TOYO TIRE Value creation

• External Environment and Risks & Opportunities
• Value Creation Process
• Our Strengths

External Environment and Risks & Opportunities

We are aware of the risks and opportunities posed by the external macro environment in which the Medium-Term ’21 Plan was formulated and is being implemented, as well as the changes in the mobility field that are expected to occur by around 2030. We will work to create value along the entire value chain through our operations, products and services based on this awareness.

Awareness of the external macro environment (before 2025)

Significant changes in consumer behavior in the post-COVID-19 era

• Mindset: Home bound, budget-minded, avoiding person-to-person contact
• Behavior: EC/cashless purchases, changes in requested services

Increasing in geopolitical risks

• Decoupling trend continued, including competition for leadership between U.S. and China
• Economic disparities widening due to COVID-19 also aggravate populism

Aligning of social & environmental interests with economic interests accelerated

• Prioritization of employee/customer satisfaction increased
• Accelerated trend to align public interest with economic interests through customer-producer collaboration

Evolution and accelerated introduction of laborsaving technology

• Digital investment accelerated to make up for slow growth in worker headcount
• Advanced roles for humans as quality/quantity of data increased

Predicted changes in the mobility field (before 2030)

Growth of environmentally compliant/electric vehicles

Increased use of driverless transport and alternative transport services

Greater use of IT (mobility-related data linking)

Further diversification to meet individual needs and convenience

Risks & Opportunities

Opportunities

• Opportunities to increase demand through technological innovation and uniqueness in our EV response
• Opportunities to increase demand through technological innovation and uniqueness in our environmental response
• Opportunities in the solutions business

Products and services

• EV-specific/compatible tires
• Life cycle focused product development
• Highly durable/maintenance-free tires, airless tires
• Sensing

Risks

• Risks associated with climate-related measures
• Risk of not being able to secure a stable human resource base
• Risks associated with measures to uphold human rights in our operations and supply chain
• Risks of failing to ensure quality, including environmental compliance, throughout the value chain
• Risks associated with the growing demand for safety

Operations

• Improve energy efficiency and expand use of renewable energy
• Promote resource circulation and recycling
• Process assurance
• Tire safety awareness
• Human capital management
• Strengthen supplier engagement
• Responsible raw material procurement and traceability
• Individual management systems in the market

Value Creation Process

The Toyo Tire Group believes in the importance of organizing and disclosing our corporate philosophy, business model, governance, and business risks and opportunities to help promote a clearer understanding of the type of company we want to be in the future. As part of our value creation process, we have verbalized our six capitals, and defined the outputs generated through the utilization of these capitals and the outcomes that might impact stakeholders.

Our Strengths

The core competence of the Toyo Tire Group lies in our technological prowess. We are developing our business by linking technological developments to our production and distribution systems on a global scale. We intend to further refine our strength in differentiated products at our technology development bases in and outside Japan, while also building new production facilities to secure stable supply capacity and engage in global sales tailored to regional characteristics.

Proprietary technology and tripolar R&D collaboration between Japan, the U.S. and Europe

The automotive industry is currently undergoing major transformations and tire development is also expected to quickly provide quantitative performance and functions to support the evolution of mobility. We are constantly updating our proprietary technology base to achieve higher precision and speed in material compounding and tire design.
Our R&D functions in Japan, the U.S. and Europe each play a different role in our research and we are combining their results and collaborating with sales and production departments to develop highly functional and differentiated products that meet the needs of each market.

Optimal global production and supply system

We are promoting local production for local consumption in markets where our production bases are located, while working to optimize the product mix at each of our plants and to deliver products to our customers in a timely manner through our flexible and optimal supply system made up of such production bases. Large-diameter tires for SUVs and pickup trucks, an area in which we excel, enjoy tremendous support in the North American market. We are gradually increasing the production capacity at our U.S. plant in order to meet the demand for such tires.
We are also renovating facilities at our plants in Japan to increase supply to North America.
In 2022, we opened our first European plant in Serbia. The plant aims to deliver competitive products to the European market and to supply tires for passenger cars to the North American market. In Malaysia, we are consolidating our production bases and shifting to the production of high-margin brand lines.

Solid customer base built to target the North American market

Our business strategy in North America has evolved into an iconic business model for our tire business.
We have built a strong customer base by narrowing down target models and users and by collaborating with local dealers who know their customers extremely well, rather than operating directly managed dealerships.
In addition, through our marketing activities we identify needs which we promptly feed back into the Group, to create a virtuous cycle that leads to the development of differentiated products.