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					                                                                              6 Sales & Marketing /
                                                                                    After Sales




     “The role of Sales & Marketing is to define the product range (specifications,
     price, colours, etc) and communicate it in a way that makes people want to
     drive a Toyota or Lexus. Through the Toyota Prius and Lexus RX400h, for
     example, we can offer some of the most beneficial environmental technology
     in the world, but it will make little difference unless people know and want to
     drive them. And talk about them. The role of After Sales is to offer ways to
     maintain the car’s performance throughout its life cycle while not burdening the
     environment, for example through the use of remanufactured products and our
     waterborne paints project."

                                                                                                                    Thierry Dombreval
                                                                                                                    Executive Vice-President & COO
                                                                                                                    Sales Group
                                                                                                                    Toyota Motor Europe

     Toyota’s complete vehicle-life-cycle approach to environmental           and lean” eco-cars. Toyota’s marketing efforts are thus two-pron-
     concerns means that every part of the corporation and its affiliated     ged. One aspect of the company’s marketing strategy is to raise
     companies are bound by the Toyota Earth Charter to make                  awareness in general of the environmental impact of automobiles
     protection of the environment a top priority. In the previous            and the lengths to which Toyota is going to reduce that impact.
42
     sections of this report, we have already seen how environmental          Just as important, however, is the careful collection and analysis
     concerns are shaping the design process at Toyota. We have also          of customer-satisfaction data, allowing the company to better
     seen how the company’s production facilities and logistics operations    understand customers’ purchasing decisions and thereby to
     are held to strict environmental standards, in many cases exceeding      hone an ever-more successful marketing strategy for the various
     legal requirements. This report also demonstrates how the principles     Toyota and Lexus models.
     of Kaizen (continuous improvement), Yokoten (knowledge transfer)
     and Genchi Genbutsu (going to the source) are constantly being           With every sale of an eco-friendly vehicle like the Prius or the new
     applied to improve environmental performance in these areas.             Toyota AYGO, regardless of the reason behind the purchase, a
                                                                              net improvement in environmental impact is made. Driving a new
     Toyota’s Sales & Marketing/After Sales operations are no exception       Prius saves roughly one tonne of CO2 per year as compared to a
     to this rule. One could even say that the Toyota operation having the    diesel vehicle in the same segment, or 1.9 tonnes in comparison
     greatest possible impact on the health of the environment is precisely   with a petrol vehicle in the same segment. Global sales of the new
     Sales & Marketing, as the environmental impact of all of Toyota’s        Prius totalled 125,000 in 2004, with over 360,000 Toyota hybrids
     eco-friendly design, production, and logistics would remain              sold in total.
     inconsequential without strong sales of Toyota’s “green, clean


     Corporate Environmental Awareness
     In 2003, Toyota embarked on its first pan-European corporate
     advertising campaign conducted by its Corporate Affairs department.
     Spanning an initial three-year period (2003-2005), this campaign
     seeks to enhance Toyota's corporate awareness and image in
     Europe by outlining its corporate citizenship and explaining why
     the company is the automotive leader in environmentally friendly
     technologies. Under the "Aim: Zero Emissions" tag line, Toyota
     communicates its aspiration to reduce harmful emissions in all its
     areas of activity, from the design and planning phase all the way
     to the recycling of end-of-life vehicles.

     In 2004, the corporate advertising campaign's media plan wide-
     ned to include television. A series of vignettes focusing on "Green
     Design" appeared on three pan-European television channels.
     Using this form of sponsored advertising, Toyota seeks to show
     how clever design and technology can make people’s lives better
     while also reducing the environmental impact.                                                 Toyota’s 2005 European Corporate
                                                                                                   Advertising Campaign
In order to better communicate its environmental principals and                     of Europe's markets a clearer and more comprehensive
activities – and support the "Aim: Zero Emissions" message –                        understanding of Toyota's environmental stance and activities.
Toyota created an Environmental Brochure in early 2004. The
Environmental Brochure was designed and published to target
the general public, presenting Toyota’s basic environmental mes-
sages with a clear focus on the environmental technologies that
are beneficial to consumers.

Concretely, the following issues are addressed within the
Environmental Brochure:

• Outline of today's environmental challenges and what Toyota is
  doing to address them.
• Focus on Toyota's leading environmental technologies(Hybrid
  Synergy Drive/Prius, Toyota ‘Clean Power’ D-4D, fuel cell sys-
  tems and so forth).
• Communicate basic environmental messages using various
  examples (Zero waste to landfill, recyclability, etc.).

Toyota's first European Environmental Brochure was translated                       Toyota’s 2004 European Corporate         Environmental Brochure
                                                                                    Advertising Campaign
into nine different languages, giving audiences in many




Sales & Marketing
Brand Environmental Awareness
The Toyota and Lexus brands also carry out awareness raising
campaigns for environmental technologies. The Toyota Prius and
the Lexus RX400h, featuring Hybrid Synergy Drive, as well as                                                                                                  43
Toyota D-CAT technology is perhaps the most relevant and signi-
ficant evidence of Toyota's dedication to the ultimate goal of zero
emissions.

Named 2005 European Car of the Year, the Toyota Prius repre-
sents the cutting edge in the industry's quest for a cleaner, greener
car. This concrete evidence of Toyota's desire to safeguard the
environment was used by the Toyota brand in both pan-European
and focussed awareness raising and marketing.

At times, this was done in conjunction with the corporate
                                                                                           Toyota Prius advertisement on the front of Toyota Motor Europe’s
advertising campaign that ran in several pan-European print                                head office in Brussels, Belgium.
publications as well as in national media in the UK, Italy, Germany,
France and Spain.




                        Toyota Prius stand at the Brussels International Airport.
     The Toyota Avensis D-4D Clean Power and the Lexus RX400h                technology in the new Corolla Verso and the next generation RAV-4.
     represent two more products where it is important to build an           In the new RX400h, Lexus Division engineers have created
     understanding of the technology with the customer.                      completely new, SUV oriented hybrid components based on the
                                                                             Hybrid Synergy Drive concept, resulting in superior SUV fuel
     In order to do this, both Toyota and Lexus have carried out awa-        efficiency and driving performance.
     reness campaigns as shown below. The campaigns have had
     very successful results; for example 40% of Avensis’ sold in            For more information regarding the Toyota D-CAT and Hybrid
     Germany have the Toyota D-CAT technology. Due to the                    Synergy Drive technology, please see the Product Design &
     demand, Toyota has decided to introduce the Toyota D-CAT                Development Chapter.




     Example of Toyota D-CAT awareness campaign.                             Example of Lexus RX400h awareness campaign.




      Survey: Prius Customer Satisfaction
        From an independent survey commissioned by Toyota targeting          following findings for the new generation Prius as compared to
        Prius owners in the UK and Germany, Toyota has obtained the          the original Prius.
44



             The key findings of 267 new Prius owners are:

                 • Key purchase reasons:
                   o low fuel consumption (spontaneously mentioned by 50% of buyers),
                   o environmental/ green issues (41%) and
                   o the new technology (21%).
                 • When asked what they like best about their car, buyers of the new Prius are very likely to spontaneously mention
                   fuel consumption (43%), quietness of operation (28%), low running costs (19%) and environmental friendliness (18%).
                 • Prius owners’ satisfaction has almost doubled on exterior styling (completely satisfied buyers: 52% for the new
                   Prius, up from 27% for the original Prius).
                 • Satisfaction has also significantly increased on:
                   o Interior-related items such as interior styling (62% completely satisfied buyers, up from 54% for the original
                      Prius), roominess (73%, up from 53%), luggage capacity (36%, up from 24%).
                   o Equipment level (61% completely satisfied buyers, up from 51%),
                   o Quality-related items like safety (71% completely satisfied buyers, up from 47%) and reliability (77%, up from 67%),
                   o Value for money (29% completely satisfied buyers, up from 24%),
                   o Performance-related items such as acceleration (52% completely satisfied buyers, up from 33%), road-holding
                      (61%, up from 47%), braking (69%, up from 54%) and sportiness (30%, up from 13%)
                 • Satisfaction is very high on environmental friendliness (with 91% of buyers completely satisfied)
                 • Satisfaction remains high (though it has decreased vs. previous generation, due to high and increasing customer
                   expectations) on fuel economy (with 64% completely satisfied buyers), quietness when driving (with 67% com-
                   pletely satisfied buyers), body workmanship & finish (with 71% completely satisfied buyers), no squeaks and
                   rattles (with 67% completely satisfied buyers)
  Survey: Prius General Perception and Knowledge
  Not only are Prius customers satisfied with the car, but an       perception of car owners within the Prius segment. For Toyota,
  independent survey commissioned by Toyota and conducted           this is a very important step as, together with increased sales,
  in the main five European markets (UK, Germany, France, Italy     it shows that people are becoming increasingly aware of the
  and Spain), shows that the general perception and knowledge       car and its technology and are embracing it. It is also further
  of the Toyota Prius has increased dramatically since the laun-    confirmation that Toyota’s strategy on the ultimate eco-car is
  ch of the new-generation Prius (January 2004). This survey not    correct and that the Toyota Prius is the most viable eco-car
  only included Prius owners, but also incorporates the general     available on the market at this time.

    Toyota Prius         2001       2002      2003      2004                                 Explanation
                           %         %          %         %

    Awareness             26         24        28         39       % of respondents who at least know the name
                                                                   (2-5 on 5 point scale)

    Knowledge              2          2         2         5        % of respondents who know it fairly well or very well
                                                                   (4-5 on 5 point scale)

    Positive              26         30        25         36       % liking the car out of those who at least know the name
    Awareness                                                      (7-10 on a 10 point scale)

    Technical             16         20        20         28       % scoring 8-10 on 10 point scale
    advancement

    Fuel economy          12         14        16         20       % scoring 8-10 on 10 point scale

    Performance           14         14        16         23       % scoring 8-10 on 10 point scale

    Safety                12         18        20         26       % scoring 8-10 on 10 point scale

                                                                                                                                        45


Prius - The European Car of the Year 2005
The new Toyota Prius represents the culmination of all Toyota’s efforts to promote a greener, cleaner
mobility solution, and those efforts have not gone unnoticed or unrewarded. The new Prius:



   The new Prius:

   • Is the first hybrid car to win the European Car of the Year award (2005);
   • Has won important awards in the areas of safety, environment, technology,
     design and others (see below);
   • Has received critical awards complemented by strong sales performance worldwide;
   • Has worldwide sales totalling 125,000 units in 2004, with 8,136 units sold in Europe
     (global sales thus exceeded Toyota’s initial sales target of 76,000 units by 64%);
   • Has a European sales target of over 20,000 units for 2005;
   • Is expected to see worldwide production increase to 180,000 units in 2005.


In 2005, the world’s best-selling hybrid car also became the        supported by the FIA (Fédération Internationale de
first hybrid ever to win the title of European Car of the Year.     l’Automobile). This test is particularly important as it measures
Having received votes from every member of the jury, the            emissions and fuel consumption of vehicles under several
Toyota Prius achieved 406 points, one of the highest scores         conditions, including high-speed, motorway driving with air
ever, with a large margin over second place.                        conditioner operation. Prius recorded the lowest emissions
                                                                    overall, and its fuel consumption was only beaten by diesel city
The Prius’ Hybrid Synergy Drive system has been named               cars.
International Engine of the Year 2004, with a record score. In
addition, it came top in three separate award categories in the     In October 2004, the Prius triumphed in the Challenge
same year, including Best Fuel Economy and Best New Engine.         Bibendum Rally, held at the Formula 1 racetrack in Shanghai,
                                                                    where it went head-to-head against the most prominent eco-
The new Prius has also been recognised in the 2004 and 2005         cars in the world, both prototype and standard-production
ADAC EcoTests, organised by Germany’s auto club ADAC and            vehicles.
     Incentives for Environmentally Friendly Vehicles
     Consumers are not the only stakeholders interested in the new              duties, etc.). The following chart shows some examples of the
     Prius. With a reduction in greenhouse gases ranking at the top             fiscal incentives currently available throughout Europe. Other
     of the European Union’s priorities, many EU Member States have             countries that also have similar incentives in place are Austria,
     started offering a variety of fiscal incentives towards the purchase       Cyprus, France, Monaco, Portugal, Spain, Italy, Slovenia,
     of environmentally friendly vehicles (annual taxation, VAT, import         Norway and Ireland.



                                   Country           Description                               Incentive        Frequency
                                                                                                 (Euro)


                                   The Netherlands   Exemption of luxury tax                         9,456        Once


                                   Belgium           Reduction of basis for taxable income           4,000        Once


                                   United Kingdom    Direct support scheme – Powershift              1,200        Once
                                                     (promotion of alternative clean
                                                     fuel initiatives)
                                                     Exemption of London Congestion Charge   £8 (approx. €12)     Daily


                                   Greece            Exemption of registration duty (25%)
                                                     Exemption of odd/even circulation               3,328        Once
                                                     system in Athens


                                   Sweden            50% reduction on benefits in kind                 519        Once


                                   Denmark           Preferential “green owner” tax
                                                     based on CO2 minimum advantage                    230      Annually



46


        Case Study: The London Congestion Charge
        One of the more interesting regulatory developments in the              without paying the fee – given that the fee was raised to
        field of transport has been the introduction of a congestion            £8/day (approx. €12) in July 2005, this gives a potential
        charge in London. The scheme was designed to reduce                     saving of £2,000 (approx. €3,000) a year for a London com-
        congestion in the very centre of the city by charging moto-             muter. All they need do is register the vehicle with TfL and
        rists £5 to enter the area between early morning and early              then enjoy the savings - and the benefits of the congestion
        evening, Monday to Friday. A system of perimeter cameras was            charge which has reduced traffic by some 20%, reducing
        established that could read car license plates and then match           journey times significantly.
        the details against a central database of fee payers. Failure
        to pay would result in heavy fines and, ultimately, confiscation        Sales of vehicles offering environmentally friendly technologies,
        of the vehicle for repeat offenders.                                    such as the hybrid Prius, have increased significantly as a
                                                                                result, helping to improve the air quality of one of Europe's
        Although conceived as a scheme to reduce urban conges-                  most congested cities.
        tion, the London scheme is also a very powerful environmen-
        tal tool. Toyota and other vehicle manufacturers worked
        together to persuade the regulatory authority, Transport for
        London (TfL), to exempt the cleanest vehicles. Hence the
        "congestion" charge acts as another incentive to purchase
        cleaner vehicles such as Prius. By linking qualification for the
        exemption to the UK Government's existing Powershift
        grant, only the very cleanest vehicles (those with emission
        performance more than 60% better than the relevant
        European Emission Standard) were exempt.

        The Toyota Prius easily meets this criteria so Prius owners
        who have need to drive into the centre of London can do so
After Sales
Every year, After Sales performance in environmental issues has         well as through working with Toyota’s network of retailers and
improved. This has been accomplished by Toyota’s continuing             repairers to ensure that they are in compliance with the company’s
efforts to procure environmentally friendly parts and materials, as     environmental guidelines.



     Some examples of After Sales environmental efforts are:

       • Continuously expanding Toyota’s remanufactured parts offering;
       • Launching Toyota’s own paint products, in cooperation with Dupont, that are fully in line with European environmental
         requirements.
       • After Sales also contributes to a “lean and green” repairers network through the use of an online repair manual,
        Tech.Doc. Use of the online version rather than a printed one saves the paper required for approximately 22,000
        manuals of 2,000 pages each.
Procurement of Environmentally Friendly Parts and Materials



Greening the Supply Chain
Greening the supply chain means that Toyota does not only look          It also works directly with suppliers when product innovations are
inwards to improve its environmental performance. Most of the           required. Some examples of such product innovations include
company’s parts and materials are supplied by third parties and         the:
Toyota therefore enlists the participation of those suppliers in the
effort to provide environmentally friendly parts and materials to its              • Remanufactured Parts
customers. To do this, Toyota developed a set of Environmental                     • SMART Repairs
Purchasing Guidelines (see Social Engagement Chapter), which                       • Chemicals & Oils
the company encourages suppliers to follow.


Remanufactured Parts                                                                                                                           47

Toyota is expanding its remanufactured parts range. By reusing          Three new product ranges were introduced on the European
many components and thereby reducing its demand for new raw             market in August 2003: engines, shortblocks and cylinder heads.
materials, Toyota also saves the energy needed to turn those raw        Sales of remanufactured starters and clutch kits decreased slightly
materials into finished products. The benefits of this approach are     in 2004 from the previous year. However, sales of other remanu-
reflected not only in the reduced environmental impact, but also        factured parts showed gains, notably the continued strong
in a lower cost of ownership, higher customer satisfaction and          increase in sales of power steering racks.
technical feedback to support future product development.


    Remanufactured Part                                                   Units sold per calendar year

                                                    2001                   2002                   2003                   2004

    ATM (automatic transmission)                     206                     281                    325                     444
    Starter                                       10,495                   9,750                  9,345                   9,309
    Alternator                                     9,256                   8,538                  8,020                   8,158
    Clutch Kit                                    24,341                  23,976                 25,048                  21,528
    AC Compressor                                    144                     354                    986                     991
    Power Steering Rack                                0                   1,450                  7,397                  10,302
    Engine*                                            0                       0                      2                      19
    Shortblock*                                        0                       0                     26                     131
    Cylinder Head*                                     0                       0                     23                     203
   * Introduced August 2003



Toyota has also coordinated the development and implementa-             bution centre, rather than directly from dealers to the supplier. In
tion of a more efficient parts-return system in Europe. Used parts      the long term, this will ensure that more cores are returned cor-
are returned through TPCE, Toyota’s main European parts distri-         rectly and that the system is managed more efficiently.
     SMART Repairs
     The SMART (SMall Area Repair Technique) Repair Programme
     was introduced several years ago as an initiative to reduce the
     environmental impact of repairs. Toyota developed and now
     offers its repairers a SMART kit that allows them to make minor
     repairs to slightly damaged materials or components, rather than
     making a full replacement. The idea is catching on. Customers and
     insurance companies alike are enthusiastic because of the lower
     repair costs. As a result, more repairers are opting to use the
     SMART kit. Currently, 15% of Toyota repairers have opted to offer
     SMART repairs.


     Traditional Repair                     SMART Repair
     Replace windscreen                     Windscreen repair
     Replace bumper, protectors, mirror     Exterior plastic repair
     Replace dashboard and other interior
     plastics                               Interior plastic repair
     Replace seat cover                     Velour repair
     Replace leather cover                  Leather repair




     Chemicals & Oils

          Toyota’s After Sales division has also sought to make environmentally conscious changes to the chemicals it uses.
           Some examples of these include:
48
                • Super Long Life Coolant
                   o Only needs to be changed every 150,000 km instead of 45,000 km
                • Fuel Additives (source: Chevron)
                   o Reduce exhaust emissions by up to:
                     -10% HC (hydrocarbons)
                     -23% CO (carbon monoxide)
                     -26% NOx (nitrogen oxides)
                   o Reduce fuel consumption
                   o Increase engine durability
                • Toyota Genuine Motor Oil
                   o Use of the Toyota 5W-30 fuel economy motor oil versus mineral oil reduces fuel consumption by 4.9%.
                     (Source: ExxonMobil and DAT Germany)
                • Synthetic Manual Transmission Fluid (source: Chevron)
                   o Better fuel consumption (-0.7%)
                   o Lower CO2 emissions (-8 g/km)



     These are only a few examples of the “green” products and ser-      repairers. Another Toyota effort is the Water-Based Paint Project,
     vices that Toyota promotes and recommends to its retailers and      which is outlined in the following case study.
  Case Study: Meeting Tomorrow’s Regulations Today
  Volatile organic compounds (VOC) are found in a wide range                           vent) will be banned in Europe and will no longer be available
  of products from paints, coatings and consumer healthcare pro-                       for sale.
  ducts to cleaning fluids. These compounds are the solvent
  contained in the product that evaporates into the atmosphere.                        Although legislators in each Member State can choose how
                                                                                       the guidelines are implemented, the most cost-efficient and
  For the automotive industry, such solvents are added during                          effective means for paint shops to comply with the regulations
  the paint application process in manufacturing or by the paint                       is to opt now for compliant products.
  technician in a “Body & Paint” operation. VOCs have been
  found to be a major contributing factor to ozone in the lower                        Toyota is proactively assisting its European network to meet
  atmosphere, a common air pollutant that has been linked to res-                      the terms of the legislation quickly, easily and in the most cost-
  piratory problems in certain individuals.                                            effective way by providing a paint refinishing product solution
                                                                                       at an early stage. The development, together with a leading
  The European Union is becoming increasingly stringent with                           paint supplier, of a complete VOC-compliant product range
  regard to the permissible amount of emissions produced by                            further demonstrates Toyota’s commitment to environmental
  vehicle refinishing products, aiming to reduce VOC emissions                         protection. These products are suitable for use in all European
  in solvents by 60% by 2007. Recent legislation calls for a limi-                     countries, taking into account repair habits and temperature
  tation in the total content of VOCs in these products in order                       constraints. Technologies that combine high solid and water-
  to prevent or reduce air pollution.                                                  borne products enable full compliance without affecting the
                                                                                       application process.
  The new legislation further requires, as of 2004, that all new
  Body & Paint shops be equipped to comply with the new                                Much of the organic solvent in the waterborne-basecoat pro-
  accepted VOC levels. All existing Body & Paint shops must be                         duct range has been replaced by water (fully de-ionised and
  converted by 31 December 2006, at the latest. At that time,                          de-mineralised water). For example, whereas a conventio-
  vehicle refinishing products that are non-VOC compliant                              nal base paint contains 85% organic solvents in their ready-to-
  (i.e. that contain more than the regulated maximum level of sol-                     use state, this hydro basecoat contains a maximum of 10%.

        VOC emissions: Total paint process                                              VOC emissions Solvant content
                                                                                        of ready-to-use basecoats
                    Traditional product offer   Toyota-DuPont cobrand product offers
                                                                                         100%
                                                                                                                                                            49
        100%                                                                                                                            Metallic
                                                          40% reduction                              85%                                Solid
                        2K cleancoat
                                                           in emissions                                     80%
                                                                                          80%
         80%
                          Basecoat
                                                                                          60%
         60%                                                                                                          88% reduction
                                                               HS dea                                                  in emissions
                                                           Hydro basecoat                 40%
         40%
                           2K filler
                                                             Repair filler                20%
                                                                                                                      10%     10%
         20%
                                                          1K metal primer                  0%
                          1K primer
                                                                                                     Solventborne      Waterborne
            0                                                                                         basecoats         basecoats




Retailer/Repairer Compliance
In order to ensure environmental compliance at retailer/repairer
level, Toyota last year initiated the Authorised Repairer                                       Under the programme, retailers/repairers are reques-
Environmental Risk Audit Programme (ARERAP). This programme                                     ted to fill out a check sheet to determine whether they
consists of an “Environmental Guideline for Retailers/Repairers” as                             have met the following five minimum environmental
well as a self-audit.                                                                           requirements:

A total of 2,879 out of 3,093 retailers/repairers (93%) conducted                                  1. Assignment of a person responsible for
the self-audit. Any necessary corrective actions are being followed                                   environmental affairs
up by the NMSCs and the retailers/repairers themselves.                                            2. Compliance with applicable environmental
                                                                                                      legislation
To track compliance with the company’s minimum requirements                                        3. Proper treatment of hazardous waste
for its retailers/repairers, Toyota has developed an intranet-based                                4. Compliance with local legal requirements
tool called the Toyota Service Marketing (TSM) Manual. Toyota’s                                       regarding wastewater discharge
field staff makes regular visits to network retailers/repairers and                                5. Proper recovery of air-conditioning refrigerants
enters any issues into the database to ensure quick follow-up and
monitoring.

				
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Description: The role of Sales & Marketing is to define the product range (specifications, price, colours, etc) and communicate it in a way that makes people want to drive