Annual Report 2009 - Toyota Financial Services

Toyota Financial Services Czech s.r.o.Ladies and Gentlemen,Dear friends,If I am to evaluate the previous fiscal year just with one word, the most appropriate one would be the word„difficult“.It was difficult for several reasons. First of all – due to the influence of various aspects of the public finance reform– which, as a whole was certainly a correct solution – an almost complete suspension of financial leasing (whichwas until then a very popular measure, and was offered by our company under a brand name Toyota Leasing) tookplace in 2008. Financial lease became less popular for business entities due to the abolition of the valid option tocover the payments for a vehicle with tax deductible instalments in less time than if it was bought for cash. Althoughwe had been prepared for such a situation, and since 2002 we offer an alternative in the form of loan financing(Series Toyota Credit), we nevertheless experienced an outflow of customers. We were trying to gain them back notonly with our loan products but also with our operating leases (available in our offer under the names of ToyotaRent and Toyota Rent Plus), which are provided as a standard product in established market economies. There isno doubt that operational leases have a great future, but it will take some time before they are accepted by thebusiness sector, particularly by smaller companies.In addition, our business was influenced by the upcoming economic and financial crisis, resulting in a further lossof interest of potential clients in funding.This means that the financial services sector, as we have known it before, has completely changed. And we mustdeal with this fact in the future.In addition to changes in the market, the financial sector crisis caused also changes in our cost inputs. If it waspossible to work with a relatively predictable development of interest rates and margins until 2008, this conceptwas completely changed afterwards. Besides the significant reduction of the value of assets due to a lower volumeof funds lent, our current result was also impaired due to the change in the value of the interest rate swaps. And,unfortunately, this change was negative.Although we have been trying hard to cope with the effects of the changes in the macro-environment on ourbusiness, we have not stopped working on our projects and products that we consider to be essential in the light offuture developments.Already in the previous fiscal year, we have marketed our first brand insurance – Toyota Pojištění – and we havebeen trying, as the first company of our type, to operate as an insurance agent and mediate insurance to a type ofcustomer which is new to us. These are customers who are buying their assets (vehicles) for cash. Today, we alreadyknow more – we have been working for a year in this business and we know all its strengths and weaknesses whichwe rather expected to happen in the project preparation stage.It is certain that there is great potential in mediated insurance – firstly, it is a service increasing customersatisfaction as both the car sales and support services are provided in one location. Secondly, we see furtherpotential in selling insurance via the internet and in other improvements of our related services provided to Toyotacustomers, aiming at the top quality service.During the past fiscal year, we were dealing with the completion of the „toyota724“ project (as was its originalinternal name). Since autumn 2008, we had been gradually delivering parts of the TFS ONLINE system, which isthe name of the final solution prepared for our customers and cooperating partners. In October 2008, we madeavailable to our customers the first part of it denominated „My Account“ (its original name was „Client Accounts“).As far as I know, we are the second company of our type which enables its customers on-line access to view lease orcredit agreements, and potential changes to these contracts.6