Joint Venture Proposal
Submitted November 14, 1995
Toyota's long-standing reputation for quality and value.
Dependability/Value: Toyotas high standing for productivity, efficiency and
capability, is well earned resulting from Toyota's sophisticated engineering
and the company's continuous quest for product refinement.
Comfort/Convince: From its ergonomic interior to the many available features,
such as 60/40 folding rear seats, height-adjustable shoulder belts and well
placed cupholder, Toyota delivers surprising comfort and accessibility in a
subcompact car. Toyota's safety features are placed around impact protection,
accident avoidance and personal security.
In all three areas, Toyota provides the driver and the passengers with
modern safety engineering and technology.
Styling: Toyota's modern design has an European flair. The smooth lines of
our cars sheet metal are also designed to reduce aerodynamic drag for
excellent fuel effiiency and surprisingly low noise, vibration and harshness.
Toyota Teamwork: It takes Toyota Teamwork to earn the loyalty of our
That's why we're always striving to make a quality product that works smart as
well as hard. So it's not surprising Toyota has been ranked as the #1 Truck
Line in Customer Satisfaction for four years running.
Quality. It's the Toyota Way: Perhaps you've heard about our legendary
reliability and staying power.
Commitment: At Toyota, each one of us is absolutely committed to the principle
of constant improvement. From the initial spark that ignites a concept in our
designers, to the innovative technology of engineering, to our very special
manufacturing team, to final delivery. How a Toyota can make your life better
and easier, more convenient, more fun.
As you read further, you'll find details about the source of that constant
improvement, the process we call the Toyota Way. The process is unique.
Recently, other car makers have seen the strengths of this way of building
automobiles, and put some of these strengths to work in the creation of their
own vehicles. This is , you could say, the process in its infancy. At Toyota
the process has been up and running for 40 years. We invented it.
We are perfecting it still. And we're using those decades of experience to
make every Toyota as close to perfect as possible.
What drives the process is our team members. That's because the Toyota Way is
not just an abstract idea. It is a way of life. Team members are dedicated
to constant improvement -every moment on the job, and often on their own time.
That cockpit is so quiet because someone wanted it that way. The door closes
so solidly, the body seams are so tight, the paint looks so lustrous-all this
and more because Toyota team members wanted these things that way.
At our design center, team members meet in small groups to develop the
concepts that will become Toyota's. In the Toyota Way, high tech and
creativity operate in harmony.
Interior and exterior clay models help provide accurate pictures of how a
design shapes up. CAD operators can look at images of that shape from any
angle, and suggest improvements.
Our all new Corolla fulfills the demands of a new generation of drivers and
passengers with a superb blend of sophisticated contemporary styling,
exciting yet economical performance and quality features.
Corolla was born of a user-oriented philosophy that identified the demands
of a new generation of drivers and passengers for enjoyable driving
performance, superb design and high functionality. At the same time we paid
careful attention to safety and care for the environment.
IMPROVING URBAN ENVIRONMENTS
Toyota is especially concerned about two urban environmental issues: air
pollution and noise pollution. Urban air pollution became a major social
issue in the late 1960s as populations, industries, and culture gravitated
increasingly to urban areas. These concentrations made it ever more difficult
to maintain air and water quality in major cities.
The first challenge facing automobile manufacturers in doing their part to
improve urban air quality was to develop vehicles with lower emissions,
especially of hydrocarbons (HC), carbon monoxide (CO), and nitrogen oxide
(NOx). Once these substances exceed certain concentrations, they may cause
photochemical smog and other damage to the local environment. As gasoline and
diesel engines burn their respective fuels differently, so different methods
must be used to reduce the pollutants in their exhaust gases. In this vein,
Toyota has developed some very advanced technology to reduce automotive
emissions. Toyota is also working hard on the issue of noise. We hope these
efforts help create better urban environments.
In 1964, Toyota organized an exhaust emissions study group, which started
basic research and technological development. In 1970, the entire company
was charged with finding ways to reduce exhaust emissions, and a research and
development organization was established. The following year, we organized a
project team of specialists to tackle the most difficult issues. Both Japan
and the United States set stringent targets of reducing automotive gasoline
engine emissions to less than 10% of unregulated levels.
And, because Toyota had already started working on reducing emissions, with
extra effort we were able to meet the targets. Since then, our research has
led to many new technologies in this field. At the same time, we worked on
reducing the emissions of diesel engines. Among other technologies, we
developed an electronically controlled diesel fuel injection system and the
Toyota Reflex Burn (TRB) combustion chamber. This technology helped us reduce
Nox emissions by 70% over unregulated levels, and cut smoke emissions and
particulate as well. In 1992, we announced the Toyota Earth Charter, in which
we set goals to develop and market automobiles with the lowest possible
emissions. To that end, we pursue ever cleaner exhaust gas levels through
ongoing technological development.
Part of the automobile's impact on the environment comes from traffic issues
and urban congestion. Toyota goes beyond just manufacturing cars. We also
work hand-in-glove with government agencies in Japan and abroad, striving for
better traffic infrastructure and more detailed driver information.
Toyota Central Research Laboratories, Inc., works with us on analysis of the
automobile's biological influence. We constantly monitor the atmosphere near
major traffic arteries in Japan, compiling and studying information that will
one day lead us to a viable simulation of the emissions dispersion mechanism.
And in our Toyota Forest Program, we seek to understand and improve the
natural ability of trees to purify the atmosphere.
Today, about 75% by weight of every post-use automobile can be recycled. But
we are not satisfied with that high percentage. We want to improve it. Reusing
everything possible. And retrieving energy from combustible waste that cannot
Toyota starts toward a higher recycling percentage at the design stage. We
design cars to be easier to disassemble. We stipulate materials that are
easier to recycle. We eliminate all waste possible in the production process.
And we conduct continuing life cycle assessments, which will help us judge how
vehicles are used, what happens after use, and how we can help make
automobiles a sustainable product.
Thailand:Implementation of the White Road Project traffic safety campaign
The White Road Project, a campaign to deepen understanding about traffic
safety among the public at large, from children to the elderly, has been
operating since 1988. Activities include TV broadcast of messages on safe
driving, the production of manuals and stickers on traffic safety and safe
driving, and traffic safety slogan contests. Particular emphasis is placed
on traffic safety education for children, with tools such as stationery
bearing the White Road mascot used to attract interest.
The ASEAN Toyota Seminar was initiated in 1978 as Toyota's first large-scale
international exchange, with the objective of promoting understanding of Japan
and the Japanese automobile industry. Every year since, foreign diplomats
stationed in Japan and exchange students from ASEAN countries (Indonesia,
Malaysia, Singapore, the Philippines, Brunei and Thailand) are invited to
participate in the seminar, increasing mutual understanding through
presentations and discussions on Toyota's production methods and product
development. In 1991, Toyota held a symposium to commemorate the company's
100th international exchange project.
TOYOTA'S GLOBALIZATION ACTIVITIES
For a quicker and more stable supply of the vehicles that customers want,
automobiles must now be manufactured locally. This is why we have pursued
local production with such enthusiasm at 36 local companies in 26 countries
and regions, At the same time, we are extensively involved with the car
manufactures of numerous countries and regions through tie-ups and other
affiliations ---- based on our principle of competition and cooperation. As a
good corporate citizen of the would, we wand to help local economies by
stimulating employment and parts procurement in the community.
Australia is Toyota's third largest overseas market after the U.S. and
Thailand. In 1994, Toyota was number one in sales in Australia for the fourth
consecutive year and number one in New Zealand for the seventh year in a row.
Toyota is also expanding its sales and service outlets throughout the Southern
Pacific region. Toyota's two existing assembly plants in Australia were
integrated into a sophisticated plant in Altona in 1994.
The new plant started operations in July. Future plans call for further
improvements in production efficiency and product quality.
In June 1995, Toyota Motor Corporation(TMC) announced a new global business
plan that will provide mid- and long-term direction to its future business
activities. The plan was created in response to increased globalization of
economies and to the new economic environment resulting from recent rapid
valuation of the yen.
The proportion of overseas-produced vehicles in worldwide sales (excluding
sales in Japan) will increase as production in foreign countries is expanded
further. Specifically, the percentage is projected to increase from the 1994
level of 48% to around 60% in 1996, and around 65% in 1998. The shift from
vehicle exportation to local production will accelerate and be most evident
in North America. In Europe, Asia, and Oceania, the ratio of locally produced
cars will be increased as well, taking into consideration the changes in
economic circumstances such as the exchange rate.
Local procurement activities for parts, materials, and equipment will be
further strengthened in each region through the seeking of capable suppliers
and various support activities for current suppliers. Toyota will also engage
aggressively in technology transfer, increased investment, and establishing
regional parts complementary programs in areas where localization has
previously been difficult. To further strengthen the relationships with
overseas suppliers, a "Toyota Global Optimized Purchase System" will also be
introduced at various locations worldwide.
The Japanese auto distribution market is open, and its system is run based
on fair competition. Toyota supports this distribution system. It has also
repeatedly declared that the decision to handle foreign automobiles and auto
parts remains in the hands of the auto dealers and parts wholesalers, and has
acted accordingly. To further enhance understanding among those in the
automobile industry and governmental bodies, however, Toyota will take the
- Send out a letter to the dealers, stating once again that those handling
foreign makers' vehicles are not subject to prior consultation with
Toyota, and that they are free to handle them.
- Send out a letter to the parts wholesalers, stating that they are free to
handle foreign makers' parts and accessories.
- In response to the concerns among foreign makers that they will face
problems in gaining access to Toyota dealers, Toyota will consider
establishing an internal "grievance body" to handle questions and
concerns on handling foreign makers' cars.
INVESTMENT IN OTHER INDUSTRIES
The industries into which Toyota has diversified include telecommunications,
import and sales of small planes and helicopters in Japan, computer systems,
optical electronics engineering and other high-tech areas.
Toyota teaches people how to identify opportunities for improvements. And it
gives team leaders and their team members in the workplace the authority to go
ahead and make the improvements. So, what matters for us in the people we hire
is attitude--the ability and inclination to cooperate, to learn new skills, to
keep getting better and better."
"Be a company of the world." That's what our Guiding Principles admonish us
to be. What that means is to integrate our operations--our company--with the
industries and economies of every nation where we operate. It means making an
economic and industrial contribution commensurate with our market presence. It
means becoming a real member of the community. In that spirit, we unveiled
our New Global Business Plan this spring.
Good cars and trucks aren't so good if they make a mess of the environment.
So, minimizing environmental impact is a big consideration in the way we power
our cars and trucks, in the way we design them, in the materials we select for
them, and in the way we make the vehicles. Toyota is a fuel-economy leader
among automakers offering a full lineup of vehicle models, including trucks.
And we continue to develop cleaner and greener technologies for powering the
vehicles of the future.
Toyota listens--to our customers, and to the pulse of society.
With that input, we strive for the best possible balance, for
sustainable auto manufacturing. To us that means continual
improvement of the basic automotive functions: safety, comfort, and
reliability, among others. And it means cleaner emissions and better
These goals can only be achieved with on-going basic research and
development of new and improved technology--analyzing and improving
combustion, developing new catalysts, devising new body structures,
finding new materials, and using the most advanced electronics
available to create an integral system to control automobiles.
The Proposed Car In the joint venture, Toyota proposes to manufacture the Toyota Corolla in China. The Corolla is a compact car with a world renown reputation for quality, affordability, fuel efficiency, and reliability second to none in its class. In the United States alone, over 3 million Corollas have been sold in its twenty-six year history. The engineering innovations incorporated into the Corolla are significant and will be instrumental in the technology transferred required to upgrade the Chinese Automobile industry.
Toyota believes in developing partnerships in the countries that it
manufactures automobiles. In the US, Toyota has a total investment of more
than $5 billion in the American market that includes investments in design
centers, testing facilities, and manufacturing plants. Over 84,000 men and
women are employed in the US by Toyota and Toyota dealers. Partnerships with
hundreds of American suppliers also have had a significant economic impact
across the United States. Toyota is not interested in duplicated the
successes of its past partnerships, but only surpassing them.
In the first three years of the project, the joint venture will produce one
standard Corolla model: 4-Door Sedan. After the third year, two additional
models will be made available: 4-Door DX Sedan and 4-Door LE Sedan. These
models will offer a variety of options that will target and satisfy the
specific needs of individual consumers in China.
After five years, the 5-Door DX Wagon version will be available to consumers.
The following will outline the features that will be standard on the 4-Door Sedan:
Brakes: power-assisted ventilated front disc/rear drum
Drive train: front-wheel drive
Engine: 1.6 liter, 4-cylinder twin-cam 16-valve (EFI)
Steering: power-assisted rack-and-pinion
Transmission: 5-speed manual overdrive
Headlamps: aerodynamic halogen with "auto-off" feature
Mirrors: dual black remote-controlled folding outside
Wheel covers: full
Wipers: intermittent front
Carpeting: full cut-pile
Cup holder: dual
Demisters: side window
Gauges: speedometer, odometer, trip meter, coolant temperature
and fuel level
Releases: remote hood, trunk, and fuel-filler door
Seats: reclining front bucket with adjustable headrests
Warning Lights: seatbelts, low-fuel level, battery, door-ajar, engine,
oil pressure, brake
The following outlines the Specifications of the 4-Door Corolla Sedan:
Brakes-power assisted: front - Ventilated discs
rear - Drums
Construction-body/frame: Unitized body
Engine type: 4 cylinder twin-cam 16-valve with electronic
displacement: 1.6 liters (1,587cc)
horsepower: 105 @ 5,800 rpm
Torque: 100 lb.-ft. @ 4,800 rpm
Steering type: Rack-and-pinion
Suspension: front - independent MacPherson struts
back - independent MacPherson struts &
Turning circle diameter curb to curb: 32.2 ft.
Height-overall: 53.5 in.
Length-overall: 172.0 in.
Wheelbase: 97.0 in.
Width-overall: 66.3 in.
Width-tread: front - 57.5 in.
rear - 57.1 in.
Head room: front - 38.8 in.
rear - 37.1 in.
Hip room: front - 51.3 in.
rear - 54.3 in.
Leg room: front - 42.4 in.
rear - 33.0 in.
Should room: front - 54.1 in.
rear - 53.5 in.
5-speed manual overdrive 2,315 lbs.
Fuel tank: 13.2 gals.
Interior volume 102.1 cu.ft.
Luggage capacity 12.7 cu.ft.
Type: all-season steel-belted radials blackwalls
5-speed manual overdrive: 27 mpg city/34 mpg highway
In our opinion and from our research we expect this sedan and later-on it's
wagon counterpart to be best-sellers in China. This sedan is one of our
cheaper ones and it is also rated to be quite reliable. Costs to the consumer
will be about $9,000. This is well below our American price of $13,000. You
will save on the fact that the car has a manual transmission and will not come
with so many extras. As you can see from above the gas mileage is quite good
and our consumer satisfaction is excellent with the Corolla model as well as
all our other cars. We are looking forward to selling one of our best car
models in China.
After reviewing our record of excellence in quality and consumer
satisfaction we at Toyota are confident in our future dealings with your
country. We understand what you want in a car and we are willing to provide
that and more.
The following are our projections for the joint venture:
Initial Cost Analysis
The initial approximate cost of the project is 1 billion dollars for a
minimal capacity of 300,000 cars/yr. This will include the building of the
new factory and payroll for the first year as well as car production. What
we need China to do is put up a stake of about 50% and we will supply 50% as
The factory we intend to build will have an initial production capability of
approximately 200,000 cars. Based on our research of the surrounding areas
and the needs of your people we find this to be an adequate number. Of course
our factory will be equipped to handle a production increase of 100%, to
400,000 cars, within the next 5 years. Seeing as we expect your market
demand for cars to rise as time goes by we are prepared to grow with it and
expand as necessary. This route of action will allow us to start building as
soon as possible and make cars while still in the building process. We
believe this to be sufficient given the initial delays in marketing and
delivery based on the foreseen demand in our automobile.
We believe that with this joint venture, together, we will help employ a large
segment of the population in the Tianjin region. The job opportunities will be
limited at first, mostly to less skilled functions, but as we move ahead in
our project and substantial training takes place in the plant, the employment
prospects will become more varied and innovating. We will need assembly-line
managers and equipment men. Most of our cars will be put together by
machines, this is, as we have seen in the past, the cheapest and most
efficient way to build cars. We trust you will realize our expertise in this
area. We will most definitely need personnel as designers and engineers as
well as marketers and mangers. We want our company to give a great boost to
the region's and your country's economic status. At the beginning of the
project we expect most of our own people to hold supervisory positions.
However, as the project progresses, we will look for Chinese trained personnel
for executive positions, after corresponding training.
We are interested in the free-trade zone located in Tianjin. We also wish to
make a proposal for it to be a tax-free zone for us. In other words, we wish
to be able to have our revenue untaxed for a fair amount of time, to be
discussed in the negotiations. In turn we are willing to redirect a
percentage of our income into the local Chinese economy. We also are
interested in expanding our ability to export. 25% is ok initially, but as
our production increases our we wish our export percentage to increase,
perhaps another 5%, as is necessary. For the initial equity we believe we
cannot provide 70% of the start up costs. We were thinking more along the
lines of 50%, as we mentioned above. Also, we find the Board of Directors to
be a bit biased in Newchin's Favor. We would like to have at least 2 more
people on that board, and have the Foreign Investment Commission add another
member as well.
We look forward to discussing this proposal in detail with you at your
Click here to return to the news list