SUSTAINABILITY REPORT - TOYOTA SOUTH AFRICA MOTORS

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SUSTAINABILITY REPORT - TOYOTA SOUTH AFRICA MOTORS
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               SUSTAINABILITY REPORT

               T O Y O TA S O U T H A F R I C A M O T O R S
              Challenge
                2050
SUSTAINABILITY REPORT - TOYOTA SOUTH AFRICA MOTORS
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                                                          Toyota South Africa Motors (TSAM) is a well-governed

                                  South Africa’s
                                                           company which ensures the sustainability and

                                  approach to
                                                            upliftment of the societies in which we operate as well
                                                             as providing robust environmental stewardship.
                                                                 TSAM’s sustainability report aims to provide our stakeholders with a
                                                                  transparent overview of our social, environmental and governance
                                  Toyota

                                                                    performance for the period 1 April 2018 to 31 March 2019.

                                    REPORTING

TSAM is wholly owned by                        The report covers our operations in        We are committed to improving
Toyota Motor Corporation                       Durban, Sandton and Atlas. It also         the report’s quality and its
(TMC). As such we are guided                   outlines the performance of our            accessibility to our stakeholders.
by the vision and strategy of                  brands (Toyota, Hino and Lexus)            This report is available in print and
                                               and our activities relating to our key     online at www.toyota.co.za.
TMC and we encourage you to
                                               internal and external stakeholders.
read further about how Toyota                                                             TSAM values feedback from its
                                               There were no significant changes
embraces sustainability globally                                                          stakeholders on our Sustainability
                                               during the reporting period to the
at: http://www.toyota-global.com/                                                         Report. Any questions or feedback
                                               size, structure or ownership of TSAM.
sustainability/report/sr/.                                                                regarding this report can be
                                               The report’s structure and content
                                                                                          directed to:
                                               is aligned with TMC’s Sustainable
Toyota Motor Corporation (TMC)                 Management Report and international        Charmaine Reddy
                                               best practices as set out by the           Company Secretary and Legal Adviser
                                               Global Reporting Initiative (GRI).         creddy3@tsb.toyota.co.za
      Toyota South Africa (TSA)
                                               The performance data is reported to
                                               facilitate comparability to our previous
Toyota South Africa Motors (TSAM)
                                               year’s report.
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Toyota South Africa’s approach to reporting ...... IFC
Our performance summary .................................. 2
Toyota’s global vision ............................................ 4
                                                                           24
                                                                            SOCIETY
                                                                                Customer and quality first ............... 26

                                                                                Collaboration with business
                                                                                partners ........................................... 32

                                                                                Employees ....................................... 40

                                                                                Social contribution activities ........... 50

                                                                           56
An introduction to TSAM ....................................... 6
Chief Executive Officer’s message ....................... 8
Our brands .......................................................... 12
Our material matters .......................................... 22
Our material issues ............................................ 24
                                                                            ENVIRONMENT
                                                                                Our approach ................................... 57

                                                                                Structure .......................................... 57

                                                                                                                                                 TOYOTA SOUTH AFRICA MOTORS
                                                                                Emissions reduction ........................ 58

                                                                                Resource efficiency ......................... 62

                                                                                Society in harmony with nature ....... 64

                                                                           69
                                                                            GOVERNANCE
                                                                                                                                            SUSTAINABILITY REPORT 2018/19

                                                                                Approach and structures ................. 70

                                                                                Board of directors ............................ 72

                                                                                Committees ..................................... 72

                                                                                Ethics ............................................... 74

                                                                                Risk management ............................ 76

                                                                                                                                                   1
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                                our
                                PERFORMANCE
                                SUMMARY
                                Shareholders
                                                                                                                        2018      2017          2016
                                     Total domestic sales: Toyota, Lexus and Hino (units)                             133 603   129 073       117 071
                                     Passenger car sales: Toyota and Lexus (units)                                     70 170   125 326       113 525
                                     Light commercial vehicle sales: Toyota (units)                                    60 231    54 952        36 609
                                     Medium commercial vehicle sales: Hino (units)                                      1 711     1 717         2 112
                                     Heavy commercial vehicle sales: Hino (units)                                       1 491      882          1 367
                                     Automark used vehicle sales (units)                                               50 399    46 545        45 083
                                     Export units: Toyota                                                              52 528    43 776        53 322

                                Customers and quality
                                     COMPETITIVE CUSTOMER EXPERIENCE (%)                                                2018      2017          2016
                                     Toyota                                                                              93.6      92.7          92.8
                                     Lexus                                                                               95.1      92.1          91.6

                                Business partners
                                Suppliers
  TOYOTA SOUTH AFRICA MOTORS

                                                                                                                        2018      2017          2016
                                     Number of ISO14001-certified suppliers                                              149       132           112

                                Dealers
                                     TOTAL DEALERSHIPS                                                                  2018      2017          2016
                                     Toyota                                                                              194       194    1
                                                                                                                                                 198
                                     Lexus                                                                                19        191           17
                                     Hino                                                                                 66        66    2
                                                                                                                                                  65
SUSTAINABILITY REPORT 2018/19

                                     Automark                                                                            191       190           187
                                1.
                                      Full dealers (South Africa, Botswana, Namibia, Lesotho, Swaziland (eSwatini))
                                2.
                                      All dealers (South Africa, Botswana, Namibia, Lesotho, Swaziland (eSwatini))

      2
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Employees
                                                                          2018     2017       2016
Headcount (full-time employees)                                           7 378    6 690     6 927
Fatalities                                                                   0        0          0
Total injury frequency rate                                                1.50     1.64      1.62

Social contribution
                                                                          2018     2017       2016
Total social investment (Rm)                                               22.9     23.2      17.3
Dti Broad-based Black Economic Empowerment (B-BBEE) contribution level       7        8          8

Environmental stewardship
                                                                          2018     2017       2016
Production emissions (kilotonnes CO2)                                     129.5    130.6     140.7
Carbon intensity (kg CO2/vehicle manufactured)                           930.49   966.96   1 014.78
Water intensity (kl/vehicle manufactured)                                  4.73     4.79      5.01
Waste intensity (kg/vehicle manufactured)                                 20.04    18.74     18.26

                                                                                                           TOYOTA SOUTH AFRICA MOTORS
Volatile organic compounds (VOCs) emitted (g/m2 body paint applied)       18.44    17.92     19.90

                                                                                                      SUSTAINABILITY REPORT 2018/19

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                                TOYOTA’S                                                           TSAM acts in accordance with TMC’s Guiding

                                GLOBAL                                                             Principles to produce reliable vehicles and to
                                                                                                  sustainably develop society through constant

                                VISION                                                           innovation and the provision of high-quality
                                                                                                products and services.

                                        Toyota is striving to go beyond automobiles
                                       by becoming a mobility company. Our goal is
                                    to provide mobility for all, bring joy and freedom of
                                  movement to all people. Toyota will lead the way to the
                                future of mobility, enriching lives around the world with the
                                   safest and most responsible ways of moving people.

                                 Through our commitment to quality, constant innovation
                                and respect for the planet we aim to exceed expectations
                                 and be rewarded with a smile. We will meet challenging
                                   goals by engaging the talent and passion of people
                                        who believe there is always a better way.
  TOYOTA SOUTH AFRICA MOTORS

                                The Toyota Way                                                                           The Toyota ReBorn
                                We conduct business-specific methods and values:                                         strategy
                                Continuous improvement: We are never satisfied with where we are and                     During 2016, as part of a
                                consistently seek further knowledge to pursue higher values.                             worldwide TMC initiative, TSAM
                                                                                                                         launched the ReBorn strategy.
                                Respect for People: We respect all Toyota stakeholders and believe that the
                                                                                                                         This strategy is aimed at listening
                                growth of each employee will connect to the success of our business.
                                                                                                                         and responding to the ‘Voice of
                                Five values support the Toyota Way, namely:                                              the Guest’ and living our guest-
SUSTAINABILITY REPORT 2018/19

                                   Challenge: We form a long-term vision, meeting challenges with courage and
                                1.	                                                                                     first value throughout everything
                                   creativity to realise our dreams.                                                     we do, from sourcing components
                                   Kaizen: We improve our business operations continuously, always driving for
                                2.	                                                                                     to manufacturing, engaging guests
                                   innovation and evolution.                                                             and after-sales service. Each
                                                                                                                         operation assumes responsibility
                                   Genchi Genbutsu: We go to the source to find the facts to make correct
                                3.	
                                   decisions, build consensus and achieve goals at our best speed.                       for defining and implementing their
                                                                                                                         own ReBorn strategy and playing
                                   Respect: We respect others, make every effort to understand one another,
                                4.	
                                                                                                                         their part in contributing to the
                                   take responsibility and do our best to build mutual trust.
                                                                                                                         success of TSAM.
                                   Teamwork: We stimulate personal and professional growth, share the
                                5.	
      4                            opportunities of development and maximise individual and team performance.
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 Guiding Principles at Toyota
 The Guiding Principles at Toyota reflect the kind of company that Toyota seeks to be, in light of the unique management
 philosophy, values and methods that it has embraced since its foundation. TMC, together with its consolidated
 subsidiaries, hopes to contribute to sustainable development through its corporate activities, based on understanding
 and sharing of the Guiding Principles at Toyota.

 1                                                                              5
              Honour the language and spirit of the law                              Foster a corporate culture that enhances both
              of every nation and undertake open and fair                            individual creativity and the value of teamwork,
              business activities to be a good corporate                             while honouring mutual trust and respect
              citizen of the world.                                                  between labour and management.

 2                                                                              6
              Respect the culture and customs of every
              nation and contribute to economic and social                           Pursue growth through harmony with the global
              development through corporate activities in their                      community via innovative management.
              respective communities.

 3                                                                              7
                                                                                     Work with business partners in research and
              Dedicate our business to providing clean and
                                                                                     manufacture to achieve stable, long-term
              safe products, and to enhancing the quality of
                                                                                     growth and mutual benefits, while keeping
              life everywhere through all of our activities.
                                                                                     ourselves open to new partnerships.

 4
              Create and develop advanced technologies and
              provide outstanding products and services that
              fulfil the needs of customers worldwide.
                                                                                Toyota’s Olympic Vision
                                                                                Toyota is proud to be part of The Olympic Partner
                                                                                programme (TOP) as a mobility sponsor for the Tokyo
        CSR policy: Contribution towards sustainable development                2020 Olympic and Paralympic Games. We believe that
                                                                                the Olympic Games personify our ambition to transform
                                                                                our reputation from ‘car maker’ to a company that makes
                                                                                a meaningful contribution to society through:
                                Medium-      Annual
   Toyota          Toyota       to long-   directions:   Regular       Toyota   •	improved environmental responsibility that will
    Way            Global      term man-     global      business     Code of
                   Vision       agement    corporate     activities                see us lead the way in terms of hybrid technology,

                                                                                                                                                    TOYOTA SOUTH AFRICA MOTORS
    2001                                                              Conduct
                                  plan        policy                               vehicles with reduced CO2 emissions and meeting our
                                                                                   2050 Challenge (see page 10);
                                                                                •	bringing mobility for all. We want to be recognised as
                                                                                   a human movement company that brings personal
                                                                                   mobility, autonomous driving and out-of-the-box
  TSAM and other TMC subsidiaries take initiative                                  innovations; and
  to contribute to the harmonious and sustainable
                                                                                •	improving transportation management, including our
  development of society and the earth through all business                        drive for connected cars, transportation apps and
  activities that we carry out in each country and region,                         better infrastructure.
  based on our Guiding Principles. We comply with local,
                                                                                                                                               SUSTAINABILITY REPORT 2018/19

  national and international laws and regulations as well as                    Through our Olympic partnership we will awaken Ikigai
  the spirit thereof, and conduct our business operations                       (a reason for being, the thing that gets you up in the
  with honesty and integrity. In order to contribute to                         morning) through our ‘Start Your Impossible’ campaign.
  sustainable development, we believe that management                           This campaign is rooted in our belief that everyone has
  interacting with its stakeholders is of considerable                          an impossible, which we aim to unleash. In 2018 TSAM
  importance and we will endeavour to build and maintain                        implemented a Start Your Impossible campaign for
  sound relationships with our stakeholders through open                        employees to share inspirational stories or pledge to
  and fair communication. We expect our business partners                       start a new challenge by simply sharing on one of three
  to support this initiative and act in accordance with it.                     platforms, namely: internal mobility website (staff, dealers
                                                                                and suppliers), our closed Facebook page for staff,
                                                                                as well as a free SMS line.                                           5
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                                                   introduction to
                                                                                           TSAM is a key component of South Africa’s automotive
                                                                                           manufacturing sector. We play a pivotal role in driving
                                                                                           economic growth and creating employment.

                                                                                                                                   Established in 1961
                                                                                                                                         by Dr Albert Wessels
                                                   an

                                                      TSAM

                                                                                                                                                Over
                                                                                                                                               7 300
  TOYOTA SOUTH AFRICA MOTORS

                                                                         298 Dealers
                                                                         in South Africa and                                               employees
                                                                           BLNS countries
                                                                               (including satellites)
                                                                                                            Botswana
                                                Key competitive
                                                 advantages:                                Namibia
                                                                                                                                  Swaziland
                                        State-of-the-art assembly operations                                                      (eSwatini)
SUSTAINABILITY REPORT 2018/19

                                    We believe that a large part of our success
                                      is attributed to the way our value chain
                                       collaborates and engages to form an
                                                                                                        South Africa    Lesotho
                                                                                                                                                101
                                   integrated ecosystem – from parts suppliers                                                          component manufacturers
                                         to manufacturing, sales, our dealer
                                         network and our valued customers
                                                      or guests.
                                                                                                                       Wholly owned by TMC
      6
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Sandton, Johannesburg                     Head Office                     Marketing and Sales
Boksburg, Johannesburg Warehouse                                          Distribution of After-Sales parts
Prospecton Plant,                         Manufacturing and               Toyota Hilux, Fortuner, Ses’fikile, Corolla, Corolla Quest
Durban                                    assembly operations             Hino		 Dyna, Hino 300, 500 and 700-series
Imports                                   We import an additional 22 models from our global Toyota affiliates. All Lexus models are
                                          imported from manufacturing plants in Japan.
Exports                                   We also export vehicles to 75 countries throughout Africa, Europe and Latin America.
Dealer network                            Our vehicles are distributed regionally through our network of independently owned and run
                                          dealerships in South Africa, Botswana, Lesotho, Namibia and Swaziland (eSwatini). These include
                                          full dealerships and satellite services (that only offer parts and services).

                                              Our structure and business model

                                             Import duty
          Imported vehicles                                Vehicle cost

        Parts suppliers                   Manufacturing             Sales business       Dealer network            Customers

   Parts volume        Parts cost         Production volume                                                               Market share
                                                                                                           EXPORTS

                                                                                                                                                      TOYOTA SOUTH AFRICA MOTORS
RETAIL POINTS IN                                                                                                      Swaziland
SOUTHERN AFRICA                                                     South Africa Botswana      Namibia        Lesotho (eSwatini)         Total
Toyota        Full dealers                                                 173            6           12            1          2          194
              Automark satellite                                              3                                                             3
              Parts, Service and Automark satellite                           3                                                             3
              Parts and Service satellite                                     3           1            1            1                       6
                                                                                                                                                 SUSTAINABILITY REPORT 2018/19

                                                                           182            7           13            2          2          206
Hino          Full dealers                                                  45            3            2                       1           51
              Parts and Service satellite                                   13                         1                       1           15
                                                                            58            3            3            –          2           66
Lexus         Full dealers                                                  17            1            1                                   19
              Parts and Service satellite                                     6                                     1                       7
                                                                            23            1            1            1          –           26
                                                                                                                                          298
                                                                                                                                                        7
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                                CHIEF EXECUTIVE
                                OFFICER’S MESSAGE
                                Andrew Kirby
                                President and CEO
                                Toyota South Africa Motors

                                2018 was a pleasing year in which we
                                managed to remain resilient and grow our
                                volumes and market share in a declining
                                market. We navigated the headwinds in an
                                operating environment that continued to be
                                characterised by low consumer confidence
  TOYOTA SOUTH AFRICA MOTORS

                                and business uncertainty. As a business,
                                we remained robust and embedded vital
                                strategic advancements which will also lay a
                                good foundation for our business. These will
                                enable us to navigate the continually
                                changing landscape and evolve in the
                                coming years.
SUSTAINABILITY REPORT 2018/19

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Increasing volumes in a                       TSAM’s journey to                          The demand for new vehicles in
                                                                                         the South African market has been
declining market                              global competitiveness                     declining over the years. Our exports
TSAM’s performance in 2018 reflects           and exports                                into the rest of Africa have been
the strength of our brand coupled with        We restructured our business to            growing marginally while our exports
the diligent efforts of our dealer network    enhance our efficiencies and, therefore,   into Europe have remained stable. Sub-
as well as the results of the ReBorn          move towards a higher level of global      Saharan Africa is a key market which
strategy that was launched in 2016.           competitiveness in the TMC network.        has substantial growth potential for us
The strategy has evolved our approach         Internal initiatives such as the Big 5     to tap into in the coming years.
to guest-centricity and helped us to          competitiveness project, a benchmark
deliver improved vehicles that meet           against Thailand, and our efforts to       Countries in the rest of Africa have
the demands of our evolving customer          rightsize the business have placed us      identified the automotive sector as
profile. We have instilled the ‘Best in       in a good position to progress towards     a catalyst which could propel their
Town’ culture and mindset to assist our       our October 2021 roadmap.                  industrialisation roadmaps and assist
dealers in delivering unrivalled guest                                                   them to decrease their balance of
experiences at every touchpoint.              TSAM is also cognisant of further          payment challenges. Numerous
                                              initiatives which will need to be          enablers, such as the African
In 2018, we increased our                     implemented to remain competitive          Continental Free Trade Area (AfCFTA),
concentration on fleet sales and              toward 2026, when the replacement          have been deployed to facilitate this
servicing the demand for quality and          of our IMV (Hilux and Fortuner) is         development. TSAM and TTC are
reliable used cars through Automark.          expected.                                  collaborating with certain governments
This focus yielded good results and                                                      with the potential semi-knocked-down
played a key role in increasing our           Big 5                                      kit (SKD) hubs in Africa (Ghana and

                                              1
volumes in the declining market.                                                         Kenya) to support local manufacturing.
                                                       Manufacturing conversion          This initiative is in line with TSAM’s
Our role in the taxi industry has been a
                                                       cost reduction                    long-term vision of becoming TMC’s
key part of our contribution to affording

                                              2
                                                                                         mother plant for the continent.
mobility to South African communities.
We continued to satisfy the demand for                 Fixed cost
                                                       reduction                         The production of the Corolla sedan
the Ses’fikile in the taxi industry and the                                              model at our Durban plant will cease

                                              3
demand continues to increase.                                                            in December 2019. TSAM will start
                                                       Component/parts
                                                       cost reduction                    importing the new-generation Corolla
                                                                                         and will continue producing the current

                                                                                                                                        TOYOTA SOUTH AFRICA MOTORS
                                              4
                                                                                         model as the Corolla Quest. We are
                                                       Logistics cost
                                                                                         in the process of seeking approval
                                                       reduction
                                                                                         to produce a new passenger model.

                                              5
                                                                                         The approval process has been
                                                       Increase domestic and             challenging due to the constrained
                                                       export sales
                                                                                         South African market and the lack of a
                                                                                         volume-generating market in Africa.

                                                                                                                                   SUSTAINABILITY REPORT 2018/19

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                                CHIEF EXECUTIVE OFFICER’S MESSAGE (continued)

                                Transforming the                              TSAM along with six other original               showcase opportunities and also
                                                                              equipment manufacturers (OEMs) will              promote Tier-2 supplier capability
                                South African                                 be involved in the establishment of              and growth. For South Africa to
                                automotive sector                             a R6 billion automotive industry fund            expand localisation it is mandatory
                                TSAM believes it is essential to increase     (AITF) through the National Association          to develop and expand our Tier-2
                                the local content in South African            of Automobile Manufacturers of                   supplier base. As TSAM, we believe
                                vehicles.                                     South Africa (NAAMSA). The AITF gives            that this is where we will start to see
                                                                              us the opportunity to develop more               a real competitive advantage and
                                Currently, the volatile exchange rate         Tier 2 and 3 suppliers and to support            enable growth with sustainability for
                                influences the cost of importing              black ownership of vehicle dealerships.          the future.
                                vehicles and components as well               This will also enable us to achieve
                                                                              the level 4 B-BBEE certification that          •	In 2018 Toyota became the proud
                                as our profit margins on exports.
                                                                              is required for the second phase of               partner of the South African Sports
                                Furthermore, import duties, ad valorem
                                                                              the APDP.                                         Association for the Physically
                                tax, VAT and the CO2 tax cumulatively                                                           Disabled (SASAPD) – a sports
                                account for 42% of the retail price of
                                vehicles in South Africa.
                                                                              Some of our successes                             federation that develops and
                                                                                                                                promotes the sporting codes
                                                                              Toyota Dundee reopened as a satellite
                                                                                                                                offered at Paralympic level for
                                In 2018 the Department of Trade               dealer (part of the Mortimer and
                                                                                                                                athletes with physical disabilities
                                and Industry introduced an                    Thesele Group) in April 2018 and
                                                                                                                                and visual impairment. Furthermore
                                Automotive Masterplan which outlines          was later approved as a full dealer in
                                                                                                                                we inducted Start Your Impossible
                                government’s objective to increase            February 2019, with a 51% B-BBEE
                                                                                                                                challengers to continue driving our
                                local content in South African-made           shareholding by the Thesele Group.
                                                                                                                                Start Your Impossible ventures and
                                vehicles. The master plan will come into      Toyota Hyde Park opened in May of
                                                                                                                                help drive the momentum internally
                                effect from 2021 and run till 2035. It will   2018 and Toyota Citrusdal upgraded
                                                                                                                                in their respective areas.
                                build on the progress that has been           to a full dealer on 1 January 2019.
                                achieved by the current Automotive
                                                                              The Taxi Centre in Kuilsrivier, which
                                                                              forms part of Prieska and Ulundi
                                                                                                                             Our commitment
                                Production and Development
                                                                              satellite dealers, was approved as a           to environmental
                                Programme (APDP) which expires in
                                                                              full dealer.                                   stewardship and
                                December 2020.
                                                                                                                             corporate citizenship
                                                                              Engaging with our                              Toyota envisions a society where
                                  Automotive sector
                                                                              stakeholders                                   people, cars and nature can coexist
                                  Current                    Vision of the
                                                             Master Plan      •	The external affairs department has         in harmony. At TSAM we are working
  TOYOTA SOUTH AFRICA MOTORS

                                                                                 played a huge role in improving our         on numerous initiatives through Future
                                  •	Employs                 •	Employs          engagement with key stakeholders,           Toyota and other internal teams to
                                     110 000                    220 000
                                                                                 particularly with the government and        achieve this vision.
                                  •	Contributes    •	Increase the              regulators. TSAM, other OEMs and
                                     7% to GDP         proportion of
                                                                                 the Competition Commission are still        TSAM is committed to TMC’s ambitious
                                  •	30% of            local content
                                                       in vehicles               working to reach a solution which is        goal to reduce vehicle CO2 emissions
                                     South Africa’s
                                                       assembled in              mutually beneficial to everyone on          by 90% (based on 2010 levels) by
                                     total
                                                       South Africa              the right-to-repair (R2R) campaign.         2050. To sufficiently equip our leaders
                                     manufacturing
                                     output            from 38.7%                Our view is that this movement              on environmental challenges we
                                                       to 60%                    threatens the profitability of franchised   facilitated a four-hour training course
                                  •	14% of total
                                     exports                                     dealerships and, most importantly,          in collaboration with the University of
SUSTAINABILITY REPORT 2018/19

                                                                                 the safety of our vehicles.                 Stellenbosch. We are currently working
                                TSAM is committed to transformation                                                          towards the 2030 milestones (for more
                                                                              •	TSAM is an active supporter
                                efforts aimed at our dealer network,                                                         information view page 57). Alongside
                                                                                 of the National Association of
                                supplier base and senior leadership.                                                         the rest of TMC’s global affiliates,
                                                                                 Automotive Component and Allied
                                To support the transformation of                 Manufacturers (NAACAM) Supplier             we are committed to having a zero
                                our staff and to provide a pipeline of           show. The show promotes the                 environmental impact and achieving a
                                senior leaders we have revitalised               South African Automotive Master             net positive impact. TSAM is cognisant
                                our graduate programme and we are                Plan (SAAM)’s pillars of localisation       of the need to address the transport
                                focusing on improving our retention of           and supply chain transformation.            sector’s greenhouse gas (GHG)
                                African critically skilled employees.            It also allows us, as OEMs, to              emissions in South Africa.
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Toyota_Page 11_28 November 2019_Proof 9

Disappointingly, the uptake of EVs and HVs in the South African market has been                Acknowledgements
low. This dynamic is due to infrastructure challenges and the lack of national
                                                                                               My gratitude goes to the TSA board
incentives to support sales. TSAM has several initiatives aimed at the public to
educate and raise awareness around fuel consumption and other environmental                    and our management teams for their
benefits that accrue from using eco-friendlier vehicles.                                       diligent support and contribution to our
                                                                                               strong performance in 2018. The wise
TSAM actively contributes towards social upliftment and environmental initiatives.             counsel of the global Toyota Tsusho
Protecting our wildlife heritage is close to our heart. In particular, the plight of rhinos,   Corporation (TTC) leadership has been
as well as other endangered species, is a matter that requires our attention – hence           instrumental in our transition to a new
our commitment to supporting SANParks.                                                         organisational structure.

                                                                                               Our employees are the backbone of
  Outlook                                                                                      our company, I am grateful for their
                                                                                               unfailing support in ensuring that we
  I am pleased that we made some very important strategic steps to position our
                                                                                               continue to deliver reliable vehicles and
  business for the future. Although the automotive market has been subdued,
                                                                                               sustainable value to the society.
  we are committed to make the most of the prospects in the vehicle and
  non-vehicle products space, which we believe we are well positioned for.
  Our priority is to ensure that TSAM remains a dynamic and agile company –
  as such we are considering the introduction of a millennial board to ensure the
  continued progression of our ReBorn strategy. TSAM’s progression will also be
  supported by the new leadership behaviours which we launched in 2018:                        Andrew Kirby
                                                                                               President and CEO
    Self-regulate                                                                              Toyota South Africa Motors

    Empower others to correct you
    Speak last and let others present
    Insist that the project leader leads
    Add voices – facilitate all contributions

  Our guest-centric approach will continue to be the source of our competitive
  advantage and retention strategy. We will continue our emphasis on the ‘Voice
  of the Guest’ and respond to their needs at every touchpoint. TSAM’s dealers

                                                                                                                                                TOYOTA SOUTH AFRICA MOTORS
  will continue driving the ‘Best in Town’ philosophy and the ‘Keep It Genuine’
  campaign which is crucial to the safety and integrity of our vehicles. We are
  looking forward to the revamped e-Toyota platform and the added benefits it
  will yield.

  Globally, Toyota is working towards becoming a mobility services provider
  as opposed to merely being a provider of vehicles. We are in the process of
  developing financing models to generate new revenue streams.

  The outlook for the automotive sector, especially the premium segment will remain
  challenging and volatile in 2019. Continuing to deliver affordable and quality vehicles
                                                                                                                                           SUSTAINABILITY REPORT 2018/19

  to as many customers as possible will preserve our sales record. We are committed
  to demonstrating that we are globally competitive and capable of achieving the
  required volumes to make the production of a new model at our Prospecton
  facility viable. By successfully implementing the Global Toyota Parts Supply System
  (GTOPAS), TSAM will continue with its drive to become the hub for parts in Africa.

  Following the three-year wage agreement, which was signed in 2016,
  the National Union of Metalworkers of South Africa (NUMSA) will begin
  negotiations with OEMs in 2019. We aim to amicably reach a mutually viable
  agreement with them.

                                                                                                                                           11
12
     SUSTAINABILITY REPORT 2018/19   TOYOTA SOUTH AFRICA MOTORS

                                                                       our
                                                                             Toyota_Page 12_28 November 2019_Proof 9

                                                                  BRANDS

                           B
Toyota_Page 13_28 November 2019_Proof 9

                                          Our three brands – Toyota, Lexus and Hino –
                                          serve to meet the needs of a broad spectrum of
                                          customers, from entry-level passenger cars to
                                          large commercial vehicles. Through Automark we
                                          also offer customers reliable used cars. We treat
                                          our customers as guests from the moment
                                          they enter a dealership right through to our
                                          after-sales service and we maintain our strong
                                          reputation for quality, safety and reliability through
                                          our Toyota Way which emphasises Kaizen –
                                          continuous improvement and respect for people.

                                                   2019                        2018                   2018                       2017                        2016
SA SALES VOLUMES                                  target                      target                 actual                     actual                      actual
CBU                                           42 481                    39 873                       39 196                  38 588                   41 479
CKD                                           85 636                    81 620                       82 822                  79 952                   70 316
Hino/Dyna                                      4 510                     3 850                        3 774                   3 373                    3 913
Total                                        132 627                   125 343                      125 792                 121 913                  115 708
Export volumes                                43 249                    41 664                       46 307                  53 322                   45 043
Total sales                                  175 876                   167 007                      172 099                 175 235                  160 751
Total production                             130 970                   125 006                      135 100                 138 722                  118 674

                                                   2019                        2018                   2018                       2017                        2016
TSAM MARKET SHARE (%)                             target                      target                 actual                     actual                      actual
Total domestic: Toyota, Lexus and Hino               24.2                      23.8                        24.2                    22.9                     21.40
Passenger cars: Toyota and Lexus                     19.1                      19.2                        19.2                    18.7                     16.40

                                                                                                                                                                          TOYOTA SOUTH AFRICA MOTORS
Light commercial vehicles: Toyota                    32.2                      29.5                        32.2                    29.4                     29.40
Medium commercial vehicles: Hino                     23.0                      22.2                        21.6                    21.3                     25.26
Heavy commercial vehicles: Hino                       8.8                       9.6                         7.6                     7.4                      7.25

                                                                                  TOTAL
                                                                                  MARKET SALES                                                                       SUSTAINABILITY REPORT 2018/19

                                                                                                                     TOYOTA
                                           2002   2003   2004   2005   2006    2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017    2018

                                                                                                                                                                     13
Toyota_Page 14_28 November 2019_Proof 9

                                OUR BRANDS (continued)

                                TOYOTA
                                Toyota has been a well-loved, reliable and trusted brand in                             We move the public
                                                                                                                        The Ses’fikile holds a strong reputation
                                South Africa since 1961. Our vehicles are an integral feature of
                                                                                                                        for offering a safe and reliable mode of
                                the country’s social and business culture. We offer a vehicle for                       public transport. Ses’fikile contributes
                                                                                                                        13.27% to Toyota’s overall market
                                every requirement and taste.
                                                                                                                        share and is the second best-selling
                                                                                                                        model after the Innovative International
                                                                                                                        Multi-purpose Vehicle, or IMV (Hilux
                                Toyota reaffirmed its status as a brand     We are strongly committed to                and Fortuner). TSAM has been holding
                                of choice during 2018. We maintained        ‘doing the right things’ consistently.      well above 90% market share with the
                                our market-leading position in the sales    TSAM aims to make the necessary             Ses’fikile. In 2018 we introduced a taxi
                                market and increased our market share       refinements to our vehicle models           centre – Barloworld Toyota, Kuilsrivier
                                to 24.2% (2017: 22.9%). The Hilux,          based on the ‘Voice of the Guest’           and a 60 000km service plan. We also
                                which has been South Africa’s best-         to ensure that we improve our               assessed the prospect of introducing a
                                selling vehicle for more than 40 years,     customer experience and remain the          Coaster minibus (17 – 35 seater).
                                sold 40 018 units.                          ‘Best in Town’.
                                                                                                                        Going off-road
                                Dealers drive our success                   A car for every person                      TSAM’s participation in the Dakar Rally
                                The contribution of our dealer              TSAM’s ReBorn strategy has focused          is an important business tool. The race
                                channel is a remarkable factor which        on winning the hearts of first-             provides a platform for us to showcase
                                contributes to our success. We are          time vehicle owners and younger             the durability of our vehicles and the
                                appreciative of their continued efforts,    consumers as well as millennials/           “bold soul” of our local talent. In 2018
                                but we cannot become complacent             Afrilennials. We are revamping our          Toyota Gazoo Racing SA won the race
                                because there is always room for            approach to purchasing, marketing           which took place in Peru. The victory
                                improvement. We will continue our           and product features accordingly            came after achieving six podium places
                                drive to uphold our position as the         to meet the needs of our changing           since the Toyota Hilux’s debut in 2012.
  TOYOTA SOUTH AFRICA MOTORS

                                brand of choice.                            demographics.                               Our proudly South African Hilux V8 has
                                                                                                                        become the Dakar vehicle of choice for
                                                                            We value and prioritise the safety of the
                                                                                                                        both local and international competitors.
                                                                            people who drive our cars. Our internal
                                                                            safety specifications exceed national       TSAM also supports the Fortuner 4x4
                                                                            legislative requirements and we ensure      Challenge. The competition, which has
                                                                            that all our vehicles meet or exceed        been running for three years, enables
                                                                            these safety specifications.                four public participants to team up with
                                                                                                                        celebrities and compete in a range of
                                                                                                                        tasks. The winning participant receives
                                                                                                                        a brand-new Fortuner.
SUSTAINABILITY REPORT 2018/19

                                                                                                 2019          2018        2018           2017           2016
                                 TOYOTA SALES (UNITS)                                           target        target      actual         actual         actual
                                 Production volume                                            130 363       118 998     126 463        131 068        116 042
                                 Domestic sales                                               133 000       130 000     130 401        124 441        114 019
                                 Light commercial vehicle sales                                61 390         58 855      60 231        54 952         36 609
                                 Exports                                                       56 900         43 249      52 528        43 776         53 322
14
Toyota_Page 15_28 November 2019_Proof 9

                                                     New Toyota product launches in 2018
                   2 0 1 8 / 1 9
                   A W A R D S                       April 2018                •	Etios Limited Edition model
                                                     May 2018                  •	Hilux Dakar Limited Edition
                      Gold 2018                      June 2018                 •	Corolla Special Edition
                National Automobile                  July 2018                 • New introduction Rush model
             Dealers’ Association (NADA)
                                                                               •	Aygo (minor change)
            Dealer Satisfaction Index (DSI)
                       awards                                                  •	Prius (specification change)
                                                                               •	86 (specification change)
       Orchid for Rush Campaign – Jul 2018                                     •	Prado (specification change)
 Orchid for Corolla Beaded Billboard – Sep 2018                                •	C-HR (specification change)
 Orchid for Corolla Hatch Campaign – Feb 2019        August 2018               IMV (Hilux, Fortuner) (Mini-minor change)

   Sports Industry Awards 2018 – Fortuner 4x4       October 2018              Quest (specification change)
     Challenge wins Social Media Campaign of         February 2019             •	New Generation Corolla Hatch
               the Year – Aug 2018                                             •	Corolla Special Edition
               Adfocus Partnership of the                                      •	Yaris (specification change)
                 Year – Toyota & FCB –               March 2019                •	Prius (minor change)
                       Nov 2018
                                                                               •	New Generation RAV4
                                                                               •	Ses’fikile (specification change)

                           Toyota’s 5 Continents Drive Project a great success in Africa
Toyota has just completed its fifth           experiencing first-hand the way vehicle      The start-point for Team 2 in Namibia
consecutive leg of the 5 Continents           performance is impacted by the wide          treated the crew to some of the world’s
Drive (5CD) Project in Africa. The Africa     variety of driving conditions around the     most dramatic landscapes, including
leg comprised two routes: Arusha,             world and to gather new insights”.           sweeping deserts and glittering
Tanzania to Sandton, South Africa as                                                       salt pans. Namibia also lays claim
well as Windhoek, Namibia to Durban,          “We were able to get valuable hands-on       to the world’s highest sand dune
South Africa. The first drive, led by         experience on different types of roads       (the notorious Dune 7) and is one of
Team 1 Captain Bundo covered more             in Africa, receive valuable comments         the world’s most sparsely populated
than 4 000km including countries such         from our customers, and have close           countries.
as Tanzania, Zambia, Zimbabwe and             communications between Japanese

                                                                                                                                           TOYOTA SOUTH AFRICA MOTORS
Botswana.                                     and African colleagues in one team.”         “We trust that the experience was
                                                                                           both adventurous and rewarding.
The Team 2 drive, under Captain               Before coming to Africa, the 5CD team        But we know that the most important
Umeda, covered Namibia, Lesotho               faced unrelenting dust and heat in the       benefit will come from the valuable
and South Africa. The teams also              Australian leg in 2014, freezing cold        information you gathered from our
included members from TSAM                    and torturous passes in the Americas         roads, which we know will be used
and representatives from other                                                             to help us make ever-better cars and
                                              in 2015 and 2016, and the urban
African countries such as Tanzania,                                                        thus heed President Akio Toyoda’s
                                              highways of Europe in 2017.
Zambia, Zimbabwe, Congo and Côte                                                           call to put our vehicles to the ultimate
d’Ivoire. The teams covered more              Africa presented the team with a totally     test, across every possible terrain and
than 10 000km from the two drives.            new and varied set of challenges. Team       climate on every continent worldwide,”
The project also included spot drives                                                      adds Kirby.
                                              1 had to contend with unforgiving
in other countries such as Kenya,
                                                                                                                                      SUSTAINABILITY REPORT 2018/19

                                              terrain, high altitude in some parts, as
Morocco, Togo, Benin, Cameroon                                                             Team 2 of the 5CD was treated to
                                              well as sharing some of the worst roads      a warm African welcome with song
and Senegal.
                                              in the world with some of our beautiful      and dance upon arrival at the TSAM
In the words of President and CEO             wildlife. In Tanzania the team got to        Prospecton Plant in Durban. This event
of TSAM, Andrew Kirby, the main               experience extreme dirt-road driving         also marked the end of the Africa leg
purpose of 5CD is to “enable Toyota           on their way to the Ngorongoro District.     before the project moves to the next
technicians, engineers and a varied           They came to understand that durability      continent. Toyota believes that the
crew of white-collar as well as other         has to be one of the most important          data collected will be crucial towards
partners to get out from behind their         aspects when building vehicles for           making ever-better cars – not only for
work desks and actually feel the road,        African conditions.                          Africa, but for all Toyota markets.

                                                                                                                                      15
Toyota_Page 16_28 November 2019_Proof 9

                                OUR BRANDS (continued)

                                LEXUS
                                Lexus offers exceptional customer experiences. We deliver
                                vehicles with an inspired design philosophy, relentless innovation
                                and uninhibited performance which becomes a passionate,
                                moving experience.

                                The challenging economic environment          Our customer loyalty and retention           Beyond the challenges presented
                                continued to negatively impact the            has been very strong and will be a           by the poor economic environment,
                                premium car market during 2018.               catalyst for the brand’s sustainability in   the premium brands market segment
                                Lexus’ sales decreased to 864 units           the future. Our dealer network and our       has become heavily incentivised.
                                (2017: 885). Despite the subdued              employees played an instrumental role        The relevance of the premium
                                market, Lexus maintained a market             in maintaining our market share and          market has also been challenged by
                                share of 1.7% (2017: 1.5%) and we             remaining resilient in this challenging      mainstream brands, which are also
                                remain in a much better position              period. Therefore, it is essential to        offering vehicles of a similar quality and
                                compared to other premium brands.             ensure that we retain our employees.         specification level at much lower prices.

                                Lexus is on a continued pursuit of                                                         We introduced a new-generation ES
                                Omotenashi (Japanese for                                                                    and a new model (UX) during the last
                                ‘hospitality’). Our guest-centric                                                           quarter of 2018. The UX is Lexus’
                                approach is premised on an                               2 0 1 8                            first model in the small SUV market,
                                approach of personalisation,                           A W A R D S                          which is growing in popularity.
                                attention to detail and delivering                                                          Our range also comprises clean/
                                exceptional service. Upon                                                                   alternative energy vehicles. Although
                                purchasing a Lexus vehicle, each                      ES awarded                            the popularity of these vehicles is still
  TOYOTA SOUTH AFRICA MOTORS

                                guest receives a personalised                      Premium Sedan of                         low, we are in a strong position to
                                gift. Lexus includes the input                   the year by Autotrader                     capitalise on their growing demand,
                                of psychologists to understand               SA Guild of Motoring Journalists               which will be driven by related
                                customer satisfaction and                            Car of the year                        legislation in the coming years.
                                enhance the brand’s customer
                                experience.                                  Gold Award in Customer Service
                                                                            Experience as rated by Ipsos – only
                                                                            two premium brands achieved Gold
                                                                                status, i.e. Lexus and Audi

                                                                                    Silver Award NADA
SUSTAINABILITY REPORT 2018/19

                                                                                                    2019           2018       2018           2017            2016
                                 LEXUS SALES (UNITS)                                               target         target     actual         actual          actual
                                 Production volume                                                 1 000             874        897            942          1 111
                                 Domestic sales                                                    1 100           1 000        864            885          1 031
16
Toyota_Page 17_28 November 2019_Proof 9

     SUSTAINABILITY REPORT 2018/19

17
                                     TOYOTA SOUTH AFRICA MOTORS
Toyota_Page 18_28 November 2019_Proof 9

                                OUR BRANDS (continued)

                                HINO
                                Hino is a committed provider of products and support                                      We also aim to continue growing by
                                                                                                                          meeting our customers’ requirements.
                                services to professional truck users and freight operators in                             There is a growing shift in demand
                                the South African transport and logistics industry and broader                            from automated manual transmissions
                                                                                                                          (AMT) and manual gearboxes to
                                market. Our Total Support philosophy is ‘Keep On Trucking’.                               automatic transmissions in the
                                                                                                                          Hino 300 and 500 ranges.

                                                                                                                          In 2018 Hino worked on the
                                Hino South Africa (Hino SA) is an           house will play an integral role in driving   development of Hino Connect.
                                integral part of TSAM. We strive to         our sales in the future.                      The telematics system will be released
                                enhance our marketing capabilities and                                                    in 2020 and fitted into all Hino models.
                                                                            Through our 66 dealerships, Hino’s            It is also customisable to suit specific
                                maximise our sales volumes. Despite
                                                                            footprint in Southern Africa is               customer requirements. Hino Connect
                                operating in a currently stagnant truck
                                                                            the largest among truck brands.               will be fundamental for our buy-back
                                market, Hino performed remarkably
                                                                            Our production plant in Durban                programme. The system will enable our
                                well in 2018. Our sales and production
                                                                            produces 40 different derivatives of          dealer network to monitor the usage of
                                volumes increased significantly
                                                                            Toyota Dyna, Hino 300, Hino 500 and           vehicles to ensure that they can be sold
                                compared to 2017. We sold
                                                                            Hino 700 models, which cover the              as reliable used trucks.
                                4 408 units (2017: 3 747) vehicles and
                                                                            entire spectrum of commercial vehicle
                                achieved a production volume of 4 489
                                                                            needs. We also offer a full range of
                                (2017: 3 407). Our total sales figure
                                                                            buses from 25- to 65-seaters.
                                equates to 11.6% of the South African
                                truck market.                               Our Total Support philosophy
                                                                            enables us to go the distance for our
                                This performance was largely driven
                                                                            customers by delivering appropriate,
                                by the Dyna sales, which are now
                                                                            durable and reliable trucks as well as
  TOYOTA SOUTH AFRICA MOTORS

                                included in the light commercial vehicle
                                                                            comprehensive after-sales services/
                                segment. Our light commercial vehicle
                                                                            support and value-added services such
                                sales increased by 43.7%, while Hino’s
                                                                            as the Hino Care programme. Building
                                heavy commercial vehicle sales, which
                                                                            and maintaining trusted relationships
                                included the new Hino 500 Wide
                                                                            between Hino Motors Limited, Hino SA,
                                Cab models, increased by 23.5%.
                                                                            our dealer network and suppliers is
                                The establishment of Hino Financial
                                                                            a priority.
                                Services as an accredited finance
SUSTAINABILITY REPORT 2018/19

                                                                                                  2019           2018        2018           2017          2016
                                 TOYOTA SALES (UNITS)                                            target         target      actual         actual        actual
                                 Production volume                                               5 447           4 387       4 489          3 407         3 772
                                 Domestic sales                                                  4 950           4 400       4 408          3 747         3 572
                                 Light commercial vehicle sales (Dyna)                           1 500           1 000       1 179            820            93
                                 Medium commercial vehicle sales                                 1 790           1 710       1 734          1 717         2 112
                                 Heavy commercial vehicle sales                                  1 660           1 690       1 495          1 210         1 367
18
Toyota_Page 19_28 November 2019_Proof 9

We also worked on upgrading                 but also make a meaningful                  Customer retention is a key component
the e-Hino system to improve                contribution to the community.              of our sustainability approach.
communication between Hino SA               Hino Shelly Beach was awarded the           Our ‘Bring it Back’ campaign aims
and its dealer network. The system          title of Hino Dealer of the Year for 2018   to encourage vehicle owners to
enables our dealer network to view an       while Subbeshin Pillay was presented        bring trucks in for servicing at our
integrated vehicle history from ordering,   with the Hino Knight of the Year award.     dealerships. We have a two-year
through to production, sales and after-                                                 warranty on parts and an extended
sales servicing. The system supports        Training is a vital component of            five-year vehicle warranty. Fleet owners
standardisation of dealer and customer      meeting the challenges of trucking          have already started yielding great
communication as well as quality            in the future. The Hino Learnership         benefits from ‘Keeping Your Hino
management throughout the vehicle’s         Programme (HLP) aims to provide a           Genuine’.
life span.                                  pipeline of young sales executives for
                                            our Hino dealer network. Through the        Internationally Hino will maintain its
There has been growing demand               nine-month programme learners will          focus on customer retention, product
for Hino trucks in the export market.       be able to tailor a requisite truck and     line-up improvements, strengthening
We are targeting to continue servicing      finance package in accordance with          our dealer network and staff
the growing demand in Zimbabwe,             the customer’s needs. In 2018 we            development. We are committed to
Zambia, Mozambique and Malawi.              introduced an accredited Supply Chain       delivering a lower cost of ownership
The Southern African Customs Union          Management course that employees            and higher levels of customer
(Botswana, Lesotho, Swaziland               from Hino SA and its dealers                satisfaction. Hino has recognised
(eSwatini) and Namibia (BLSN                embarked on.                                the growth potential of the extra-
countries)) has also shown great                                                        heavy commercial segment. We aim
potential, most notably in Namibia.                                                     to develop a dedicated department
For Hino SA to continue servicing this                                                  to ensure that we increase our
growth in demand we may be required                                                     market share.
to expand our production plant.                           2 0 1 8
                                                        A W A R D                       Hino aims to move towards vehicles

                                                                                                                                        TOYOTA SOUTH AFRICA MOTORS
We maintained our strong relationship                                                   which rely on four alternative fuel
with the farming community by                                                           sources: diesel-electric hybrids, plug-
delivering water donated by TSA to                                                      in hybrids, pure electric power and
Beaufort West during the drought                                                        hydrogen fuel cells by 2025.
period. We recognise Hino Knights, an
elite group within the dealer sales force          Gold 2018 National
who are not only excellent salespeople             Automobile Dealers’
                                               Association (NADA) Dealer
                                             Satisfaction Index (DSI) awards                                                       SUSTAINABILITY REPORT 2018/19

                                                                                                                                   19
Toyota_Page 20_28 November 2019_Proof 9

                                OUR BRANDS (continued)

                                AUTOMARK
                                Since its inception in 1982 Automark has strived to provide quality certified used vehicles. We thus
                                provide customers with peace of mind when purchasing a used car. Automark’s world-class focus
                                on customer experience, vehicle quality and safety remains aligned to the Toyota Way.

                                The demand for used vehicles has               In conjunction with TTC we have made        models are also eligible for the Toyota
                                grown in recent years. According to            efforts to assess the prospects of          Genuine extended warranty. This is
                                TransUnion, the ratio indicates that           driving the Automark brand into the         part of our ReBorn strategy, which
                                finance houses are financing 2.03              rest of Africa.                             aims to strengthen customer retention.
                                new vehicles for every used vehicle.                                                       We strive to reward customer loyalty
                                Our aim is to achieve a 1:1 ratio              We guarantee that all Automark              at a time of vehicle replacement by
                                between new vehicle sales and private          vehicles have gone through a range          establishing a used car service that
                                customer used vehicle sales. We have           of tests to ensure the quality is           provides ultimate customer experience
                                competed well in a highly saturated            maintained. The Automark Promise            and offers the best trade-in value.
                                environment, which has replaced direct         also certifies that the vehicle is backed
                                customer engagement with online sales          by Toyota. Our policy on all vehicles
                                and trade-in opportunities. In 2018            includes a seven-day return clause if
                                Automark increased its sales volumes           the customer experiences a serious
                                to 50 399 (2017: 46 545).                      problem with the vehicle. All Toyota
  TOYOTA SOUTH AFRICA MOTORS

                                          1
                                                                  High
                                                                                   High customer             Continuous                 Car kept in
                                                           customer service
                                                                                   satisfaction              genuine service            good condition
                                                            in after service

                                                                                       Reason for used car as a customer retention tool

                                          2
                                                                 Good price                                  Ultimate
                                                                                   Best trade-in                                        Repurchase
                                                                  offer for                                  customer
                                                                                   price                                                Toyota
                                                                  trade-in                                   experience
SUSTAINABILITY REPORT 2018/19

                                                                                                     2019          2018         2018         2017          2016
                                 TOYOTA SALES (UNITS)                                               target        target       actual       actual        actual
                                 Automark used vehicle sales                                        52 000       50 000        50 399       46 545        45 083
                                 New vehicle domestic sales                                        133 000      123 800    130 401         124 441       114 019
20
Toyota_Page 21_28 November 2019_Proof 9

TOYOTA FINANCIAL
SERVICES
Toyota Financial Services (TFS) is a key pillar of the TSAM ecosystem. We are a captive finance
company with the sole purpose of supporting and improving sales of Toyota, Lexus and Hino
vehicles. By offering finance to qualifying applicants we play a significant role in supporting the
dealer network, retail customers and TSAM to achieve their goals.

In 2018 we managed to maintain              balanced with responsible credit                   TFS aims to continually develop
our presence as a financial institution     lending practices. It is our intention to          products and solutions which
despite the challenging macroeconomic       always conduct our business ethically              support TSAM’s brands. As the
environment. TFS financed 45 437            and in a legally compliant manner,                 business continues to transform into
vehicles at a conversion rate of 58.16%.    acting to the best of our abilities for            a mobility company, we are intent
Fewer people qualify for finance and        the greater good of our business and               on evolving our offering too.
the volume of finance transactions we       our stakeholders. In conjunction with
are concluding has decreased due            the BankSeta we upskill our teams
to the increasing levels of household       and the dealer network through an
indebtedness linked to the slowdown in      accredited training programme, which                                        OM OF MO VEM E
                                            is designed by TFS and facilitated                                EED                                 NT
the economy.                                                                                             FR
                                                                                                                       TIO N PL AT F
                                            through TALA, TSAM’s corporate                                         SAC                      OR
TFS operates in a highly regulated          training division. TFS is committed                               AN                                       M
                                                                                                         TR              R ev o lutio ni   se
environment and we apply sound              to driving transformation. We run                                       |
                                                                                                               n                                tr a
corporate governance principles.            a learnership which specifically                              ai

                                                                                                                                                   di
                                                                                                 ch

                                                                                                                                                       ti o
The benefits of the rapidly evolving        aims to develop the skills of
                                                                                                   lue

                                                                                                                                                           na
financial services solutions must be        people with disabilities.
                                                                                        E xpand va

                                                                                                                                                           l bu

                                                                                                                                                                                TOYOTA SOUTH AFRICA MOTORS
                                                                                                                                                                sin e ss
                                                                                                                    TRADITIONAL
                                                                                                                     BUSINESS

                                                                                                         Fleet                         Digital

                                                                                                                          Mobility

                                                                                                                                                                           SUSTAINABILITY REPORT 2018/19

                                                                                                                                                                           21
M
                                Toyota_Page 22_28 November 2019_Proof 9

                                our
                                MATERIAL
                                MATTERS
  TOYOTA SOUTH AFRICA MOTORS
SUSTAINABILITY REPORT 2018/19

22
Toyota_Page 23_28 November 2019_Proof 9

Our material matters are predominantly aligned to TMC’s global approach to sustainability. To ensure that they remain relevant
in the South African context TSAM also reviews and refines the material matters regularly. Our senior management revisits the
matters annually. Additionally, we periodically conduct reviews of key documentation, detailed assessments based on surveys
as well as one-on-one discussions with key internal and external stakeholders.

Our material matters are segmented according to our sustainable business model’s three non-financial drivers: society,
environment and governance.

1        SOCIETY
                                           Collaboration with
                                                                                              Material theme        Material issue

                                                                                                        Social contribution
  Customer and quality first               business partners              Employees                     activities

  •	Ensuring customer                     •	Suppliers                   •	Performance                •	Community support
     satisfaction                          • Dealers                         management                 •	Employee involvement
  • Service excellence                     • Enterprise development       • Training and development    •	Initiatives for improving
  • Resolving issues                       • Government                   • Diversity and inclusion        traffic safety
  • Ensuring quality                       • Unions                       • Safety                      •	Creating an enriched
                                                                          • Health and well-being          society
                                                                          • Respect for human rights

2
                                                                                                                                            TOYOTA SOUTH AFRICA MOTORS
            ENVIRONMENT
  Emissions reduction                                  Resource efficiency                    Society in harmony with nature

  •	Challenge 1: new vehicle zero CO2                 •	Challenge 4: minimising and         •	Challenge 6: establishing a future
     emissions challenge                                  optimising water usage                 society in harmony with nature
  •	Challenge 2: life cycle zero CO2                  •	Challenge 5: establishing a
     emissions challenge                                  recycling-based society and
  •	Challenge 3: plant zero CO2                          systems
     emissions challenge
                                                                                                                                       SUSTAINABILITY REPORT 2018/19

3 Governance
            GOVERNANCE
                                                       Ethics                                 Risk management

  •	Approach and structures                           • Ethics                               • Risk management
  • Compliance

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                                                                                    society
                                                                                    TSAM’s business activities are designed to
                                                                                    deliver sustainable growth in society. We are
                                                                                    guided by values such as ‘safety and peace
                                                                                    of mind’, ‘environmental sustainability’ and
                                                                                    ‘Waku-doki’ (excitement and exhilaration that
                                                                                    wows you).
  TOYOTA SOUTH AFRICA MOTORS

                                                                                                                          Material theme       Material issue

                                Material issues
                                                                           Collaboration with                                      Social contribution
                                  Customer and quality first               business partners          Employees                    activities

                                  •	Ensuring customer                     •	Suppliers               •	Performance management    •	Community support
SUSTAINABILITY REPORT 2018/19

                                     satisfaction                          • Dealers                  • Training and development   •	Employee involvement
                                  • Service excellence                     • Enterprise development   • Diversity and inclusion    •	Initiatives for improving
                                  • Resolving issues                                                  • Safety                        traffic safety
                                  • Ensuring quality                                                  • Health and well-being      •	Creating an enriched
                                                                                                                                      society
                                                                                                      • Respect for human rights

                                               26                                   32                           40                          50
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The TMC Corporate                                                              The TSAM approach
Social Responsibility (CSR) policy                                        TSAM’s approach to sustainable development
Since its foundation TMC has continuously striven to contribute            is aligned to TMC’s CSR policy and Guiding
to the sustainable development of society by manufacturing            Principles. We realise that we can play a positive role
and providing innovative and quality products and services.           in the societies and environment in which we operate
Motor vehicles greatly expand the freedom of mobility, but         through contributing to economic and social development
impact society and the environment. As such TMC and its               and working in harmony with nature. We engage our
subsidiaries take ownership and initiative to contribute to        stakeholders to build trust, meet and exceed expectations
the harmonious and sustainable development of society and             and find innovative, collaborative solutions to address
the earth through all our local, regional and global business         key sustainability risks and opportunities. Our team is
activities, based on our Guiding Principles. These principles           committed to creating sustainable mobility for all –
express our engagement with stakeholders such as customers,                       in a safe and responsible manner.
employees, our business partners (suppliers and dealers), our
shareholders and global society/local communities.

We strive to comply with local, national and international laws and
regulations as well as the spirit thereof and we conduct our business operations
with honesty and integrity. In order to contribute to sustainable development,
we believe that management interacting with its stakeholders is of considerable
importance, and we will endeavour to build and maintain sound relationships with
our stakeholders through open and fair communication. We expect our business
partners to support this initiative and act in accordance with it.

                                                                                                                                     TOYOTA SOUTH AFRICA MOTORS
                                                                                                                                SUSTAINABILITY REPORT 2018/19
                Challenge
                  2050

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                                CUSTOMER and quality first
                                                                          Toyota adheres to the principles of putting the ‘guest first’ and
                                                                          ‘quality first’ in everything we do. By listening and responding to
                                                                          the ‘Voice of the Guest’, we have a mechanism which enables
                                                                          us to attract and retain customers.
                                                                          Toyota’s guest-centric approach places effort on ensuring service excellence and
                                                                          quality as well as effectively resolving issues where they arise. With our commitment
                                                                          to Kaizen, continuous improvement is driven from our manufacturing plant
                                                                          through to customer engagement. TSAM constantly re-evaluates and revitalises
                                HIGHLIGHTS                                its approach to customer service through continuous improvement. Our ReBorn
                                •	Promotion of the ‘Voice of the         strategy ensures that we continuously improve our guest relations as well as the
                                   Guest’ and a +Alpha experience         quality, safety and affordability of our vehicles.
                                   to attract guests and drive
                                   retention
                                •	Enhancement of the MyToyota
                                   app to incorporate more user-
                                   friendly features and enhanced
                                   functionality
  TOYOTA SOUTH AFRICA MOTORS

                                CHALLENGES
                                •	Adapting to the speed of change
                                •	Tracing vehicle owners as part of
                                   the Takata airbag recall campaign
SUSTAINABILITY REPORT 2018/19

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Ensuring customer                                                           delivering what guests require.          engagement. Toyota’s view on guest
                                                                            We specifically recruit employees        retention is not only focused on repeat
satisfaction                                                                with the right attitude and an           business — our intention is to cultivate
The sustainability of TSAM is                                               aptitude for hospitality. The Toyota     love for the brand.
intrinsically linked to our ability to retain                               Touch programme develops Toyota
and expand our valued customer base.                                                                                 The MyToyota application enables
                                                                            ambassadors who live the Toyota
Therefore, our key priority is to maintain                                                                           owners to manage and monitor various
                                                                            values. In 2018 we held 58 sessions
high levels of guest satisfaction which                                                                              aspects of their vehicle ownership
                                                                            for 3 568 employees and dealer staff
cultivates loyalty.                                                                                                  digitally.
                                                                            through the programme. TSAM also
Guest-centricity is a key component                                         collaborates with the TMC global
                                                                                                                     In 2018 we listened to the ‘Voice of the
of our value proposition. Listening to                                      network to establish and adopt
                                                                                                                     Guest’ and made our vehicles more
the ‘Voice of the Guest’ is a crucial                                       best practices.
                                                                                                                     attractive by increasing our focus on
component which ensures that we                                                                                      accessories. Through interdepartmental
                                                                            We aim to meet the ever-evolving
deliver a positive experience. This
                                                                            needs of our guests. To stay relevant    collaborations with the vehicle planning
philosophy underpins our approach
                                                                            in a changing world, we have a           team, we have introduced more
to guest experience and ensures that
                                                                            ‘Future Toyota’ team which focuses       attractive accessories to our various
we listen, and we are responsive to
                                                                            on building, identifying and driving     models which are relevant to the
our guests’ expectations. It is built on
                                                                            projects which focus on transforming     lifestyle requirements of our guests.
the principles of convenience, fairness
                                                                            our digital support capabilities and     The introduction of Toyota-certified
and transparency, convenience,
                                                                            guest-centricity. The ‘Voice of the      accessories at our dealer network has
personalisation and collaboration.
                                                                            Guest’ enables us to identify, develop   made us a one-stop shop for authentic
Successfully delivering this experience                                     and implement many new processes,        parts and accessories. This also
requires an engaged staff complement,                                       systems and technologies which           contributes to our ‘Keep It Genuine’
committed to understanding and                                              enhance our customer experience and      campaign.

                                                                                                                                                                     TOYOTA SOUTH AFRICA MOTORS
                              |   B EST IN T
                                               OW
                         AY                         N
                     W
                TA                                      |
           YO

                                                            TO
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                      Guest-
                                                             YO
  THE

                                                             TA T

                     centricity
                                                                  O
  |

                                                                 UCH MO
 ISI O N

                Accuracy + Caring
   RV

                                                                        D

                    = Trust
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      OU

                                                             EL

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