A

TOYOTA’S 21ST CENTURY

DIVERSITY STRATEGY
A Comprehensive Program for Minority Participation
in Toyota Today and Tomorrow
B
 1

Toyota’s 21st Century Diversity Strategy

Introduction
Toyota Diversity Strategy

Section One
Diversity and The Toyota Way —Our Guiding Principles

Section Two
Procurement —Doing Business with Minority-Owned Companies

Section Three
Advertising—New African-American Advertising Agency

Section Four
Dealer Representation—Creating Successful Minority Ownership

Section Five
Employmen t—Enhancing Minority Representation and Inclusion

Section Six
Retail Initiatives —Avenues for Increasing Minority Participation

Section Seven
Community Involvement —Supporting Minority Communities and Causes

Section Eight
Diversity Advisory Board —Outside Advice and Accountability

Section Nine
Implementation and Accountability —Moving the Agenda Forward
 2

The Toyota Diversity Strategy

Leadership is a choice we make every day at Toyota. Over the last four decades,
we have redefined leadership within our industry by constantly moving the
benchmark of quality, corporate responsibility and best practices. With a
comprehensive strategy that is firmly rooted in the Toyota principles of contin-
uous improvement and respect for people, we now have the opportunity to
become a leader in corporate diversity. We are pleased to present the Toyota
Diversity Strategy, a ten year, multi-billion dollar sustainable commitment to
minority participation in Toyota—today and tomorrow.

The Toyota Diversity Strategy outlines the processes and programs we will use
to achieve our diversity goals. The programs discussed in this document are
significant and innovative and will impact our organization in meaningful
ways. This plan has received commitment from the highest-level officials in
Japan and our senior leadership in North America.

Essential Elements
At the core of our plan are elements from which we will build a sustainable
diversity platform:
. We aligned our diversity commitment to the tenets of the
Toyota Way, “respect for people” and “continuous improvement.”
. We secured the support of our senior management.
. We established real goals — ones that are actionable, ones that stretch us
beyond the status quo, and, most importantly, ones that we can achieve
now.
. We have made ourselves accountable. We have established criteria by
which we will measure change and by which we will be judged.
. We have committed to a training and education program to acquire
new skills and gain new understanding.
. We created a diversity management structure with the authority and
conviction to push our organization toward its vision.
. We have committed to an ongoing communication strategy. We will
communicate our commitment and progress in diversity to
all who have a stake in the future of Toyota.
 3

Nine Diversity Initiatives

Toyota’s diversity strategy will impact our workplace, our dealerships, our
business partners and the larger community. The initiatives discussed in this
strategy range from increasing minority representation in senior management
to addressing the under-representation of minorities in retail management
positions. We are devoting substantial resources (both human and financial) to
ensure that all aspects of the plan are fully staffed and fully financed. Further,
Toyota is taking the lead in fostering diversity throughout the automotive
industry. Two programs in particular address systemic issues in the retail
sector and will bring genuine, tangible, and widespread economic benefits to
minority communities.

A Better Toyota
Toyota sees diversity as a pathway to create a better Toyota. Success in diversity
gives Toyota access to the best and the brightest. It creates opportunities for
new partnerships. Diversity allows Toyota the ability to fully participate in
today’s changing marketplace. Diversity gives Toyota additional ways to make
a difference and to earn the respect of all of our communities. In short, it
provides Toyota with a new way to fulfill its mission —to become the most
successful and respected car company in America.
 4

Diversity and the Toyota Way

Our Guiding Principles

Over the next ten years, Toyota will make a multi-billion

dollar investment in diversity and align diversity with its
mission and core business strategies.

The Toyota Way is based on the legendary manufacturing system that has
helped Toyota build some of the best and most reliable cars in the world.
The Toyota Way is more than a set of tools and techniques. It is an attitude, Our Commitment
a philosophy and a culture that permeates all that Toyota does, including . Toyota is committed to
our quest for leadership in diversity. becoming the industry
leader in diversity.
Positioned within the Toyota Way, the diversity strategy represents a fun-
damental sea change in the way we do business and think about doing . Over the next 10 years,
business. For Toyota, diversity is an opportunity to continuously improve Toyota will make a signifi-
every aspect of our business and to show our respect for people. cant impact in the areas
of minority procurement,
dealership development,
management development,
employment, job training,
and community support.

Toyota Diversity Advisory Council

Community Involvement

Job Training

Retail Management Development

Minority Advertising

Dealer Representation

Procurement

Employment

Diversity Management Structure

 5

Procurement
Doing Business with Minority-Owned Companies

In 2002, Toyota will spend $700 million

with minority-owned businesses.

Toyota seeks long-term quality relationships with its business partners

and suppliers. Partners and suppliers are considered part of the
Toyota family and are an integral part of the legendary Toyota supply Our Commitment
chain management network. . TMMNA will purchase at
least $600 million from
Building on the success of the minority procurement program that started
MBEs in 2002, surpassing
just four years ago and has already made great strides, Toyota is on track its 5% minority procure-
to become an industry leader in minority supplier development. In addition ment goal.
to its direct investments, Toyota leverages its relationships with all of its
suppliers to create a second tier of minority purchasing. This creates even
. Toyota numbers are in
more economic opportunity for minority businesses. Toyota’s procurement addition to the $100
efforts will include the diversification of our professional service providers. million in confirmed Tier
Two minority purchasing
Toyota builds accountability into its minority procurement systems. Its at TMMNA.
procurement program offers a state of the art training program. Toyota’s . TMS will purchase at
opportunity fair is the largest in the industry, attracting thousands of least $100 million from
minority vendors each year. MBEs in 2002, including
professional services.
. TMS will achieve its 5%
minority procurement
goal by 2003 and will
impose a 5% goal on its
Minority Expenditure Trend
key Tier Two suppliers.
$ Million
. TMS plans to set a goal of
700 putting $100 million into
minority and women-owned
600
money management firms
by the end of 2002.
500
. Toyota’s financial services
400 company will continue its
use of minority investment
300 banking firms in connection
with its ongoing funding
200
efforts.
100

1997 1998 1999 2000 2001 2002

Projected
 6

Advertising
New African-American Advertising Agency

Over the next three years Toyota will spend $150 million
on African-American and Hispanic promotional programs
and establish a new relationship with an African-American
advertising firm.

Loyal and satisfied customers are essential to Toyota’s business. To contin- Our Commitment
ually grow our market share, we must connect with all of our potential . Toyota’s commitment is to
customers in meaningful and creative ways. This is especially true in a capture the full promise
marketplace where we must be heard above the cacophony of competing of the ethnic marketplace.
advertising messages. In a growing diverse marketplace, Toyota must have We bring to this goal a
advertising partners who bring a wide array of perspectives, creative minimum commitment
solutions and energy to our business. These partners will help Toyota realize of $50 million annually
the promise of a diverse market. to African-American and
Hispanic marketing and
According to the National Association of Minority Automobile Dealers, advertising firms, which
approximately 15% of American new car buyers are minorities. This number will be split roughly on
is substantial and represents tremendous growth potential for Toyota a 50-50 basis.
among this important group.

Conill Advertising has helped Toyota reach the Hispanic market. In

September 2001, Toyota will enter into a new relationship with an
African-American owned advertising firm to extend Toyota’s reach to
the African-American market.

To further ensure that Toyota’s marketing materials are effective and appro-
priate for multi-cultural audiences, Toyota has drawn on its diverse employee
base to establish an Advertising Diversity Awareness Panel. On a frequent
basis, the panel reviews upcoming advertising and provides feedback and
insights on the messages, images and cultural context of the materials.

In a multi-cultural society, where communication is even more complex,

Toyota is making sure its messages to all audiences are consistent with a
pillar of the Toyota Way, “respect for people.”
 7

Dealer Representation
Creating Successful Minority Ownership Interests

Driven by a vision-goal to lead the industry in successful

minority dealer ownership in terms of profits and
per store sales, Toyota will add 4 to 6 new minority
dealers each year over the next 10 years and increase
our dealer development budget to $25 million for 2002.

When it comes to Toyota dealerships, our aim is clear: To have the best
dealers in the industry selling the best products in the world. This philoso-
phy extends to Toyota’s minority dealership program and is the reason Our Commitment
Toyota’s dealer diversity program is one of the most successful . Building on the success
in the industry. that has made Toyota #2
in the industry for percent-
While the industry tendency is to emphasize quantity over quality when it
age of minority ownership
comes to minority dealerships, Toyota takes a careful approach to increasing and #1 in minority dealer
its dealer count. This approach results in dealership values far exceeding success, Toyota is pushing
those of other leading manufacturers. For the minority dealer, this equates for even greater gains.
to greater profits and a more valuable franchise. For the industry, Toyota’s
approach provides an exemplary model for minority dealer success.
. Toyota’s vision-goal is to
place 4 to 6 new minority
owners each year over the
next 10 years.
. Toyota will expand its
model to embrace and
encourage increased levels
of minority ownership
interests, matching
investors to investment
opportunities.
 8

Employment
Enhancing Minority Representation and Inclusion

With a base of nearly 8,000 minority associates nation-

wide, Toyota will increase minority representation
at senior and executive levels of the organization.

Toyota’s North American workforce is in many ways beautifully diverse.

Statistical comparisons with the civil labor workforce and the equal employ-
ment profiles of the major U.S. automakers bear this out. However, we Our Commitment
recognize that there is still more to do as we dedicate ourselves to the . Toyota is committed to a
goal of meaningful diversity and inclusion at every level of the organization, immediate and steady
particularly at the top. improvement in its repre-
sentation of people of
Toyota’s existing significant human resource tools and programs will be color and women in our
better aligned with our new diversity strategy. These include The University senior management ranks.
of Toyota, Career Net, minority scholarships and intern programs, Toyota’s . TMS will create a new
management trainee program and its leadership development programs. Director of Diversity at a
senior management level.
Toyota intends to become, over the next five years, an outstanding employer
The Director of Diversity
of choice for all groups-by every reasonable and objective measure.
will report to the executive
committee and be charged
with the responsibility of
coordinating all aspects
of TMS‘ diversity efforts.
. Toyota will improve repre-
sentation through a strategy
of targeted development,
recruiting and retention.
. TMS will implement a
comprehensive dispute
resolution process for
associates.
 9

Retail Diversity Initiatives

Avenues for Advancement—Minority Participation in the Industry

Through its newest program, “Avenues for Advancement,”

Toyota will create sustainable avenues for minority
candidates to become successful senior managers in
Toyota and Lexus dealerships.

Retail Management Development

The automotive retail environment, which employs more than one million Our Commitment
Americans at more than 22,000 dealerships, offers thousands of well-paying
management opportunities. Partnering with its own dealers as well as
. Toyota is committed to
helping talented minorities
major publicly and privately owned dealer groups representing all makes,
prepare themselves for
“Avenues for Advancement” will open a new dimension to increase diversity leadership positions within
in the retail environment. the retail automotive sector.
Retail automotive experience, especially at the general manager level, is . Toyota pledges $1 million
considered essential for anyone aspiring to acquire equity in a dealership. to partner with Toyota/
Providing specific training in dealership management will create the all- Lexus dealers to help
important link between successfully operating the dealership and owning recruit, train, and develop
it. Toyota funding will help subsidize real-world experience as well as minority employees for
education through such institutions as Northwood University’s automotive dealership management
retail curriculum and the University of Toyota. and technical positions.
. Toyota’s commitment will
have a significant economic
impact within minority
communities.
 10

Retail Diversity Initiatives

Avenues for Advancement—Minority Participation in the Industry

With thousands of jobs open within the technical fields

of the automotive industry, Toyota is opening doors for
hundreds of minority youth.

Automotive Training Centers

Toyota depends on certified automotive technicians to provide quality Our Commitment
service for the millions of Americans who own our cars and trucks. Yet each
year there is a dwindling pool from which to draw candidates to complete
. Toyota’s investment in the
Los Angeles Automotive
intensive training programs and become automotive technicians. In fact,
Training Center (ATC) has
the industry at large is witnessing a shortage of thousands of workers in exceeded $7 million
this field each year. since 1992.
In 1993, Toyota created the Los Angeles Urban League Automotive Training . The Los Angeles ATC con-
Center (ATC). This joint venture with the Los Angeles Urban League provides tinues to receive $1 million
no-cost job training and placement for unemployed and underemployed annually for operating costs.
urban residents in the automotive industry. The program has graduated
850 trainees who have gone on to secure entry-level jobs. The economic
. Toyota will spend $4 mil-
lion to build an ATC in the
impact of this program has exceeded $20 million to date.
eastern United States and
Starting in 2002, Toyota will replicate the success of the Los Angeles ATC train 125 students annually.
by opening a similar training facility in the eastern United States. Over the
years, it too will have a significant economic impact of hundreds of millions
of dollars.
 11

Community Involvement
Supporting Minority Communities And Causes

Each year, Toyota invests millions of dollars towards

education and other social programs in the community,
providing thousands of people a chance for a better
life and access to opportunities.

Being a good corporate citizen is important to Toyota. We support a large

number of civic, cultural and charitable groups, education and scholarship Our Commitment
initiatives. Our support focuses on education with an emphasis on mathe-
matics and science.
. Toyota is committed to
giving back to minority
One of the most significant aspects of Toyota’s diversity activities is its communities through
support of minority organizations. Among these are United Negro College financial resources and
Fund, Hispanic Scholarship Fund and our trademark Toyota Community corporate volunteerism.
Scholars program. We also provide funding and volunteers to the 100 . Toyota will allocate a
Black Men Young Black Scholars program. minimum of 10% of its
annual giving to minority
Toyota supports organizations by giving time as well as dollars. Many of our
groups and causes.
executives and associates volunteer in a broad range of non-profit
boards, mentoring and scholarship programs and other community based . Toyota will dedicate a
activities. Toyota recognizes its corporate responsibility to respond to the senior staff member to
needs of these communities. supervise corporate giving
on minority programs.
 12

Diversity Advisory Board

Outside Advice and Accountability

By the end of 2001, Toyota will appoint a distinguished

panel of outside advisors to provide North American
management with guidance, oversight and fresh ideas
for its diversity strategy.

As an international company, Toyota Motor Sales, USA, is a wholly owned

subsidiary of an overseas firm and therefore does not have the traditional
American board of directors structure. In a move believed to be unprece- Our Commitment
dented for a multi-national company, Toyota will establish a Diversity . Toyota is committed to
Advisory Board consisting of high-level community leaders from such the success of its 21st
fields as business, law, labor and government. As a group, this board Century Diversity Strategy.
will represent the racial, ethnic and gender diversity of the community. . Toyota has established
Built on a model much like the Toyota and Lexus Dealer Advisory Councils, measures for real account-
the Toyota Diversity Advisory Board will bring “real world” insights, ability, real change and
real impact.
provide an objective sounding board for our diversity strategy and, over
time, create a powerful network on a range of issues and opportunities. . Toyota will appoint a
Diversity Advisory Board
The Toyota Diversity Advisory Board will meet with senior management as an expert resource
several times a year to be given overviews of Toyota’s North America and a virtual guarantor
operations. The Board will be fully informed about Toyota’s diversity of accountability.
strategy in progress. We expect the Board’s involvement to be a signifi-
cant asset. This program is expected to become an integral part of our
ongoing North American diversity efforts.
 13

Implementation And Accountability

Moving The Agenda Forward

Toyota has developed a strong implementation process

for its diversity strategy, which is supported by the
highest levels of Toyota management.

Aligning resources and policies in a manner consistent with the stated

importance of Toyota’s diversity strategy is key to ensuring that the strategy Our Commitment
remains a priority. Only by dedicating resources and conveying the centrality
of diversity to all members of the Toyota family, can Toyota generate the
. Toyota is committed to
regular reviews and the
ongoing energy necessary to follow through with our diversity commitment.
strong oversight of our
Toyota is committed to developing a culture that views diversity as a path- processes, programs and
way to a better Toyota. This commitment demands that we support the policies on diversity, so
human resources aspect of our diversity strategy. We are embarking on a to ensure that we achieve
all that is truly possible
five-prong plan to ensure that our diversity initiatives succeed throughout
for a great company
our organization.
like Toyota.
First, the senior management of Toyota North American companies will
communicate the strategy to every manager and associate. There will be a
system-wide rollout, both orally and in writing.

Second, the implementation of our diversity strategy will be driven by real

benchmarks and real timetables, which will be set forth in a written
document to be provided to all relevant managers.

Third, we will dedicate a lead manager in each area to ensure full

compliance at all levels of the company. These lead managers will report
directly to a senior level executive on a quarterly basis.

In addition, we will provide incentives to managers (reflected in rewards,

bonuses and positive performance evaluations) to ensure their full compli-
ance with the diversity plan and their full energies to achieving the specific
goals of the plan and meeting its timetables.

Fourth, we will have in place a planned deviation system, which will

address situations where managers fail to achieve our established goals
and timetables or commit less than their full efforts to achieving them.
 14

Finally, we will continue to work with outside organizations to ensure

that our strategy is working and remains state of the art. We know that
our diversity strategy is the first step in becoming the company we strive
to be.

We have already referenced the importance of communications to all

stakeholders; our strategy relies on ongoing communications, updates and
announcements of success, and discussions of serious issues with our
associates, our suppliers, and our community. Starting with the launch that
will communicate the diversity strategy from our most senior executives,
Toyota will make information accessible and will have mechanisms to
respond to issues and concerns. Ongoing communications and prompt
feedback will be key to the success of the program. Toyota fully appreciates
the importance of follow through.
15