458 6,853 4,836
Liabilities for recalls and other safety measures at end of year 1,093,689 1,171,213 1,194,156

25. Equity and other equity items

(1) Equity management

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Toyota will efficiently invest in maintenance and replacement of conventional manufacturing facilities and the introduction of new products, and
will focus on capital investment and research and development in areas contributing to strengthening competitiveness and future growth. Through these
activities, Toyota aims to improve corporate value and keep sustainable growth for realization of a new mobility society. Generally, Toyota Motor
Corporation shareholder’s equity cover such activities, with additional short-term and long-term debt, if necessary.

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The amount of Toyota Motor Corporation shareholder’s equity and short-term and long-term debt are as follows:

Yen in millions
March 31,
2022 2023
Toyota Motor Corporation Shareholders’ equity 26,245,969 28,338,706
Short-term and long-term debt 26,496,358 29,380,273

(2) Number of shares

The total number of authorized shares of TMC’s common stock was 10,000,000,000, 50,000,000,000 and 50,000,000,000 as of March 31, 2021,
2022 and 2023, respectively.

The changes in the shares of common stock issued are as follows:

For the years ended March 31,

2021 2022 2023
Common stock issued:
Balance at beginning of year 3,262,997,492 3,262,997,492 16,314,987,460
Changes during the year — 13,051,989,968 —
Balance at end of year 3,262,997,492 16,314,987,460 16,314,987,460

The common stock issued by TMC is a no-parity stock without any limitations on the content of the rights, and the issued stock is fully paid.

On October 1, 2021, TMC effected a five-for-one stock split of its common stock to shareholders. The total number of authorized shares of TMC’s
common stock and common stock issued was increased by 40,000,000,000 and 13,051,989,968, respectively.

The total number of treasury stock was 467,048,832, 2,536,685,916 and 2,749,807,731 as of March 31, 2021, 2022 and 2023, respectively.

(3) Capital surplus and retained earnings

Capital surplus consists of capital reserves and other capital surplus. Retained earnings consist of retained earnings reserve and other retained
earnings. The Companies Act of Japan provides that an amount equal to 10% of distributions from surplus paid by TMC and its Japanese subsidiaries be
appropriated as a capital reserve or a retained earnings reserve. No further appropriations are required when the total amount of the capital reserve and
the retained earnings reserve reaches 25% of stated capital. The Companies Act provides that the retained earnings reserve of TMC and its Japanese
subsidiaries is restricted and unable to be used for dividend payments, and is excluded from the calculation of the profit available for dividend.

The amounts of statutory retained earnings of TMC available for dividend payments to shareholders were ¥11,656,187 million and
¥13,434,394 million as of March 31, 2022 and 2023, respectively. In accordance with customary practice in Japan, the distributions from surplus are not
accrued in the financial statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’ approval has
been obtained.

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Retained earnings at March 31, 2023 include ¥3,506,777 million relating to equity in undistributed earnings of associates and joint ventures.

(4) Treasury stock

The reissuance and repurchase of treasury stock are as follows:

For the year ended March 31, 2021

Reissuance of treasury stock

Reason for reissuing treasury stock -

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At its Directors’ Meeting held on March 24, 2020, TMC resolved to purchase shares issued by NIPPON TELEGRAPH AND TELEPHONE
CORPORATION (“NTT”) and conduct a reissuance of treasury stock through third-party allotment with NTT as the allottee to form a business and
capital alliance with NTT. The parties entered into a memorandum of understanding concerning the business and capital alliance on the same day. Based
on the agreement, TMC has completed the purchase of NTT shares and reissuance of treasury stock with NTT as the allottee on April 9, 2020.

Details of matters relating to reissuance -

Number of common shares reissued 29,730,900 shares
Amount of reissuance ¥199,999 million

For the year ended March 31, 2022

Repurchase of treasury stock

1) Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 12, 2021 and November 4, 2021

Reason for repurchasing treasury stock -

The repurchase was made to promote capital efficiency by repurchasing flexibly its common stock while comprehensively considering factors
such as its investment in growth, level of its dividends, its cash reserves and the price level of its common stock.

Details of matters relating to repurchase -

Number of common shares repurchased 96,196,900 shares

Total purchase price for repurchase of shares ¥400,000 million

2) Repurchasing of treasury stock resolved at the Board of Directors meeting held on March 23, 2022

Reason for repurchasing treasury stock -

The repurchase was made to promote capital efficiency by repurchasing flexibly its common stock than before while comprehensively considering
factors such as the price level of its common stock.

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Details of matters relating to repurchase -

Number of common shares repurchased 2,111,000 shares
Total purchase price for repurchase of shares ¥4,607 million

For the year ended March 31, 2023

Repurchase of treasury stock

1) Repurchasing of treasury stock resolved at the Board of Directors meeting held on March 23, 2022

Reason for repurchasing treasury stock -

The repurchase was made to promote capital efficiency by repurchasing flexibly its common stock than before while comprehensively considering
factors such as the price level of its common stock.

Details of matters relating to repurchase -

Number of common shares repurchased 44,114,900 shares
Total purchase price for repurchase of shares ¥95,392 million

2) Repurchasing of treasury stock resolved at the Board of Directors meeting held on May 11, 2022 and November 1, 2022

Reason for repurchasing treasury stock -

The repurchase was made to promote capital efficiency by repurchasing flexibly its common stock than before while comprehensively considering
factors such as the price level of its common stock.

Details of matters relating to repurchase -

Number of common shares repurchased 169,429,000 shares
Total purchase price for repurchase of shares ¥335,685 million
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(5) Other components of equity

Other components of equity are as follows:

Yen in millions
Net changes in
revaluation of
financial assets
measured at fair Exchange
value through other Remeasurements of differences on
comprehensive defined benefit translating foreign
income plans operations Total
Balance at April 01, 2020 954,070 — (368,520) 585,549
Other comprehensive income, net of
tax 380,814 221,409 410,253 1,012,476
Reclassification to retained earnings (31,321) (219,047) — (250,369)
Other comprehensive income for the period attributable
to non-controlling interests (8,211) (2,362) (29,357) (39,930)
Balance at March 31, 2021 1,295,351 — 12,375 1,307,726
Other comprehensive income, net of
tax (103,131) 151,243 1,095,017 1,143,129
Reclassification to retained earnings (59,110) (149,602) — (208,712)
Other comprehensive income for the period attributable
to non-controlling interests 1,561 (1,640) (38,810) (38,889)
Balance at March 31, 2022 1,134,671 — 1,068,583 2,203,254
Other comprehensive income, net of
tax (105,435) 82,020 851,129 827,713
Reclassification to retained earnings (94,233) (72,598) — (166,831)
Other comprehensive income for the period attributable
to non-controlling interests (1,300) (9,422) (17,219) (27,941)
Balance at March 31, 2023 933,702 — 1,902,493 2,836,195

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(6) Other comprehensive income

The breakdown of other comprehensive income and the corresponding tax benefits (including non-controlling interests) are as follows:

Yen in millions
For the year ended
March 31, 2021
Before Tax After
tax effect tax
Items that will not be reclassified to profit (loss)
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
Amount incurred during the year 560,225 (172,798) 387,427
Net changes 560,225 (172,798) 387,427
Remeasurements of defined benefit plans
Amount incurred during the year 311,360 (95,087) 216,272
Net changes 311,360 (95,087) 216,272
Shares of other comprehensive income of equity method investees
Amount incurred during the year 80,472 — 80,472
Net changes 80,472 — 80,472
Items that may be reclassified subsequently to profit (loss)
Exchange differences on translating foreign operations
Amount incurred during the year 403,636 — 403,636
Reclassification to profit (loss) — — —
Net changes 403,636 — 403,636
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
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Amount incurred during the year (119,441) 35,938 (83,503)
Reclassification to profit (loss) — — —
Net changes (119,441) 35,938 (83,503)
Shares of other comprehensive income of equity method investees
Amount incurred during the year 8,172 — 8,172
Reclassification to profit (loss) — — —
Net changes 8,172 — 8,172
Total other comprehensive income 1,244,424 (231,947) 1,012,476

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Yen in millions
For the year ended
March 31, 2022
Before Tax After
tax effect tax
Items that will not be reclassified to profit (loss)
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
Amount incurred during the year (71,641) 22,399 (49,242)
Net changes (71,641) 22,399 (49,242)
Remeasurements of defined benefit plans
Amount incurred during the year 188,239 (51,989) 136,250
Net changes 188,239 (51,989) 136,250
Shares of other comprehensive income of equity method investees
Amount incurred during the year 113,641 — 113,641
Net changes 113,641 — 113,641
Items that may be reclassified subsequently to profit (loss)
Exchange differences on translating foreign operations
Amount incurred during the year 902,844 — 902,844
Reclassification to profit (loss) — — —
Net changes 902,844 — 902,844
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
Amount incurred during the year (220,711) 66,536 (154,175)
Reclassification to profit (loss) 1 (0) 1
Net changes (220,710) 66,536 (154,174)
Shares of other comprehensive income of equity method investees
Amount incurred during the year 193,811 — 193,811
Reclassification to profit (loss) — — —
Net changes 193,811 — 193,811
Total other comprehensive income 1,106,184 36,945 1,143,129

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Yen in millions
For the year ended
March 31, 2023
Before Tax After
tax effect tax
Items that will not be reclassified to profit (loss)
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
Amount incurred during the year 144,160 (44,936) 99,223
Net changes 144,160 (44,936) 99,223
Remeasurements of defined benefit plans
Amount incurred during the year 112,151 (46,998) 65,153
Net changes 112,151 (46,998) 65,153
Shares of other comprehensive income of equity method investees
Amount incurred during the year (77,148) — (77,148)
Net changes (77,148) — (77,148)
Items that may be reclassified subsequently to profit (loss)
Exchange differences on translating foreign operations
Amount incurred during the year 676,042 — 676,042
Reclassification to profit (loss) — — —
Net changes 676,042 — 676,042
Net changes in revaluation of financial assets measured at fair value through other comprehensive
income
Amount incurred during the year (165,477) 49,738 (115,738)
Reclassification to profit (loss) — — —
Net changes (165,477) 49,738 (115,738)
Shares of other comprehensive income of equity method investees
Amount incurred during the year 180,181 — 180,181
Reclassification to profit (loss) — — —
Net changes 180,181 — 180,181
Total other comprehensive income 869,909 (42,196) 827,713

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(7) Dividends
The paid dividend amounts are as follows:

For the year ended March 31, 2021

Total amount
of dividends Dividend per share
Resolution Type of shares (yen in millions) (yen) Record date Effective date
The Board of Directors Meeting
on May 12, 2020 Common shares 331,938 120.00 March 31, 2020 May 28, 2020
The Board of Directors Meeting
on November 6, 2020 Common shares 293,576 105.00 September 30, 2020 November 27, 2020

For the year ended March 31, 2022

Total amount
of dividends Dividend per share
Resolution Type of shares (yen in millions) (yen) Record date Effective date
The Board of Directors Meeting
on May 12, 2021 Common shares 377,453 135.00 March 31, 2021 May 28, 2021
The Board of Directors Meeting
on November 4, 2021 Common shares 332,419 120.00 September 30, 2021 November 25, 2021

On October 1, 2021, TMC effected a five-for-one stock split of its common stock to shareholders. “Dividend per share” presents the amount prior
to the stock split.

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For the year ended March 31, 2023

Total amount
of dividends Dividend per share
Resolution Type of shares (yen in millions) (yen) Record date Effective date
The Board of Directors Meeting
on May 11, 2022 Common shares 385,792 28.00 March 31, 2022 May 27, 2022
The Board of Directors Meeting
on November 1, 2022 Common shares 342,187 25.00 September 30, 2022 November 22, 2022

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Dividends of which record date falls within the year ended March 31, and effective date is after the year ended March 31 are as follows:

For the year ended March 31, 2023

Total amount
of dividends Dividend per share
Resolution Type of shares (yen in millions) (yen) Record date Effective date
The Board of Directors Meeting
on May 10, 2023 Common shares 474,781 35.00 March 31, 2023 May 26, 2023

26. Sales revenues

(1) Summary by business segments and products
The table below shows Toyota’s sales revenues from external customers by business and by product category.

Yen in millions
For the years ended March 31
2021 2022 2023
Sales of products
Automotive
Vehicles 20,509,606 23,739,442 28,394,256
Parts and components for production 1,287,053 1,504,215 1,710,422
Parts and components for after service 2,049,187 2,407,143 2,866,196
Other 752,000 881,193 805,995
Total automotive 24,597,846 28,531,993 33,776,870
All other 479,553 541,436 590,749
Total sales of products 25,077,398 29,073,428 34,367,619
Financial services 2,137,195 2,306,079 2,786,679
Total sales revenues 27,214,594 31,379,507 37,154,298

The majority of sales of products are revenues recognized from contracts with customers under IFRS 15 “Revenue from Contracts with
Customers” (“IFRS 15”), and receivables related to such revenues are recognized as “Trade accounts and other receivables”.

The breakdown of income from leases included in financial service revenues is as follows:

Yen in millions
For the years ended March 31,
2021 2022 2023
Finance leases
Financial income related to net lease investment 106,724 134,512 164,820
Operating leases 1,017,707 1,093,545 1,169,018
Total 1,124,431 1,228,057 1,333,838

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Financial service revenues other than income from leases mainly consist of interest income using the effective interest method. The
amount of interest income using the effective interest method is not significant.

For the years ended March 31, 2021, 2022 and 2023 ¥125,748 million, ¥138,718 million and ¥166,220 million of financial service revenues were
accounted for under IFRS 15.

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(2) Contract liabilities
Contract liabilities consist of the following:

Yen in millions
March 31,
April 1, 2021 2022 2023
Contract liabilities 854,679 989,959 1,068,212

Contract liabilities are primarily related to advances received from customers. Contract liabilities are included in “Other current liabilities” and
“Other non-current liabilities” in the consolidated statement of financial position. For the year ended March 31, 2022 and 2023, the amounts transferred
from contract liabilities at the beginning of the fiscal year to sales revenue were ¥444,781 million and ¥529,016 million, respectively.

(3) Performance obligations

The aggregate amounts of transaction prices allocated to unsatisfied performance obligations related to contracts that have original expected
durations in excess of one year were ¥796,769 million and ¥834,624 million as of March 31, 2022 and 2023, respectively. The main contents of
unsatisfied performance obligations are insurance revenues and maintenance revenues.

For insurance revenues, Toyota receives payment agreed upon in the contract at the inception of the contract, and revenue is recognized over the
term of the contract, which ranges from three to 120 months. As of March 31, 2022, the unsatisfied performance obligations related to insurance
revenues were ¥295,648 million, and Toyota expected to recognize as revenue ¥82,215 million in fiscal 2023, and ¥213,432 million thereafter. As of
March 31, 2023, the unsatisfied performance obligations related to insurance revenues were ¥352,239 million, and Toyota expects to recognize as
revenue ¥101,392 million in fiscal 2024, and ¥250,847 million thereafter.

For maintenance revenues, Toyota receives payments agreed upon in the contract at the inception of the contract, and revenue is recognized over
the term of the contract, which ranges from 18 to 84 months.

Unsatisfied performance obligations for sales of products related to contracts that have an original expected duration of one year or less have been
excluded from this disclosure.

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27. Research and development cost

Research and development costs consist of the following:

Yen in millions
For the years ended March 31,
2021 2022 2023
Research and development expenditures incurred during the year 1,090,424 1,124,262 1,241,686
Amount capitalized (158,246) (200,512) (181,634)
Amortization of capitalized development costs 152,542 167,926 164,512
Total 1,084,721 1,091,675 1,224,564

28. Other finance income and costs

Other finance income and costs consist of the following:

Yen in millions
For the years ended March 31,
2021 2022 2023
Other finance income
Interest income
Financial assets measured at amortized cost 17,526 16,920 101,737
Financial assets measured at fair value through other comprehensive income 88,074 84,592 132,365
Dividend income
Financial assets measured at fair value through other comprehensive income 88,837 94,833 109,308
Other 240,791 138,416 35,939
Total 435,229 334,760 379,350
Other finance costs
Interest expense
Financial liabilities measured at amortized cost (42,421) (32,458) (47,356)
Other (5,116) (11,539) (77,757)
Total (47,537) (43,997) (125,113)

The decrease in “Other finance income—Other” was due mainly to a decrease during fiscal 2023 in profit on securities revaluation.

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29. Earnings per share

Reconciliation of the difference between basic and diluted earnings per share attributable to Toyota Motor Corporation are as follows:

Thousands
Yen in millions of shares Yen
Net income Earnings per share
attributable to Toyota Weighted-average attributable to Toyota
Motor Corporation common shares Motor Corporation
For the year ended March 31, 2021
Net income attributable to Toyota Motor Corporation 2,245,261
Basic earnings per share attributable to Toyota Motor
Corporation 2,245,261 13,976,442 160.65
Effect of dilutive securities
Model AA Class Shares 12,569 229,694
Diluted earnings per share attributable to Toyota Motor
Corporation 2,257,830 14,206,137 158.93
For the year ended March 31, 2022
Net income attributable to Toyota Motor Corporation 2,850,110
Basic earnings per share attributable to Toyota Motor
Corporation 2,850,110 13,887,348 205.23
Effect of dilutive securities
Model AA Class Shares 23 311
Diluted earnings per share attributable to Toyota Motor
Corporation 2,850,132 13,887,659 205.23
For the year ended March 31, 2023
Net income attributable to Toyota Motor Corporation 2,451,318
Basic earnings per share attributable to Toyota Motor
Corporation 2,451,318 13,658,382 179.47
Effect of dilutive securities
Model AA Class Shares — —
Diluted earnings per share attributable to Toyota Motor
Corporation 2,451,318 13,658,382 179.47

In addition to the disclosure requirements under IFRS, Toyota discloses the information below in order to provide financial statements users with
valuable information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows Toyota Motor Corporation shareholders’ equity per share. Toyota Motor Corporation shareholders’ equity per share
amounts are calculated by dividing Toyota Motor Corporation shareholders’ equity in the consolidated statement of financial position by common shares
issued and outstanding at the end of the year (excluding treasury stock).

Thousands
Yen in millions of shares Yen
Common shares issued
and outstanding at the Toyota Motor
Toyota Motor end of the year Corporation
Corporation (excluding treasury shareholders’ equity
shareholders’ equity stock) per share
As of March 31, 2022 26,245,969 13,778,302 1,904.88
As of March 31, 2023 28,338,706 13,565,180 2,089.08

On October 1, 2021, TMC effected a five-for-one stock split of its common stock to shareholders. “Basic earnings per share attributable to Toyota
Motor Corporation”, “Diluted earnings per share attributable to Toyota Motor Corporation” and “Toyota Motor Corporation shareholders’ equity per
share” are calculated based on the assumption that the stock split was implemented at the beginning of the earliest period presented in this note.

“Diluted earnings per share attributable to Toyota Motor Corporation” equals “Basic earnings per share attributable to Toyota Motor Corporation”
for the year ended March 31, 2023, because there were no potential dilutive shares during that period as the acquisition of all outstanding First Series
Model AA Class Shares took place on April 2, 2021, and the cancellation of all First Series Model AA Class Shares was completed on April 3, 2021

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30. Contractual commitments and contingent liabilities
(1) Contractual commitments
Contractual commitments relating to purchase of property, plant and equipment, other assets, and services are ¥349,143 million, ¥522,336 million
as of March 31, 2022 and 2023.

(2) Guarantees
Toyota enters into contracts with Toyota dealers to guarantee customers’ payments of their installment payables that arise from installment
contracts between customers and Toyota dealers, as and when requested by Toyota dealers. Guarantee periods are set to match maturity of installment
payments, and as of March 31, 2023, range from 1 month to 8 years; however, they are generally shorter than the useful lives of products sold. Toyota is
required to execute its guarantee primarily when customers are unable to make required payment.

The maximum potential amount of future payments are ¥3,641,978 million and ¥3,600,631 million as of March 31, 2022 and 2023. Liabilities for
guarantees totaling ¥21,869 million, and ¥16,759 million have been provided as of March 31, 2022 and 2023. Under these guarantee contracts, Toyota is
entitled to recover any amount paid by Toyota from the customers whose original obligations Toyota has guaranteed.

(3) Market treatment such as recalls, damages and lawsuits

Toyota and other automakers have been named in certain class actions filed in Mexico, Australia, Israel and Brazil relating to Takata airbag issues.
The actions in Israel and Brazil are being litigated. The actions in Mexico and Australia have been resolved.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Toyota is named as a defendant in an economic loss class action lawsuit in Australia in which damages are claimed on the basis that diesel
particulate filters in certain vehicle models are defective. Toyota received an unfavourable judgment both in the primary court on April 7, 2022 and in
the appeal court on March 27, 2023. The judgments included a finding that there was a perceived reduction in vehicle value of certain vehicle models.
Toyota disagrees with the judgments and has filed an application for a further appeal. Other claims of economic loss in this class action lawsuit continue
to be litigated at the court of first instance. In estimating the provision we should record in the consolidated financial statements as a result of the
aforementioned judgments, Toyota has considered various factors including the legal and factual circumstances of the case, the contents of the
judgements, and the views of legal counsel. The currently estimated probable economic outflow related to the class action is immaterial to Toyota’s
consolidated financial position, results of operations and cash flows. At this stage, however, the final outcome and therefore ultimate financial liability
for Toyota on account of this matter cannot be predicted with certainty.

In April 2020, Toyota reported possible anti-bribery violations related to a Thai subsidiary to the SEC and the Department of Justice (“DOJ”), and
is cooperating with their investigations. Investigations by governmental authorities related to these matters could result in the imposition of civil or
criminal penalties, fines or other sanctions, or litigation. Toyota cannot predict the scope, duration or outcome of these matters at this time.

Toyota also has various other pending legal actions and claims, including without limitation personal injury and wrongful death lawsuits and
claims in the United States, as well as intellectual property litigation, and is subject to government investigations from time to time.

Beyond the amounts accrued with respect to all aforementioned matters, Toyota is unable to estimate a range of reasonably possible loss, if any,
for the pending legal matters because (i) many of the proceedings are in evidence gathering stages, (ii) significant factual issues need to be resolved,
(iii) the legal theory or nature of the claims is unclear, (iv) the outcome of future motions or appeals is unknown and/or (v) the outcomes of other matters
of these types vary widely and do not appear sufficiently similar to offer meaningful guidance. Therefore, for all of the aforementioned matters, which
Toyota is in discussions to resolve, any losses that are beyond the amounts accrued could have an adverse effect on Toyota’s financial position, results of
operations or cash flows.

TMC has a concentration of labor supply in employees working under collective bargaining agreements and a substantial portion of these
employees are working under the agreement that will expire on December 31, 2023.

31. Details of company organization

(1) Major subsidiaries
Toyota primarily conducts business in the automotive industry. Toyota also conducts business in finance and other industries.

Toyota’s major subsidiaries are as follows:

Automobiles are mainly manufactured by TMC, Hino Motors Ltd. and Daihatsu Motor Co., Ltd., but some of them are outsourced in Japan.
Toyota Motor Manufacturing Kentucky, Inc. and others manufacture overseas.

Auto parts are manufactured by TMC and others. These products are sold through dealers such as TOYOTA Mobility Tokyo Inc. in Japan, and
through dealers such as Toyota Motor Sales, U.S.A., Inc. overseas.

In the financing business, Toyota Finance Corporation and others provide sales finance services in Japan and Toyota Motor Credit Corporation
and others overseas.

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other business consists of information technology-related businesses and other businesses.

(2) Structured entities

(i) Consolidated structured entities
Toyota periodically securitizes receivables related to financial services and vehicles on leases for liquidity and funding purposes and transfers
them to special purpose entities. Toyota is deemed to have the power to direct the activities of these entities that most significantly impact the entities’
economic performances. Therefore, Toyota has consolidated them.

The creditors of these entities do not have recourse to Toyota’s general credit with the exception of debts guaranteed by Toyota. Risks to which
Toyota is exposed including credit, interest rate, and/or prepayment risks are not incremental compared with the situation before Toyota enters into
securitization transactions.

Toyota has equity in investment trusts and other special purpose entities. With respect to some of the investment trusts, Toyota has both the
obligation to absorb losses of or the right to receive benefits from the investment trusts that could potentially be significant to the investment trusts and
the power to direct the activities of the investment trusts that most significantly impact the investment trusts’ economic performance through the asset
manager. Therefore, Toyota has consolidated them.

Related to securitization transactions, ¥3,367,601 million and ¥5,037,203 million receivables related to financial services, ¥3,882,623 million and
¥5,245,195 million secured debt were included in Toyota’s consolidated financial statements as of March 31, 2022 and 2023, respectively.

(ii) Unconsolidated structured entities

Other investment trusts and other special purpose entities are instructed based on contractual arrangements, and are designed so that voting or
similar rights are not the dominant factor in deciding who controls the entities. The trusts and the special purpose entities are defined as structured
entities but are determined that Toyota lacks the power to direct the activities of these investments that most significantly impact the trust’s economic
performance and, therefore does not consolidate the investment trusts and the special purpose entities. Investments in the investment trusts and the
special purpose entities are held at fair value and are included in “Other financial assets” in the consolidated statement of financial position. The
maximum exposure to loss is limited to the carrying value of its investment. The carrying value of the trusts totaled ¥18,829 million and ¥17,217 million
as of March 31, 2022 and 2023, respectively. The carrying value of the special purpose entities totaled ¥1,073,137 million and ¥784,826 million as of
March 31, 2022 and 2023, respectively. Toyota does not provide support that is not contractually required to the investments.

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TOYOTA MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

32. Related party transactions

(1) Transactions with associates and joint ventures
The balances and turnover of receivables and payables with associates and joint ventures accounted for under the equity method are as follows:

Yen in millions
March 31,
2022 2023
Trade accounts and other receivables
Associates 302,212 447,400
Joint ventures 64,195 85,275
Total 366,407 532,674
Trade accounts and other payables
Associates 1,086,397 1,459,209
Joint ventures 5,112 695
Total 1,091,509 1,459,904

Yen in millions
For the years ended March 31,
2021 2022 2023
Sales revenues
Associates 1,138,144 1,948,681 2,821,963
Joint ventures 499,437 413,703 722,278
Total 1,637,582 2,362,384 3,544,240
Cost of products sold (purchases)
Associates 5,983,797 7,946,788 9,891,804
Joint ventures 51,434 308 59,703
Total 6,035,231 7,947,095 9,951,507

Dividends from associates and joint ventures accounted for under the equity method are ¥252,557 million and ¥349,632 million for the years
ended March 31, 2022 and 2023, respectively. In addition, Toyota does not engage in transactions with associates and joint ventures outside of the
normal course of business.

(2) Compensation of key management

The compensation for the directors and audit & supervisory board members of TMC is as follows:

Yen in millions
For the years ended March 31,
2021 2022 2023
Monthly compensation 987 1,083 1,226
Bonus 748 196 397
Share compensation 364 772 808
Other 747 — —
Total 2,847 2,051 2,430

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TOYOTA MOTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

“Other” refers to income tax compensation that was granted to a member of the Board of Directors, Mr. Didier Leroy, with respect to his
remuneration during the period in which he served as a member of the Board of Directors. Mr. Leroy retired on June 11, 2020.

33. Supplemental cash flow information

“Other, net” in cash flows from investing activities includes a net decrease in time deposits of ¥2,070,726 million and a net decrease in time
deposits of ¥307,970 million for the year ended March 31, 2022 and 2023, respectively.

34. Significant subsequent events

On May 30, 2023, Toyota, Daimler Truck, MFTBC and Hino concluded a memorandum of understanding on accelerating the development of
advanced technologies and conducting a business combination of MFTBC and Hino so as to collaborate toward achieving carbon neutrality, create a
prosperous mobility society by developing CASE technologies and strengthening the commercial vehicle business on a global scale, and build a globally
competitive Japanese commercial vehicle manufacturer.

MFTBC and Hino will become wholly owned subsidiaries of a new listed holding company. Toyota and Daimler Truck will equally invest in the
holding company and will collaborate on the development of hydrogen and other CASE technologies to support the competitiveness of the new
company. The parties endeavor to develop and execute definitive agreements related to this transaction, including those concerning details related to the
scope and nature of the collaboration, including the name, location, shareholding ratio and corporate structure of the new holding company, during the
fiscal year ended March 31, 2024 and expect to close the transaction by December 31, 2024. Accordingly, we cannot currently estimate the impact of
this agreement on Toyota’s consolidated financial statements.

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ITEM 19. EXHIBITS

Index to Exhibit

1.1 Amended and Restated Articles of Incorporation of the Registrant (English translation) (incorporated by reference to Exhibit 1.1 to
Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2022, filed with the SEC on June 23, 2022 (file no. 001-
14948))
1.2 Amended and Restated Regulations of the Board of Directors of the Registrant (English translation) (incorporated by reference to
Exhibit 1.2 to Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2022, filed with the SEC on June 23, 2022
(file no. 001-14948))
1.3 Amended and Restated Regulations of the Audit & Supervisory Board of the Registrant (English translation)
2.1 Amended and Restated Share Handling Regulations of the Registrant (English translation) (incorporated by reference to Exhibit 2.1
to Toyota’s Annual Report on Form 20-F for the fiscal year ended March 31, 2021, filed with the SEC on June 24, 2021 (file no.
001-14948))
2.2 Form of Amended and Restated Deposit Agreement among the Registrant, The Bank of New York Mellon, as depositary, and all
owners and holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary
Receipt (incorporated by reference to Exhibit 1 to Toyota’s Registration Statement on Form F-6, filed with the SEC on
September 21, 2021 (file no. 333-259683))
2.3 Form of American Depositary Receipt (included in Exhibit 2.2)
2.4 Description of Toyota’s Common Stock (incorporated by reference to “Item 10.B. Memorandum and Articles of Incorporation” of
this annual report)
2.5 Description of Toyota’s American Depositary Shares (incorporated by reference to Exhibit 2.5 to Toyota’s Annual Report on Form
20-F for the fiscal year ended March 31, 2022, filed with the SEC on June 23, 2022 (file no. 001-14948))
8.1 List of Principal Subsidiaries (See “Organizational Structure” in “Item 4. Information on the Company”)
11.1 Code of Ethics of the Registrant applicable to its members of the board of directors and operating officers, including its principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions
(English translation) (incorporated by reference to Exhibit 11.1 to Toyota’s Annual Report on Form 20-F for the fiscal year ended
March 31, 2021, filed with the SEC on June 24, 2021 (file no. 001-14948))
12.1 Certifications of the Registrant’s President and Member of the Board, as well as Member of the Board, pursuant to Section 302 of
the Sarbanes-Oxley Act
13.1 Certifications of the Registrant’s President and Member of the Board, as well as Member of the Board, pursuant to Section 906 of
the Sarbanes-Oxley Act
15.1 Consent of Independent Registered Public Accounting Firm
101.INS Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

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101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 The cover page for the registrant’s Annual Report on Form 20-F for the year ended March 31, 2023, has been formatted in Inline
XBRL

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

TOYOTA MOTOR CORPORATION

By: /s/ Masahiro Yamamoto

Name: Masahiro Yamamoto
Title: Chief Officer, Accounting Group

Date: June 30, 2023

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