Toyota Motor (TM)

Operating Income and Loss

Toyota’s operating income decreased by ¥2,731.3 billion to an operating loss of ¥461.0 billion during fiscal 2009 compared with the prior year. This operating loss was unfavorably affected by the decrease in vehicle unit sales, the changes in sales mix, the increased expenses and the impact of the decrease in parts sales, partially offset by the decrease in research and development expenses.

During fiscal 2009, operating income (before the elimination of intersegment profits) for significant geographic regions decreased by ¥1,677.8 billion in Japan, decreased by ¥695.5 billion in North America, decreased by ¥284.8 billion in Europe, decreased by ¥80.3 billion, or 31.3%, in Asia, and decreased by ¥56.3 billion, or 39.1% in Other compared with the prior year. The decrease in Japan was mainly due to decreases in both production volume and vehicle unit sales in the export markets, partially offset by the decrease in research and development expenses. The decrease in North America was mainly due to decreases in both production volume and vehicle unit sales, the increases in the provision for credit losses, net charge-offs and allowance for residual value losses in sales finance subsidiaries in the United States, partially offset by the impact of the fluctuations in foreign currency translation rates. The decrease in Europe was mainly due to decreases in both production volume and vehicle unit sales, partially offset by the impact of fluctuations in foreign currency translation rates. The decrease in Asia was mainly due to decreases in both production volume and vehicle unit sales, and the impact of the fluctuations in foreign currency translation rates. The decrease in Other was primarily due to the decrease in vehicle unit sales.

The following is a discussion of operating income for each of Toyota’s business segments. The operating income amounts discussed are before the elimination of intersegment profits.