10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 1-9961

TOYOTA MOTOR CREDIT CORPORATION

(Exact name of registrant as specified in its charter)

California	95-3775816
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6565 Headquarters Drive Plano, Texas	75024
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (469) 486-9300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 31, 2018, the number of outstanding shares of capital stock, no par value per share, of the registrant was 91,500, all of which shares were held by Toyota Financial Services International Corporation.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

TOYOTA MOTOR CREDIT CORPORATION

FORM 10-Q

For the quarter ended June 30, 2018

INDEX
PART I	3
Item 1. Financial Statements	3
Consolidated Statements of Income	3
Consolidated Statements of Comprehensive Income	3
Consolidated Balance Sheets	4
Consolidated Statements of Shareholder’s Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis	44
Item 3. Quantitative and Qualitative Disclosures About Market Risk	69
Item 4. Controls and Procedures	69
PART II	70
Item 1. Legal Proceedings	70
Item 1A. Risk Factors	70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3. Defaults Upon Senior Securities	70
Item 4. Mine Safety Disclosures	70
Item 5. Other Information	70
Item 6. Exhibits	70
Exhibit Index	71
Signatures	72

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in millions)

(Unaudited)

	Three Months Ended
	June 30,
	2018		2017
Financing revenues:
Operating lease	$	2,126	$	1,981
Retail		535		474
Dealer		175		143
Total financing revenues		2,836		2,598
Depreciation on operating leases		1,766		1,681
Interest expense		682		448
Net financing revenues		388		469
Insurance earned premiums and contract revenues		224		216
Investment and other income, net		40		88
Net financing revenues and other revenues		652		773
Expenses:
Provision for credit losses		89		85
Operating and administrative		324		313
Insurance losses and loss adjustment expenses		125		114
Total expenses		538		512
Income before income taxes		114		261
Provision for income taxes		22		96
Net income	$	92	$	165

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in millions)
(Unaudited)

	Three Months Ended
	June 30,
	2018			2017
Net income	$	92		$	165
Other comprehensive loss, net of tax:
Net unrealized (losses) gains on available-for-sale marketable securities    [net of tax provision of $0 and ($10), respectively]		(4	)		17
Reclassification adjustment for net gains on available-for-sale   marketable securities included in investment and other income, net    [net of tax provision of $0 and $16, respectively]		-			(25	)
Other comprehensive loss		(4	)		(8	)
Comprehensive income	$	88		$	157

Refer to the accompanying Notes to Consolidated Financial Statements.

3

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in millions except share data)
(Unaudited)

	June 30,			March 31,
	2018			2018
ASSETS
Cash and cash equivalents	$	5,581		$	3,540
Restricted cash and cash equivalents		1,048			1,219
Investments in marketable securities		5,603			5,829
Finance receivables, net		70,466			69,647
Investments in operating leases, net		38,748			38,697
Other assets		1,617			1,614
Total assets	$	123,063		$	120,546
LIABILITIES AND SHAREHOLDER’S EQUITY
Debt	$	100,589		$	98,353
Deferred income taxes		5,310			5,326
Other liabilities		4,306			3,987
Total liabilities		110,205			107,666
Commitments and contingencies (Refer to Note 12)
Shareholder’s equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued    and outstanding) at June 30, 2018 and March 31, 2018		915			915
Additional paid-in capital		2			2
Accumulated other comprehensive loss		(21	)		(29	)
Retained earnings		11,962			11,992
Total shareholder's equity		12,858			12,880
Total liabilities and shareholder's equity	$	123,063		$	120,546

The following table presents the assets and liabilities of our consolidated variable interest entities (Refer to Note 10).

	June 30,		March 31,
	2018		2018
ASSETS
Finance receivables, net	$	11,573	$	11,927
Investments in operating leases, net		7,713		5,706
Other assets		126		125
Total assets	$	19,412	$	17,758
LIABILITIES
Debt	$	14,556	$	13,638
Other liabilities		10		10
Total liabilities	$	14,566	$	13,648

Refer to the accompanying Notes to Consolidated Financial Statements.

4

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

(Dollars in millions)

(Unaudited)

					Accumulated
			Additional		other
	Capital		paid-in		comprehensive			Retained
	stock		capital		income (loss)			earnings			Total
Balance at March 31, 2017	$	915	$	2	$	25		$	8,582		$	9,524
Net income		-		-		-			165			165
Other comprehensive loss, net of tax		-		-		(8	)		-			(8	)
Balance at June 30, 2017	$	915	$	2	$	17		$	8,747		$	9,681
Balance at March 31, 2018	$	915	$	2	$	(29	)	$	11,992		$	12,880
Cumulative-effect of change in accounting policy		-		-		12			(122	)		(110	)
Net income		-		-		-			92			92
Other comprehensive loss, net of tax		-		-		(4	)		-			(4	)
Balance at June 30, 2018	$	915	$	2	$	(21	)	$	11,962		$	12,858

Refer to the accompanying Notes to Consolidated Financial Statements.

5

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

	Three Months Ended June 30,
	2018			2017
Cash flows from operating activities:
Net income	$	92		$	165
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization		1,784			1,696
Recognition of deferred income		(572	)		(469	)
Provision for credit losses		89			85
Amortization of deferred costs		155			155
Foreign currency and other adjustments to the carrying value of   debt, net		(611	)		708
Net losses (gains) from investments in marketable securities		25			(41	)
Net change in:
Derivative assets		(21	)		(10	)
Other assets and accrued interest		(68	)		(81	)
Deferred income taxes		20			197
Derivative liabilities		(2	)		(32	)
Other liabilities		84			27
Net cash provided by operating activities		975			2,400
Cash flows from investing activities:
Purchase of investments in marketable securities		(673	)		(3,633	)
Proceeds from sales of investments in marketable securities		7			1,192
Proceeds from maturities of investments in marketable securities		862			1,478
Acquisition of finance receivables		(6,305	)		(5,998	)
Collection of finance receivables		6,117			6,024
Net change in wholesale and certain working capital receivables		(508	)		(327	)
Acquisition of investments in operating leases		(4,312	)		(4,211	)
Disposals of investments in operating leases		2,852			2,479
Net change in financing support provided to affiliates		11			4
Other, net		(9	)		(9	)
Net cash used in investing activities		(1,958	)		(3,001	)
Cash flows from financing activities:
Proceeds from issuance of debt		7,991			5,844
Payments on debt		(5,067	)		(5,886	)
Net change in commercial paper		(77	)		(121	)
Net change in financing support provided by affiliates		6			11
Net cash provided by (used in) financing activities		2,853			(152	)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents		1,870			(753	)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period		4,759			5,285
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	$	6,629		$	4,532
Supplemental disclosures:
Interest paid, net	$	516		$	444
Income taxes paid, net	$	1		$	3

Refer to the accompanying Notes to Consolidated Financial Statements.

6

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three months ended June 30, 2018 and 2017 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three months ended June 30, 2018 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2019 (“fiscal 2019”).

These financial statements should be read in conjunction with the Consolidated Financial Statements, significant accounting policies, and other Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2018 (“fiscal 2018”), which was filed with the Securities and Exchange Commission on June 4, 2018.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 14 – Related Party Transactions.

7

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

Recently Adopted Accounting Guidance

On April 1, 2018, we adopted the following new accounting standards:

Revenue Recognition

We adopted new guidance related to the recognition of revenue from contracts with customers (“revenue recognition guidance”). We utilized the modified retrospective approach and applied it to active agreements at the time of adoption. As such, the comparative information in this Form 10-Q has not been restated and continues to be reported under the accounting standards in effect for those periods. The majority of our total consolidated revenues are outside the scope of the standard; however, the majority of revenue reported by our Insurance operations segment falls within the scope of the revenue recognition guidance. Upon adoption, fees collected for administering certain vehicle and payment protection products are now recognized using the same measure as the related product revenue and certain dealer incentives are now capitalized and amortized over the contract term instead of expensed as incurred.

While the adoption of the revenue recognition guidance has changed the timing of recognition of certain revenues and expenses, the total revenue and expense recognized over the contract term will not change as a result of adopting the standard. We do not expect the adoption to be significant to our net income on an ongoing basis.

The cumulative effect of the changes made to our consolidated balance sheet as of April 1, 2018 for the adoption of the revenue recognition guidance was as follows:

	March 31,		Adjustments related			April 1,
	2018		to adoption			2018
Assets:
Other assets	$	1,614	$	73		$	1,687
Liabilities and shareholder's equity:
Deferred income taxes	$	5,326	$	(36	)	$	5,290
Other liabilities		3,987		219			4,206
Retained earnings		11,992		(110	)		11,882

The impact on our consolidated statement of income for the adoption of the revenue recognition guidance was as follows:

	Three Months Ended June 30, 2018
			Effect of		Balances without
	As reported		adoption		adoption
Insurance earned premiums and contract revenues	$	224	$	4	$	228
Provision for income taxes		22		1		23
Net income		92		3		95
Comprehensive income		88		3		91

8

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

The impact on our consolidated balance sheet for the adoption of revenue recognition guidance was as follows:

	June 30, 2018
			Effect of			Balances without
	As reported		adoption			adoption
Assets:
Other assets	$	1,617	$	(73	)	$	1,544
Liabilities and shareholder's equity:
Deferred income taxes	$	5,310	$	37		$	5,347
Other liabilities		4,306		(223	)		4,083
Retained earnings		11,962		113			12,075

In connection with the adoption of revenue recognition guidance, we have updated our accounting policies as follows:

Revenue Recognition

Insurance Contract Revenues

The Insurance operations segment offers vehicle and payment protection products on Toyota, Lexus and other domestic and import vehicles that are sold by dealers along with the sale of a vehicle.

We receive the contractually determined dealer cost at the inception of the contract.  Revenue is then deferred and recognized over the term of the contract according to earnings factors established by management that are based upon historical loss experience.  Contracts sold range in term from 3 to 120 months and are typically cancellable at any time. The effect of subsequent cancellations is recorded as an offset to unearned contract revenues in Other liabilities on our Consolidated Balance Sheets.

9

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

Recognition and Measurement

We adopted new guidance addressing certain aspects of recognition, measurement, presentation, and disclosure of financial instruments that requires entities to measure equity investments at fair value and recognize any changes in fair value in net income.  On April 1, 2018 we recognized the cumulative effect of adoption by recording a reduction to our opening retained earnings of approximately $12 million, net of income taxes.  

In connection with the adoption of the new recognition and measurement guidance, we have updated our accounting policies as follows:

Investments in Marketable Securities

Available-for-Sale (“AFS”) Debt Securities

Debt securities designated as available-for-sale are recorded at fair value using quoted market prices where available with unrealized gains or losses included in accumulated other comprehensive income (“AOCI”), net of applicable taxes.  Realized gains and losses are determined using the specific identification method and are included in Investment and other income, net within our Consolidated Statements of Income.

Equity Investments

Beginning on April 1, 2018, equity investments are recorded at fair value using quoted market prices where available, with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income. Realized gains and losses from sales are determined using the first in first out method.  

Other Recently Adopted Standards

We adopted new guidance intended to reduce diversity in practice in the classification of certain cash receipts and cash payments in the statement of cash flows. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

We adopted new guidance clarifying how restricted cash and cash equivalents should be classified and presented on the statement of cash flows. This guidance was intended to reduce diversity in practice in the classification of restricted cash and cash equivalents on the statement of cash flows.  Effective April 1, 2018, we no longer report the change in restricted cash and cash equivalents in the operating and investing sections in our Consolidated Statements of Cash Flows.  Restricted cash and cash equivalents are now included in the beginning and end of the period cash and cash equivalents on the Consolidated Statements of Cash Flows. These changes have been applied using a retrospective transition method to each period presented.

We early adopted new guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cut and Jobs Act of 2017 (“TCJA”).  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.  

10

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

Accounting Guidance Issued But Not Yet Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued new guidance that introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard.  The FASB also subsequently issued guidance amending and clarifying various aspects of the new leases guidance.  The new leasing standard represents a wholesale change to lease accounting for lessees and requires additional disclosures regarding leasing arrangements. This accounting guidance is effective for us on April 1, 2019.  Upon adoption, we expect to recognize lease liabilities and right-of-use assets (at their present value) in our Consolidated Balance Sheets related to predominantly all of the future minimum lease payments as disclosed in Note 12 – Commitments and Contingencies.  We are currently evaluating the other potential impacts of this guidance from both a lessee and lessor perspective on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued new guidance that introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  This accounting guidance is effective for us on April 1, 2020.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation. We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date.  This accounting guidance is effective for us on April 1, 2019.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2017, the FASB issued new guidance that makes targeted improvements to accounting for hedging activities. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance provides new alternatives for applying hedge accounting and measuring the hedged item in fair value hedges of interest rate risk.  This accounting guidance is effective for us on April 1, 2019.  The adoption of this guidance is not expected to have a material impact on our consolidated financial statements and related disclosures.

11

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	June 30, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	1,013	$	825		$	-		$	-		$	1,838
Certificates of deposit		-		3,500			-			-			3,500
Cash equivalents total		1,013		4,325			-			-			5,338
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations		2,480		18			-			-			2,498
Municipal debt securities		-		10			-			-			10
Certificates of deposit		-		624			-			-			624
Corporate debt securities		15		182			-			-			197
Mortgage-backed securities:
U.S. government agency		-		36			-			-			36
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			23			-			23
Asset-backed securities		-		-			38			-			38
Available-for-sale debt securities total		2,495		870			63			-			3,428
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													657
Total return bond funds		1,518		-			-			-			1,518
Equity investments total		1,518		-			-			-			2,175
Investments in marketable securities total		4,013		870			63			-			5,603
Derivative assets:
Interest rate swaps		-		915			-			-			915
Foreign currency swaps		-		158			-			-			158
Counterparty netting and collateral		-		-			-			(991	)		(991	)
Derivative assets total		-		1,073			-			(991	)		82
Assets at fair value		5,026		6,268			63			(991	)		11,023
Derivative liabilities:
Interest rate swaps		-		(663	)		(23	)		-			(686	)
Foreign currency swaps		-		(548	)		-			-			(548	)
Counterparty netting and collateral		-		-			-			1,230			1,230
Liabilities at fair value		-		(1,211	)		(23	)		1,230			(4	)
Net assets at fair value	$	5,026	$	5,057		$	40		$	239		$	11,019

12

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Fair Value Measurements (Continued)

	March 31, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	347	$	550		$	-		$	-		$	897
Certificates of deposit		-		2,240			-			-			2,240
Commercial paper		-		255			-			-			255
Cash equivalents total		347		3,045			-			-			3,392
Restricted cash equivalents - money market instruments		173		709			-			-			882
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations		2,774		24			-			-			2,798
Municipal debt securities		-		11			-			-			11
Certificates of deposit		-		474			-			-			474
Commercial paper		-		52			-			-			52
Corporate debt securities		15		186			-			-			201
Mortgage-backed securities:
U.S. government agency		-		39			-			-			39
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			29			-			29
Asset-backed securities		-		-			39			-			39
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													660
Total return bond funds		1,524		-			-			-			1,524
Available-for-sale securities total		4,313		786			70			-			5,829
Derivative assets:
Interest rate swaps		-		872			-			-			872
Interest rate floors		-		1			-			-			1
Foreign currency swaps		-		485			-			-			485
Counterparty netting and collateral		-		-			-			(1,297	)		(1,297	)
Derivative assets total		-		1,358			-			(1,297	)		61
Assets at fair value		4,833		5,898			70			(1,297	)		10,164
Derivative liabilities:
Interest rate swaps		-		(607	)		(21	)		-			(628	)
Foreign currency swaps		-		(200	)		-			-			(200	)
Counterparty netting and collateral		-		-			-			822			822
Liabilities at fair value		-		(807	)		(21	)		822			(6	)
Net assets at fair value	$	4,833	$	5,091		$	49		$	(475	)	$	10,158

13

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Fair Value Measurements (Continued)

Transfers between levels of the fair value hierarchy are recognized at the end of their respective reporting periods.  Transfers between levels of the fair value hierarchy during the three months ended June 30, 2018 and 2017 resulted from changes in the transparency of inputs and were not significant.

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended June 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(8	)		(8	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			2			2			-			2
Issuances		-			-			-			-			-
Sales		-			-			-			-			-
Settlements		(6	)		(3	)		(9	)		6			(3	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, June 30, 2018	$	25		$	38		$	63		$	(23	)	$	40
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date										$	(8	)	$	(8	)

	Three Months Ended June 30, 2017
																								Total net
																								assets
	Available-for-sale securities														Derivative instruments, net									(liabilities)
	U.S.											Total									Total
	government			Corporate		Mortgage-			Asset-			available-			Interest			Foreign			derivative
	and agency			debt		backed			backed			for-sale			rate			currency			assets
	obligations			securities		securities			securities			securities			swaps			swaps			(liabilities)
Fair value, April 1, 2017	$	2		$	8	$	39		$	31		$	80		$	(5	)	$	(62	)	$	(67	)	$	13
Total gains (losses)
Included in net income		-			-		-			-			-			13			7			20			20
Included in other comprehensive income		-			-		-			-			-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			-		5			11			16			-			-			-			16
Issuances		-			-		-			-			-			-			-			-			-
Sales		-			-		-			-			-			-			-			-			-
Settlements		-			-		(1	)		(7	)		(8	)		4			55			59			51
Transfers in to Level 3		-			-		-			-			-			-			-			-			-
Transfers out of Level 3		(2	)		-		-			-			(2	)		-			-			-			(2	)
Fair value, June 30, 2017	$	-		$	8	$	43		$	35		$	86		$	12		$	-		$	12		$	98
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date															$	13		$	-		$	13		$	13

14

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Fair Value Measurements (Continued)

Nonrecurring Fair Value Measurements

Nonrecurring fair value measurements include Level 3 net finance receivables that are not measured at fair value on a recurring basis, but are subject to fair value adjustments utilizing the fair value of the underlying collateral when there is evidence of impairment. We did not have any significant nonrecurring fair value items as of June 30, 2018 and March 31, 2018.

Level 3 Fair Value Measurements

The Level 3 financial assets and liabilities recorded at fair value which are subject to recurring and nonrecurring fair value measurement, and the corresponding change in the fair value measurements of these assets and liabilities, were not significant to our Consolidated Balance Sheets or Consolidated Statements of Income as of and for the three months ended June 30, 2018 and as of and for the year ended March 31, 2018.

15

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Fair Value Measurements (Continued)

Financial Instruments

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	June 30, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,752	$	-	$	-	$	52,323	$	52,323
Wholesale		10,800		-		-		10,847		10,847
Real estate		4,466		-		-		4,352		4,352
Working capital		2,249		-		-		2,266		2,266
Financial liabilities
Commercial paper	$	27,250	$	-	$	27,250	$	-	$	27,250
Unsecured notes and loans payable		58,783		-		56,710		2,306		59,016
Secured notes and loans payable		14,556		-		-		14,514		14,514

	March 31, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,374	$	-	$	-	$	52,081	$	52,081
Wholesale		10,365		-		-		10,413		10,413
Real estate		4,492		-		-		4,409		4,409
Working capital		2,222		-		-		2,197		2,197
Financial liabilities
Commercial paper	$	27,313	$	-	$	27,313	$	-	$	27,313
Unsecured notes and loans payable		57,402		-		55,441		2,341		57,782
Secured notes and loans payable		13,638		-		-		13,588		13,588

The carrying value of each class of finance receivables includes accrued interest and deferred fees and costs, net of deferred income and the allowance for credit losses.  Finance receivables, net, excludes related party transactions, for which the fair value approximates the carrying value, of $195 million and $189 million at June 30, 2018 and March 31, 2018, respectively.  Fair values of related party finance receivables, net would be classified as Level 3 of the fair value hierarchy.

16

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments.  We classify all of our debt securities as available-for-sale.  Prior to April 1, 2018, our equity investments were also considered available-for-sale.  However, upon the adoption of new accounting guidance, all equity investments are measured at fair value with changes in fair value recognized in net income.  

Investments in marketable securities consisted of the following:

	June 30, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	2,520	$	-	$	(22	)	$	2,498
Municipal debt securities		9		1		-			10
Certificates of deposit		625		-		(1	)		624
Corporate debt securities		202		1		(6	)		197
Mortgage-backed securities:
U.S. government agency		37		-		(1	)		36
Non-agency residential		1		1		-			2
Non-agency commercial		24		-		(1	)		23
Asset-backed securities		38		-		-			38
Total available-for-sale debt securities	$	3,456	$	3	$	(31	)	$	3,428
Equity investments								$	2,175
Total investments in marketable securities								$	5,603

	March 31, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations	$	2,821	-		$	(23	)	$	2,798
Municipal debt securities		10		1	-				11
Certificates of deposit		475	-			(1	)		474
Commercial paper		52	-		-				52
Corporate debt securities		203		1		(3	)		201
Mortgage-backed securities:
U.S. government agency		38		1		-			39
Non-agency residential		1		1	-				2
Non-agency commercial		30	-			(1	)		29
Asset-backed securities		39	-		-				39
Equity investments		2,196		11		(23	)		2,184
Total investments in marketable securities	$	5,865	$	15	$	(51	)	$	5,829

A portion of our equity investments are investments in funds that are privately placed and managed by an open-end investment management company (the “Trust”).  If we elect to redeem shares, the Trust will normally redeem all shares for cash, but may, in unusual circumstances, redeem amounts exceeding the lesser of $250 thousand or 1 percent of the Trust’s asset value by payment in kind of securities held by the respective fund during any 90-day period.

We also invest in actively traded open-end mutual funds.  Redemptions are subject to normal terms and conditions as described in each fund’s prospectus.

17

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

Available-for-sale debt securities in a continuous loss position for less than twelve months and for greater than twelve months were not significant as of June 30, 2018.  Available-for-sale debt securities and equity investments in a continuous loss position for less than twelve months and for greater than twelve months were not significant as of March 31, 2018.

Gains and Losses on Securities

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Available-for-sale securities:
Realized gains on sales	$	-		$	41
Equity investments:
Unrealized losses recognized	$	(25	)

Prior to April 1, 2018, available-for-sale securities included debt securities and equity investments.  Upon adoption of the new accounting guidance, equity investments are measured at fair value with changes in fair value recognized in net income.

Contractual Maturities

The amortized cost, fair value, and contractual maturities of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	June 30, 2018
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	2,386	$	2,376
Due after 1 year through 5 years		755		746
Due after 5 years through 10 years		142		137
Due after 10 years		73		70
Mortgage-backed and asset-backed securities1		100		99
Total	$	3,456	$	3,428

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

18

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Finance Receivables, Net

Finance receivables, net consist of retail receivables and dealer financing, which includes accrued interest and deferred fees and costs, net of the allowance for credit losses and deferred income.  Finance receivables, net also includes securitized retail receivables, which represent retail receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements, as discussed further in Note 10 – Variable Interest Entities.  Cash flows from these securitized retail receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Finance receivables, net consisted of the following:

	June 30,			March 31,
	2018			2018
Retail receivables	$	42,047		$	41,265
Securitized retail receivables		11,776			12,130
Dealer financing		17,860			17,420
		71,683			70,815
Deferred origination (fees) and costs, net		629			630
Deferred income		(1,383	)		(1,335	)
Allowance for credit losses
Retail and securitized retail receivables		(313	)		(312	)
Dealer financing		(150	)		(151	)
Total allowance for credit losses		(463	)		(463	)
Finance receivables, net	$	70,466		$	69,647

Credit Quality Indicators

We are exposed to credit risk on our finance receivables.  Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

Retail Loan Portfolio Segment

The retail loan portfolio segment consists of one class of finance receivables. While we use various credit quality metrics to develop our allowance for credit losses on the retail loan portfolio segment, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables.  Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables.  Payment status also impacts charge-offs.

Individual borrower accounts within the retail loan segment are segregated into aging categories based on the number of days outstanding.  The aging for each class of finance receivables is updated monthly.

19

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Finance Receivables, Net (Continued)

Dealer Products Portfolio Segment

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealer group, which includes affiliated entities, are aggregated and evaluated collectively by dealer or dealer group.  This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four categories representing distinct credit quality indicators based on internal risk assessments.  The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The four credit quality indicators are:

• Performing – Account not classified as either Credit Watch, At Risk or Default

• Credit Watch – Account designated for elevated attention

• At Risk – Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors

• Default – Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	June 30,		March 31,
	2018		2018
Aging of finance receivables:
Current	$	52,928	$	52,559
30-59 days past due		642		613
60-89 days past due		186		158
90 days or greater past due		67		65
Total	$	53,823	$	53,395

	Wholesale				Real Estate				Working Capital
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Credit quality indicators:
Performing	$	9,769	$	9,451	$	4,019	$	4,070	$	2,140	$	2,118
Credit Watch		1,084		946		524		484		117		105
At Risk		106		75		45		29		52		33
Default		4		41		-		47		-		21
Total	$	10,963	$	10,513	$	4,588	$	4,630	$	2,309	$	2,277

20

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	111	$	107	$	111	$	107	$	10	$	14
Real estate		54		86		54		86		3		5
Working capital		52		55		52		55		49		51
Total	$	217	$	248	$	217	$	248	$	62	$	70
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	103	$	83	$	103	$	83
Real estate		141		142		141		142
Working capital		21		22		21		22
Total	$	265	$	247	$	265	$	247
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	225	$	222	$	223	$	220
Total impaired account balances:
Retail loan	$	225	$	222	$	223	$	220
Wholesale		214		190		214		190
Real estate		195		228		195		228
Working capital		73		77		73		77
Total	$	707	$	717	$	705	$	715

As of June 30, 2018 and March 31, 2018, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was $208 million and $249 million, respectively, and there were no charge-offs against the allowance for credit losses for these finance receivables.  Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.  As of June 30, 2018 and March 31, 2018, impaired finance receivables in the retail portfolio segment recorded at the fair value of the collateral less estimated selling costs were not significant and therefore excluded from the table above.  Refer to Note 6 – Allowance for Credit Losses for details related to the retail loan portfolio segment’s impaired account balances which are aggregated and evaluated for impairment when determining the allowance for credit losses.

21

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Finance Receivables, Net (Continued)

The following table summarizes the average impaired loans by class of finance receivables as of the balance sheet date:

	Three Months Ended June 30,
	2018		2017
Impaired account balances individually evaluated   for impairment with an allowance:
Wholesale	$	109	$	109
Real estate		70		94
Working capital		53		39
Total	$	232	$	242
Impaired account balances individually evaluated   for impairment without an allowance:
Wholesale	$	93	$	134
Real estate		141		100
Working capital		22		-
Total	$	256	$	234
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	224	$	222
Total impaired account balances:
Retail loan	$	224	$	222
Wholesale		202		243
Real estate		211		194
Working capital		75		39
Total	$	712	$	698

The primary source of interest income recognized on the loans in the table above is from performing troubled debt restructurings.  Interest income on impaired finance receivables and interest income recognized using a cash-basis method of accounting during the three months ended June 30, 2018 and 2017 were not significant.

22

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Finance Receivables, Net (Continued)

Troubled Debt Restructuring

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three months ended June 30, 2018 and 2017 was not significant for each class of finance receivables.  Troubled debt restructurings for non-bankrupt accounts within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer.  For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three.  Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal or interest rate adjustments during the three months ended June 30, 2018 and 2017.

We consider finance receivables under bankruptcy protection within the retail loan class to be troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection, regardless of the ultimate outcome of the bankruptcy proceedings.  The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal.  For the three months ended June 30, 2018 and 2017, the financial impact of troubled debt restructurings related to finance receivables under bankruptcy protection was not significant to our Consolidated Statements of Income and Consolidated Balance Sheets. 

Payment Defaults

Finance receivables modified as troubled debt restructurings for which there was a subsequent payment default during the three months ended June 30, 2018 and 2017, and for which the modification occurred within twelve months of the payment default, were not significant for all classes of such receivables.

23

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 5 – Investments in Operating Leases, Net

Investments in operating leases, net consist of leases, net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Securitized investments in operating leases represent beneficial interests in a pool of certain vehicle leases that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements as discussed further in Note 10 - Variable Interest Entities.  Cash flows from these securitized investments in operating leases are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Investments in operating leases, net consisted of the following:

	June 30,			March 31,
	2018			2018
Investments in operating leases	$	40,462		$	42,863
Securitized investments in operating leases		10,573			7,869
		51,035			50,732
Deferred origination (fees) and costs, net		(227	)		(224	)
Deferred income		(1,852	)		(1,700	)
Accumulated depreciation		(10,071	)		(9,977	)
Allowance for credit losses		(137	)		(134	)
Investments in operating leases, net	$	38,748		$	38,697

24

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Allowance for Credit Losses

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

	Three Months Ended
	June 30,
	2018			2017
Allowance for credit losses at beginning of period	$	597		$	622
Provision for credit losses		89			85
Charge-offs, net of recoveries		(86	)		(96	)
Allowance for credit losses at end of period	$	600		$	611

Charge-offs are shown net of recoveries of $27 million and $23 million for the three months ended June 30, 2018 and 2017, respectively.

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses for finance receivables and finance receivables by portfolio segment:

	Three Months Ended June 30, 2018
	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(75	)		-			(75	)
Recoveries		14			-			14
Provision for credit losses		62			(1	)		61
Ending balance, June 30, 2018	$	313		$	150		$	463
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	62		$	62
Ending balance: Collectively evaluated for impairment	$	313		$	88		$	401
Finance Receivables:
Ending balance, June 30, 2018	$	53,823		$	17,860		$	71,683
Ending balance: Individually evaluated for impairment	$	-		$	482		$	482
Ending balance: Collectively evaluated for impairment	$	53,823		$	17,378		$	71,201

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2018, as they are deemed to be insignificant for individual evaluation, and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment.  The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2018 includes $1,043 million in finance receivables that are guaranteed by Toyota Motor North America, Inc. (“TMNA”), and $138 million in finance receivables that are guaranteed by third party private Toyota distributors.  These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMNA and third party private Toyota distributors.

25

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Allowance for Credit Losses (Continued)

	Three Months Ended June 30, 2017
	Retail Loan			DealerProducts		Total
Beginning balance, April 1, 2017	$	344		$	123	$	467
Charge-offs		(79	)		-		(79	)
Recoveries		13			-		13
Provision for credit losses		44			8		52
Ending balance, June 30, 2017	$	322		$	131	$	453
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	47	$	47
Ending balance: Collectively evaluated for impairment	$	322		$	84	$	406
Finance Receivables:
Ending balance, June 30, 2017	$	51,375		$	18,275	$	69,650
Ending balance: Individually evaluated for impairment	$	-		$	494	$	494
Ending balance: Collectively evaluated for impairment	$	51,375		$	17,781	$	69,156

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2017, as they are deemed to be insignificant for individual evaluation and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment.  The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2017 includes $1,056 million in finance receivables that are guaranteed by TMNA, and $173 million in finance receivables that are guaranteed by third party private Toyota distributors.  These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMNA and third party private Toyota distributors.

26

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Allowance for Credit Losses (Continued)

Past Due Finance Receivables and Investments in Operating Leases

The following table shows aggregate balances of finance receivables and investments in operating leases 60 or more days past due:

	June 30,		March 31,
	2018		2018
Aggregate balances 60 or more days past due
Finance receivables	$	253	$	223
Investments in operating leases		108		106
Total	$	361	$	329

Substantially all finance receivables and investments in operating leases do not involve recourse to the dealer in the event of customer default.  Finance receivables and investments in operating leases 60 or more days past due include contracts in bankruptcy and contracts greater than 120 days past due, which are recorded at the fair value of collateral less estimated costs to sell.  Contracts for which vehicles have been repossessed are excluded.

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class:

	June 30, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	642	$	186	$	67	$	895	$	52,928	$	53,823	$	49
Wholesale		-		-		-		-		10,963		10,963		-
Real estate		-		-		-		-		4,588		4,588		-
Working capital		-		-		-		-		2,309		2,309		-
Total	$	642	$	186	$	67	$	895	$	70,788	$	71,683	$	49

	March 31, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	613	$	158	$	65	$	836	$	52,559	$	53,395	$	46
Wholesale		-		-		-		-		10,513		10,513		-
Real estate		-		-		-		-		4,630		4,630		-
Working capital		-		-		-		-		2,277		2,277		-
Total	$	613	$	158	$	65	$	836	$	69,979	$	70,815	$	46

27

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense

Derivative Instruments

Our liabilities consist mainly of fixed and floating rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, interest rate caps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements.  All of our derivative activities are authorized and monitored by our management and our Asset Liability Committee which provides a framework for financial controls and governance to manage market risk.

Credit Risk Related Contingent Features

Our derivative contracts are governed by International Swaps and Derivatives Association (“ISDA”) Master Agreements.  Substantially all of these ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement at market value in the event of a ratings downgrade of the other party below a specified threshold.  We have daily valuation and collateral exchange arrangements with all of our counterparties.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  However, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at June 30, 2018, if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.  

28

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

Derivative Activity Impact on Financial Statements

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	June 30, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	67,920	$	915	$	67,920	$	915
Interest rate floors		-		-		847		-		847		-
Foreign currency swaps		26		5		3,742		153		3,768		158
Total	$	26	$	5	$	72,509	$	1,068	$	72,535	$	1,073
Counterparty netting and collateral held												(991	)
Carrying value of derivative    contracts – Other assets											$	82
Other liabilities:
Interest rate swaps	$	-	$	-	$	47,220	$	686	$	47,220	$	686
Foreign currency swaps		93		3		9,369		545		9,462		548
Total	$	93	$	3	$	56,589	$	1,231	$	56,682	$	1,234
Counterparty netting and collateral posted												(1,230	)
Carrying value of derivative    contracts – Other liabilities											$	4

As of June 30, 2018, we held collateral of $438 million, which offset derivative assets and we posted collateral of $677 million, which offset derivative liabilities.  In addition, there was $553 million in counterparty netting included for both derivative assets and derivative liabilities.  We also held excess collateral of $2 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets.  We posted excess collateral of $71 million which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.   

29

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

	March 31, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	71,464	$	872	$	71,464	$	872
Interest rate floors		-		-		847		1		847		1
Foreign currency swaps		119		8		7,248		477		7,367		485
Total	$	119	$	8	$	79,559	$	1,350	$	79,678	$	1,358
Counterparty netting and collateral held												(1,297	)
Carrying value of derivative    contracts – Other assets											$	61
Other liabilities:
Interest rate swaps	$	-	$	-	$	41,513	$	628	$	41,513	$	628
Foreign currency swaps		-		-		5,863		200		5,863		200
Total	$	-	$	-	$	47,376	$	828	$	47,376	$	828
Counterparty netting and collateral posted												(822	)
Carrying value of derivative    contracts – Other liabilities											$	6

As of March 31, 2018, we held collateral of $737 million, which offset derivative assets and we posted collateral of $262 million, which offset derivative liabilities.  In addition, there was $560 million in counterparty netting included for both derivative assets and derivative liabilities.  We also held excess collateral of $11 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets.  We posted excess collateral of $3 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.

30

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Interest expense on debt	$	601		$	467
Interest income on derivatives		(25	)		(16	)
Interest expense on debt and derivatives, net		576			451
(Gain) loss on non-hedge accounting debt denominated in foreign currencies		(646	)		650
Loss (gain) on non-hedge accounting foreign currency swaps		683			(650	)
Loss (gain) on U.S. dollar non-hedge accounting interest rate swaps		69			(3	)
Total interest expense	$	682		$	448

Interest expense on debt and derivatives represents net interest settlements and changes in accruals.  Gains and losses on hedge accounting derivatives and debt denominated in foreign currencies exclude net interest settlements and changes in accruals.  Ineffectiveness related to hedge accounting derivatives was not significant for the three months ended June 30, 2018 and 2017.  Cash flows associated with hedge accounting, non-hedge accounting, and de-designated derivatives are reported in Net cash provided by operating activities in our Consolidated Statements of Cash Flows.

The relative fair value allocation of derivative credit value adjustments for counterparty and non-performance credit risk within interest expense was not significant for the three months ended June 30, 2018 and 2017 as we are fully collateralized on substantially all of our derivatives without regard to credit ratings.

31

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 8 – Other Assets and Other Liabilities

Other assets and other liabilities consisted of the following:

	June 30,		March 31,
	2018		2018
Other assets:
Notes receivable from affiliates	$	56	$	68
Used vehicles held for sale		420		366
Derivative assets		82		61
Other assets		1,059		1,119
Total other assets	$	1,617	$	1,614
Other liabilities:
Unearned insurance premiums and contract revenues	$	2,522	$	2,271
Accounts payable and accrued expenses		1,113		1,054
Deferred income		477		468
Income taxes payable		3		2
Derivative liabilities		4		6
Other liabilities		187		186
Total other liabilities	$	4,306	$	3,987

32

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 9 – Debt

Debt and the related weighted average contractual interest rates are summarized as follows:

					Weighted average
					contractual interest rates
	June 30,		March 31,		June 30,			March 31,
	2018		2018		2018			2018
Commercial paper	$	27,250	$	27,313		2.18	%		1.80	%
Unsecured notes and loans payable		58,783		57,402		2.34	%		2.18	%
Secured notes and loans payable		14,556		13,638		2.22	%		1.95	%
Total debt	$	100,589	$	98,353		2.28	%		2.04	%

The carrying value of our debt includes unamortized premiums, discounts and debt issuance costs of $360 million and $353 million as of June 30, 2018 and March 31, 2018, respectively.  The face value of commercial paper, unsecured notes and loans payable and secured notes and loans payable was $27.3 billion, $59.0 billion, and $14.6 billion, respectively, as of June 30, 2018, and $27.4 billion, $57.6 billion and $13.7 billion, respectively, as of March 31, 2018.

As of June 30, 2018, our commercial paper had a weighted average remaining maturity of 75 days, while our unsecured and secured notes and loans payable mature on various dates through fiscal 2049.  Weighted average contractual interest rates are calculated based on original notional or par value before consideration of premium or discount.

Our unsecured notes and loans payable consist of both fixed and variable rate debt with contractual interest rates ranging from 0.0 percent to 5.0 percent at both June 30, 2018 and March 31, 2018.  Upon issuance of fixed rate notes, we generally elect to enter into interest rate swaps to convert fixed rate payments on notes to floating rate payments.

Our unsecured notes and loans payable contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.

Certain unsecured notes and loans payable are denominated in various foreign currencies, and include the impact of translation adjustments.  At June 30, 2018 and March 31, 2018, the carrying values of these foreign currency denominated unsecured notes and loans payable were $12.7 billion and $13.3 billion, respectively.  Concurrent with the issuance of these foreign currency unsecured notes and loans payable, we entered into currency swaps in the same notional amount to convert non-U.S. currency payments to U.S. dollar denominated payments.

Our secured notes and loans payable are denominated in U.S. dollars and consist of both fixed and variable rate debt with contractual interest rates ranging from 1.1 percent to 3.1 percent at June 30, 2018 and 1.1 percent to 2.5 percent at March 31, 2018.  Secured notes and loans payable are issued using on-balance sheet securitization trusts, as further discussed in Note 10 – Variable Interest Entities.  These notes are repayable only from collections on the underlying securitized retail finance receivables and the beneficial interests in investments in operating leases and from related credit enhancements.

33

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 10 – Variable Interest Entities

Consolidated Variable Interest Entities

We use one or more special purpose entities that are considered Variable Interest Entities (“VIEs”) to issue asset-backed securities to third party bank-sponsored asset-backed securitization vehicles and to investors in securitization transactions.  The securities issued by these VIEs are backed by the cash flows related to retail finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”).  We hold variable interests in the VIEs that could potentially be significant to the VIEs.  We determined that we are the primary beneficiary of the securitization trusts because (i) our servicing responsibilities for the Securitized Assets give us the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant.

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	June 30, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	662	$	11,776	$	11,573	$	5	$	9,631	$	8
Investments in operating leases		366		10,573		7,713		121		4,925		2
Total	$	1,028	$	22,349	$	19,286	$	126	$	14,556	$	10

	March 31, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	729	$	12,130	$	11,927	$	7	$	9,958	$	7
Investments in operating leases		297		7,869		5,706		118		3,680		3
Total	$	1,026	$	19,999	$	17,633	$	125	$	13,638	$	10

Restricted Cash, including cash equivalents, shown in the table above represents collections from the underlying Gross Securitized Assets shown in the table above and certain reserve deposits held by TMCC for the VIEs and is included as part of Restricted cash and cash equivalents on our Consolidated Balance Sheets.  Gross Securitized Assets represent finance receivables and beneficial interests in investments in operating leases securitized for the asset-backed securities issued.  Net Securitized Assets shown in the table above are presented net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Other Assets represent used vehicles held-for-sale that were repossessed by or returned to TMCC for the benefit of the VIEs.  The related debt of these consolidated VIEs is presented net of $1,461 million and $1,520 million of securities retained by TMCC at June 30, 2018 and March 31, 2018, respectively.  Other Liabilities represents accrued interest on the debt of the consolidated VIEs.

The assets of the VIEs and the restricted cash and cash equivalents held by TMCC serve as the sole source of repayment for the asset-backed securities issued by these entities.  Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities.

As the primary beneficiary of these entities, we are exposed to credit, residual value, interest rate, and prepayment risk from the Securitized Assets in the VIEs.  However, our exposure to these risks did not change as a result of the transfer of the assets to the VIEs.  We may also be exposed to interest rate risk arising from the secured notes issued by the VIEs.

34

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 10 – Variable Interest Entities (Continued)

In addition, we entered into interest rate swaps with certain special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

The transfers of the Securitized Assets to the special purpose entities in our securitizations are considered to be sales for legal purposes.  However, the Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets and interest expense on the secured debt issued by the special purpose entities.  We also maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Non-consolidated Variable Interest Entities

We provide lending to Toyota and Lexus dealers through the Toyota Dealer Investment Group’s Dealer Capital Program (“TDIG Program”) operated by our affiliate TMNA, which has an equity interest in these dealerships.  Dealers participating in this program have been determined to be VIEs.  We do not consolidate the dealerships in this program as we are not the primary beneficiary and any exposure to loss is limited to the amount of the credit facility.  Amounts due from these dealers under the TDIG Program that are classified as Finance receivables, net in our Consolidated Balance Sheets as of June 30, 2018 and March 31, 2018 and revenues earned from these dealers during the three months ended June 30, 2018 and 2017 were not significant. 

We also have other lending relationships, which have been determined to be VIEs, but these relationships are not consolidated as we are not the primary beneficiary.  Amounts due under these relationships as of June 30, 2018 and March 31, 2018 and revenues earned under these relationships during the three months ended June 30, 2018 and 2017 were not significant.

35

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 11 – Liquidity Facilities and Letters of Credit

For additional liquidity purposes, we maintain syndicated credit facilities with certain banks.

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2017, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2019, 2021, and 2023, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of June 30, 2018 and March 31, 2018.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of June 30, 2018, TMCC had committed bank credit facilities totaling $5.6 billion of which $2.1 billion, $825 million, $2.2 billion, and $475 million mature in fiscal 2019, 2020, 2021, and 2022, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of June 30, 2018 and March 31, 2018. We are currently in compliance with the covenants and conditions of the credit agreements described above.

36

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Commitments and Contingencies

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	June 30,		March 31,
	2018		2018
Commitments:
Credit facilities commitments with dealers	$	1,329	$	1,286
Minimum lease commitments		158		162
Total commitments		1,487		1,448
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,587	$	1,548

Wholesale financing is not considered to be a contractual commitment as the arrangements are not binding arrangements under which TMCC is required to perform.

We are party to a 15-year lease agreement, which expires in August 2032, with TMNA for our headquarters facility in Plano, Texas.  Minimum lease commitments in the table above include $103 million and $105 million for facilities leases with affiliates at June 30, 2018 and March 31, 2018, respectively.  At June 30, 2018, minimum future commitments under lease agreements to which we are a lessee, including those with affiliates, are as follows:

	Futureminimum
Years ending March 31,	leasepayments
2019	$	18
2020		21
2021		17
2022		19
2023		13
Thereafter		70
Total	$	158

Commitments

We provide fixed and variable rate working capital loans, revolving lines of credit, and real estate financing to dealers and various multi-franchise organizations referred to as dealer groups for facilities construction and refurbishment, working capital requirements, real estate purchases, business acquisitions and other general business purposes.  These loans are typically secured with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate, and may be guaranteed by individual or corporate guarantees of affiliated dealers, dealer groups, or dealer principals.  Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover our exposure under such agreements.  Our pricing reflects market conditions, the competitive environment, the level of support dealers provide our retail, lease and insurance business and the credit worthiness of each dealer.  Amounts drawn under these facilities are reviewed for collectability on a quarterly basis, in conjunction with our evaluation of the allowance for credit losses.

Guarantees and Other Contingencies

TMCC has guaranteed bond obligations totaling $100 million in principal that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  The bonds mature in the following fiscal years ending March 31: 2028 - $20 million; 2029 - $50 million; 2030 - $10 million; 2031 - $10 million; and 2032 - $10 million.  TMCC would be required to perform under the guarantees in the event of non-payment on the bonds and other related obligations.  TMCC is entitled to reimbursement by the applicable affiliates for any amounts paid.  TMCC receives a nominal annual fee for guaranteeing such payments.  TMCC has not been required to perform under any of these affiliate bond guarantees as of June 30, 2018 and March 31, 2018.

37

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Commitments and Contingencies (Continued)

Indemnification

In the ordinary course of business, we enter into agreements containing indemnification provisions standard in the industry related to several types of transactions, including, but not limited to, debt funding, derivatives, securitization transactions, and our vendor and supplier agreements.  Performance under these indemnities would occur upon a breach of the representations, warranties or covenants made or given, or a third party claim. In addition, we have agreed in certain debt and derivative issuances, and subject to certain exceptions, to gross-up payments due to third parties in the event that withholding tax is imposed on such payments.  In addition, certain of our funding arrangements may require us to pay lenders for increased costs due to certain changes in laws or regulations.  Due to the difficulty in predicting events, which could cause a breach of the indemnification provisions or trigger a gross-up or other payment obligation, we are not able to estimate our maximum exposure to future payments that could result from claims made under such provisions.  We have not made any material payments in the past as a result of these provisions, and as of June 30, 2018, we determined that it is not probable that we will be required to make any material payments in the future.  As of June 30, 2018 and March 31, 2018, no amounts have been recorded under these indemnification provisions.

Litigation and Governmental Proceedings

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.

38

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 13 – Income Taxes

Our effective tax rate was 19 percent for the three months ended June 30, 2018 compared to 37 percent for the same period in fiscal 2018.  Our provision for income taxes was $22 million for the first quarter of fiscal 2019, compared to $96 million for the same period in fiscal 2018.  The decreases in the effective tax rate and the provision for income taxes for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 were due to the reduction of the federal statutory income tax rate by the TCJA from 35 percent to 21 percent, the decrease in our income before taxes and the adjustment to the deemed repatriation tax as described below.  

Our assessment of the impact of the TCJA is substantially complete, and is reflected in our financial statements as of June 30, 2018 and for the three months then ended. During the first quarter of fiscal 2019, we recorded an adjustment resulting in a tax benefit of $10 million related to the provisional deemed repatriation tax previously recorded in fiscal 2018.  This adjustment is a result of new information which became available during the first quarter of fiscal 2019.  Upon completion of our fiscal 2018 income tax return, we may identify additional revaluation adjustments to our recorded deferred tax liabilities, including the deemed repatriation tax. The issuance of future administrative guidance may further clarify the interpretation of the new law and require adjustments to the provisional amount we recorded for the deemed repatriation tax. Any adjustment required to this provisional amount is not expected to be material.

Tax-related Contingencies

As of June 30, 2018, we remain under IRS examination for fiscal 2018 and 2019.  The IRS examination for fiscal 2017 was concluded in the first quarter of fiscal 2019.

We periodically review our uncertain tax positions.  Our assessment is based on many factors including any ongoing IRS audits.  For the three months ended June 30, 2018, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets were $1.9 billion and $1.6 billion at June 30, 2018 and March 31, 2018, and were primarily due to the deferred deduction of allowance for credit and residual value losses and federal tax loss carryforward which has no expiration.  The total deferred tax liability, net of these deferred tax assets, was $5.3 billion at both June 30, 2018 and March 31, 2018.  Realization with respect to the federal tax loss carryforward is dependent on generating sufficient income.  Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized.  The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.

On August 3, 2018, the IRS and Department of the Treasury proposed regulations that provide guidance regarding the additional first year depreciation deduction under section 168(k) of the Internal Revenue Code.  These proposed regulations reflect changes made by the TCJA.  Under the proposed regulations, there will be an increase to our deferred tax assets driven by our federal tax loss carryforwards and an increase to our deferred tax liability related to vehicle depreciation.  As a result, we expect no significant change to our deferred tax liability, net of deferred tax assets on our Consolidated Balance Sheets.

39

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 14 – Related Party Transactions

As of June 30, 2018, there were no material changes to our related party agreements or relationships as described in our fiscal 2018 Form 10-K.  The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended
	June 30,
	2018			2017
Total financing revenues:
Manufacturers’ subvention and other revenues	$	472		$	368
Interest expense:
Credit support fees incurred	$	24		$	23
Interest and other expenses	$	1		$	1
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44
Investment and other income, net:
Interest and other income	$	2		$	4
Expenses:
Operating and administrative	$	23		$	19
Insurance losses and loss adjustment expenses1	$	(2	)	$	(5	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

40

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 14 – Related Party Transactions (Continued)

	June 30,			March 31,
	2018			2018
Assets:
Cash and cash equivalents
Commercial paper	$	-		$	255
Investments in marketable securities
Commercial paper	$	-		$	52
Finance receivables, net
Accounts receivable	$	197		$	191
Deferred retail subvention income	$	(1,332	)	$	(1,279	)
Investments in operating leases, net
Investments in operating leases, net	$	6		$	6
Deferred lease subvention income	$	(1,833	)	$	(1,682	)
Other assets
Notes receivable	$	56		$	68
Other receivables, net	$	174		$	310
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	344		$	328
Other payables, net	$	59		$	74
Notes payable	$	24		$	18

TMCC receives subvention payments from TMNA which results in a gross monthly subvention receivable.  As of June 30, 2018 and March 31, 2018, the subvention receivable from TMNA was $193 million and $279 million, respectively. The subvention receivable is recorded in Other receivables, net in Other assets as of June 30, 2018 and March 31, 2018.  We have a master netting agreement with TMNA which allows us to net settle payments for shared services and subvention transactions.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 15 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended June 30, 2018
	Finance		Insurance			Intercompany
	operations		operations			eliminations			Total
Total financing revenues	$	2,836	$	-		$	-		$	2,836
Depreciation on operating leases		1,766		-			-			1,766
Interest expense		687		-			(5	)		682
Net financing revenues		383		-			5			388
Insurance earned premiums and contract revenues		-		224			-			224
Investment and other income (loss), net		48		(3	)		(5	)		40
Net financing and other revenues		431		221			-			652
Expenses:
Provision for credit losses		89		-			-			89
Operating and administrative expenses		241		83			-			324
Insurance losses and loss adjustment expenses		-		125			-			125
Total expenses		330		208			-			538
Income before income taxes		101		13			-			114
Provision for income taxes		19		3			-			22
Net income	$	82	$	10		$	-		$	92
Total assets at June 30, 2018	$	119,335	$	4,815		$	(1,087	)	$	123,063

Insurance operations – Revenue Recognition

For the first quarter of fiscal 2019, approximately 84 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the revenue recognition guidance.

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three months ended June 30, 2018.

We had $2.2 billion of unearned insurance premiums and contract revenues within the scope of the new revenue recognition guidance included in Other liabilities as of April 1, 2018 and June 30, 2018.  We recognized $176 million of the unearned amount in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three months ended June 30, 2018, which was included in Other liabilities as of April 1, 2018. We expect to recognize as revenue approximately $504 million of the unearned amount in the remainder of fiscal 2019, $559 million in fiscal 2020, and $1.1 billion thereafter.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 15 – Segment Information (Continued)

	Three Months Ended June 30, 2017
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,598	$	-	$	-		$	2,598
Depreciation on operating leases		1,681		-		-			1,681
Interest expense		451		-		(3	)		448
Net financing revenues		466		-		3			469
Insurance earned premiums and contract revenues		-		216		-			216
Investment and other income, net		32		59		(3	)		88
Net financing and other revenues		498		275		-			773
Expenses:
Provision for credit losses		85		-		-			85
Operating and administrative expenses		233		80		-			313
Insurance losses and loss adjustment expenses		-		114		-			114
Total expenses		318		194		-			512
Income before income taxes		180		81		-			261
Provision for income taxes		65		31		-			96
Net income	$	115	$	50	$	-		$	165
Total assets at June 30, 2017	$	117,011	$	4,605	$	(1,087	)	$	120,529

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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Form 10-Q or incorporated by reference herein are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on current expectations and currently available information.  However, since these statements are based on factors that involve risks and uncertainties, our performance and results may differ materially from those described or implied by such forward-looking statements.  Words such as “believe,” “anticipate,” “expect,” “estimate,” “project,” “should,” “intend,” “will,”  “may” or words or phrases of similar meaning are intended to identify forward-looking statements.  We caution that the forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2018  (“fiscal 2018”), including the following:

• Changes in general business, economic, and geopolitical conditions, as well as in consumer demand and the competitive environment in the automotive markets in the United States;

• A decline in Toyota Motor North America, Inc. (“TMNA”) sales volume and the level of TMNA sponsored subvention and other cash incentive programs;

• Increased competition from other financial institutions seeking to increase their share of financing Toyota and Lexus vehicles;

• Changes in consumer behavior;

• Recalls announced by TMNA and the perceived quality of Toyota and Lexus vehicles;

• Availability and cost of financing;

• Changes in our credit ratings and those of Toyota Motor Corporation (“TMC”);

• Changes in our financial position and liquidity, or changes or disruptions in our funding sources or access to the global capital markets;

• Revisions to the estimates and assumptions for our allowance for credit losses;

• Flaws in the design, implementation and use of quantitative models and revisions to the estimates and assumptions that are used to determine the value of certain assets;

• Fluctuations in the value of our investment securities or market prices;

• Changes to existing, or adoption of new, accounting standards;

• Changes in prices of used vehicles and their effect on residual values of our off-lease vehicles and return rates;

• Failure of our customers or dealers to meet the terms of any contract with us, or otherwise perform as agreed;

• Fluctuations in interest rates and foreign currency exchange rates;

• Failure or interruption in our operations, including our communications and information systems, or as a result of our failure to retain existing or to attract new key personnel;

• A security breach or a cyber-attack;

• Failure or changes in commercial soundness of our counterparties and other financial institutions;

• Insufficient establishment of reserves, or the failure of a reinsurer to meet its obligations, in our insurance operations;

• Compliance with current laws and regulations or becoming subject to more stringent laws, regulatory requirements and regulatory scrutiny;

• Natural disasters, changes in fuel prices, manufacturing disruptions and production suspensions of Toyota and Lexus vehicle models and related parts supply;

• Changes in the economy or to laws in states where we have a high concentration of customers; and

• Changes in business strategy, including expansion of product lines, credit risk appetite, and business acquisitions.

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Forward-looking statements speak only as of the date they are made.  We will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements.

45

OVERVIEW

Key Performance Indicators and Factors Affecting Our Business

In our finance operations, we generate revenue, income, and cash flows by providing retail, lease, and dealer financing to dealers and their customers.  We measure the performance of our finance operations using the following metrics: financing volume, market share, financing margins, operating expense, residual value and credit loss metrics.

In our insurance operations, we generate revenue through marketing, underwriting, and providing claims administration for products that cover certain risks of dealers and their customers.  We measure the performance of our insurance operations using the following metrics: issued agreement volume, average number of agreements in force, loss metrics and investment income.

Our financial results are affected by a variety of economic and industry factors including, but not limited to, new and used vehicle markets, Toyota and Lexus sales volume, new vehicle incentive programs, consumer behavior, employment levels, our ability to respond to changes in interest rates with respect to both contract pricing and funding, the actual or perceived quality, safety or reliability of Toyota and Lexus vehicles, the financial health of the dealers we finance, and competitive pressure.  Our financial results may also be affected by the regulatory environment in which we operate, including as a result of new legislation or changes in regulation and any compliance costs or changes we may be required to make to our business practices.  All of these factors can influence consumer contract and dealer financing volume, the number of consumer contracts and dealers that default and the loss per occurrence, our inability to realize originally estimated contractual residual values on leased vehicles, the volume and performance of our insurance operations, and our gross margins on consumer and dealer financing volume.  Changes in the volume of vehicle sales, sales of our insurance and vehicle and payment protection products, or the level of losses could materially and adversely impact our insurance operations.  Additionally, our funding programs and related costs are influenced by changes in the global capital markets, prevailing interest rates, and our credit ratings and those of our parent companies, which may affect our ability to obtain cost effective funding to support earning asset growth.

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Fiscal 2019 First Three Months Operating Environment

During the first quarter of the fiscal year ending March 31, 2019 (“fiscal 2019”), the United States (“U.S.”) economy continued to expand.  The unemployment rate reached its lowest level in nearly two decades, which has resulted in wage growth for consumers.  However, student and auto related debt balances have increased and represent a larger portion of the consumer debt mix.  Concurrently, delinquencies for student and auto related debt have also increased. In addition, uncertainties surrounding future trade policy have begun to impact the outlook for future economic growth.  Changes in the economy that adversely impact the consumer, such as higher interest rates, elevated debt levels and an increase in unemployment from the current low levels could adversely impact our results of operations in the future.

Industry-wide vehicle sales in the U.S. increased slightly due to elevated sales incentives during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018.  Vehicle sales by TMNA decreased 3 percent in the first quarter of fiscal 2019 compared to the same period in fiscal 2018 primarily due to lower consumer demand for Toyota and Lexus vehicles.  Financing volume increased 3 percent and our overall market share increased 5 percentage points for the first quarter of fiscal 2019 compared to the same period in fiscal 2018, primarily due to higher levels of subvention compared to the same period in fiscal 2018.  

Used vehicle values for Toyota and Lexus vehicles were relatively consistent in the first quarter of fiscal 2019 compared to the same period of fiscal 2018.  Declines in used vehicle values resulting from increases in the supply of used vehicles, increases in new vehicle sales incentives and a larger lease portfolio resulting in higher future maturities could unfavorably impact return rates, residual values, depreciation expense and credit losses in the future.

We continue to maintain broad global access to both domestic and international markets.  Conditions in the global capital markets were generally stable during the first quarter of fiscal 2019.  However, concerns regarding international trade policy led to periods of volatility during the period.  During the first quarter of fiscal 2019, our interest expense increased as compared to the same period in fiscal 2018 as a result of higher interest rates.  Future changes in interest rates in the U.S. and foreign markets could result in further volatility in our interest expense, which could affect our results of operations.

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RESULTS OF OPERATIONS

The following table summarizes total net income by our reportable operating segments:

	Three Months Ended
	June 30,
(Dollars in millions)	2018		2017
Net income:
Finance operations1	$	82	$	115
Insurance operations1		10		50
Total net income	$	92	$	165

¹ Refer to Note 15 - Segment Information of the Notes to Consolidated Financial Statements for the total asset balances of our finance and insurance operations.

Our consolidated net income was $92 million for the first quarter of fiscal 2019 compared to $165 million for the same period in fiscal 2018.  The decrease in net income for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to a $234 million increase in interest expense, a $85 million increase in depreciation on operating leases, a $48 million decrease in investment and other income, net, and a $11 million increase in insurance losses and loss adjustment expenses, partially offset by a $238 million increase in total financing revenues, and a $74 million decrease in provision for income taxes.  

Our overall capital position remained consistent at $12.9 billion at both June 30, 2018 and March 31, 2018.  Our debt increased to $100.6 billion at June 30, 2018 from $98.4 billion at March 31, 2018 as a result of funding our earning asset growth.  As a result, our debt-to-equity ratio increased to 7.8 at June 30, 2018 from 7.6 at March 31, 2018.  

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Finance Operations

 The following table summarizes key results of our Finance Operations:

	Three Months Ended
	June 30,				Percentage
(Dollars in millions)	2018		2017		Change
Financing revenues:
Operating lease	$	2,126	$	1,981		7	%
Retail		535		474		13	%
Dealer		175		143		22	%
Total financing revenues		2,836		2,598		9	%
Depreciation on operating leases		1,766		1,681		5	%
Interest expense		687		451		52	%
Net financing revenues		383		466		(18	)%
Investment and other income, net		48		32		50	%
Net financing and other revenues		431		498		(13	)%
Expenses:
Provision for credit losses		89		85		5	%
Operating and administrative expenses		241		233		3	%
Total expenses		330		318		4	%
Income before income taxes		101		180		(44	)%
Provision for income taxes		19		65		(71	)%
Net income from finance operations	$	82	$	115		(29	)%

Our finance operations reported net income of $82 million for the first quarter of fiscal 2019 compared to $115 million for the same period in fiscal 2018.  The decrease in net income from finance operations for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to a $236 million increase in interest expense and a $85 million increase in depreciation on operating leases, partially offset by a $238 million increase in total financing revenues and a $46 million decrease in provision for income taxes.

Financing Revenues

Total financing revenues increased 9 percent during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 due to the following:

• Operating lease revenues increased 7 percent in the first quarter of fiscal 2019 as compared to the same period in fiscal 2018, due to higher portfolio yields, increases in subvention revenue and higher average earning asset balances.  The increase in our portfolio yields was partially offset by an increase in our depreciation expense.  

• Retail financing revenues increased 13 percent in the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 due to higher portfolio yields and higher average earning asset balances.

• Dealer financing revenues increased 22 percent in the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 due to higher portfolio yields, partially offset by lower average earning asset balances.

As a result of the above, our total portfolio yield, which includes operating lease, retail and dealer financing revenues, increased to 3.9 percent for first quarter of fiscal 2019, compared to 3.4 percent for first quarter of fiscal 2018.

Depreciation on Operating Leases

We reported depreciation on operating leases of $1,766 million during the first quarter of fiscal 2019 compared to $1,681 million during the first quarter of fiscal 2018.  The increase in depreciation expense during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 was primarily attributable to an increase in average operating lease units outstanding as well as expected deterioration in used vehicle values for Toyota and Lexus vehicles, as compared to the first quarter of fiscal 2018.

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Interest Expense

Our liabilities consist mainly of fixed and floating rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, interest rate caps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  The following table summarizes the components of interest expense:

	Three Months Ended
	June 30,
(Dollars in millions)	2018			2017
Interest expense on debt	$	601		$	467
Interest income on derivatives		(25	)		(16	)
Interest expense on debt and derivatives		576			451
(Gain) loss on non-hedge accounting debt denominated in foreign currencies		(646	)		650
Loss (gain) on non-hedge accounting foreign currency swaps		683			(650	)
Loss (gain) on U.S. dollar non-hedge accounting interest rate swaps		69			(3	)
Total interest expense	$	682		$	448

During the first quarter of fiscal 2019, total interest expense increased to $682 million from $448 million in the same period in fiscal 2018.  The increase in total interest expense for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 is primarily attributable to an increase in interest expense on debt and derivatives, losses on U.S. dollar non-hedge accounting interest rate swaps, and losses on non-hedge accounting debt denominated in foreign currencies net of non-hedge accounting foreign currency swaps.  

Interest expense on debt and derivatives primarily represents contractual net interest settlements and changes in accruals on secured and unsecured notes and loans payable, commercial paper and derivatives, and includes amortization of discounts, premiums, and debt issuance costs.  During the first quarter of fiscal 2019, interest expense on debt and derivatives increased to $576 million from $451 million in the same period in fiscal 2018 due to higher weighted average interest rates.

Gain or loss on non-hedge accounting debt denominated in foreign currencies represents the impact of translation adjustments.  We use non-hedge accounting foreign currency swaps to economically hedge the debt denominated in foreign currencies. During the first quarter of fiscal 2019, we recorded net losses of $37 million, as losses on our non-hedge accounting foreign currency swaps were partially offset by gains on our non-hedge accounting debt denominated in foreign currencies primarily as a result of increases in foreign currency swap rates across the various currencies in which our debt is denominated.  During the first quarter of fiscal 2018, losses on our debt denominated in foreign currencies were offset by gains on our foreign currency swaps as a result of offsetting foreign currency swap rates across the various currencies in which our debt is denominated.

Gain or loss on U.S. dollar non-hedge accounting interest rate swaps represents the change in the valuation of interest rate swaps.  During the first quarter of fiscal 2019, we recorded losses of $69 million primarily as a result of increases in U.S. dollar swap rates across all tenors, with the losses on our pay-float swaps exceeding the gains on our pay-fixed swaps.  During the first quarter of fiscal 2018, we recorded gains of $3 million primarily as a result of slight decreases in the longer tenor U.S. dollar swap rates, with the gains on our longer-term pay-float swaps exceeding the losses on our higher notional, shorter-term pay-fixed swaps.

Future changes in interest and foreign currency exchange rates could continue to result in significant volatility in our interest expense, thereby affecting our results of operations.

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Provision for Credit Losses

We recorded a provision for credit losses of $89 million for the first quarter of fiscal 2019 compared to $85 million for the same period in fiscal 2018.  The increase in the provision for credit losses for the first quarter of fiscal 2019 was driven by higher default frequency and loss severity, partially offset by improvement in the financial performance of certain dealers and higher recoveries.  

Operating and Administrative Expenses

We recorded operating and administrative expenses of $241 million during the first quarter of fiscal 2019 compared to $233 million during the same period in fiscal 2018.  The increase in operating and administrative expenses for the first quarter of fiscal 2019 was due to an increase in general operating expenses.  We also continue to incur expenses associated with the relocation of our headquarters, including deferred compensation and other relocation expenses.  We will incur deferred compensation expenses relating to our relocation over the next two years.  

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Insurance Operations

The following table summarizes key results of our Insurance Operations:

	Three Months Ended
	June 30,					Percentage
	2018			2017		Change
Agreements (units in thousands)
Issued		635			635		-	%
Average in force		8,738			7,966		10	%
(Dollars in millions)
Insurance earned premiums and contract revenues	$	224		$	216		4	%
Investment and other (loss) income, net		(3	)		59		(105	)%
Revenues from insurance operations		221			275		(20	)%
Expenses:
Insurance losses and loss adjustment expenses		125			114		10	%
Operating and administrative expenses		83			80		4	%
Total expenses		208			194		7	%
Income before income taxes		13			81		(84	)%
Provision for income taxes		3			31		(90	)%
Net income from insurance operations	$	10		$	50		(80	)%

Our insurance operations reported net income of $10 million for the first quarter of fiscal 2019 compared to $50 million for the same period in fiscal 2018.  The decrease in net income for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to a $62 million decrease in investment and other (loss) income, net and a $11 million increase in insurance losses and loss adjustment expenses, partially offset by a $28 million decrease in provision for income taxes, and an $8 million increase in insurance earned premiums and contract revenues.  

Agreements issued remained consistent for the first quarter of fiscal 2019 compared to the same period in fiscal 2018.  The average number of in force agreements increased 10 percent during the first quarter of fiscal 2019 compared to the same period in fiscal 2018.  The increase in the average in force agreements during the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to increases in guaranteed auto protection agreements, prepaid maintenance agreements, and tire and wheel protection agreements as issuances outpaced agreement expirations.

Revenue from Insurance Operations

Our insurance operations reported insurance earned premiums and contract revenues of $224 million for the first quarter of fiscal 2019 compared to $216 million for the same period in fiscal 2018.  Insurance earned premiums and contract revenues represent revenues from in force agreements and are affected by issuances as well as the level, age, and mix of in force agreements.  Insurance earned premiums and contract revenues are recognized over the term of the agreements in relation to the timing and level of anticipated claims.  The increase in insurance earned premiums and contract revenues in the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to insurance portfolio growth in recent years.  

Investment and Other (Loss) Income, Net

Our insurance operations reported investment and other loss, net of $3 million for the first quarter of fiscal 2019 compared to investment and other income, net of $59 million for the same period in fiscal 2018.  Investment and other (loss) income, net, consists primarily of dividend and interest income, realized gains and losses on investments in marketable securities, and changes in fair value from equity investments.  The loss in the first quarter of fiscal 2019 was primarily due to declines in the fair value of our equity investments.  In comparison, investment and other income, net in the first quarter of fiscal 2018 was primarily due to the sale of a portion of our fixed income mutual funds portfolio to take advantage of favorable market conditions.  Prior to April 1, 2018, our equity investments were considered available-for-sale and changes in fair value were recorded in Accumulated other comprehensive income until realized.  As a result of the adoption of new accounting guidance in the first quarter of fiscal 2019, all equity investments are measured at fair value with changes in fair value recognized in net income.

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Insurance Losses and Loss Adjustment Expenses

Our insurance operations reported insurance losses and loss adjustment expenses of $125 million for the first quarter of fiscal 2019 compared to $114 million for the same period in fiscal 2018.  Insurance losses and loss adjustment expenses incurred are a function of the amount of covered risks, the frequency and severity of claims associated with in force agreements and the level of risk retained by our insurance operations.  Insurance losses and loss adjustment expenses include amounts paid and accrued for reported losses, estimates of losses incurred but not reported, and any related claim adjustment expenses. The increase in insurance losses and loss adjustment expenses in the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was primarily due to an increase in losses in our inventory insurance program, tire and wheel protection, and prepaid maintenance agreements.  The increase in our inventory insurance program losses was due to weather related damages incurred in the first quarter of fiscal 2019. The increase in our tire and wheel protection losses was due to an increase in the frequency and severity of claims.  The increase in our prepaid maintenance losses was due to an increase in the severity of claims, as well as a higher number of average in force agreements.

Operating and Administrative Expenses

Our insurance operations reported operating and administrative expenses of $83 million for the first quarter of fiscal 2019 compared to $80 million for the same period in fiscal 2018.  The increase in operating and administrative expenses in the first quarter of fiscal 2019 compared to the same period in fiscal 2018 was attributable to higher product and dealer back-end expenses driven by the continued growth of our insurance business. Insurance dealer back-end program expenses are incentives or expense reduction programs we provide to dealers based on certain performance criteria.  

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Provision for Income Taxes

Our provision for income taxes was $22 million for the first quarter of fiscal 2019 compared to $96 million for the same period in fiscal 2018.  Our effective tax rate was 19 percent for the first quarter of fiscal 2019 compared to 37 percent for the same period in fiscal 2018.  The decreases in the effective tax rate and the provision for income taxes for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 were due to the reduction of the federal statutory income tax rate by the Tax Cut and Jobs Act of 2017 from 35 percent to 21 percent, the decrease in our income before taxes, and the adjustment to the deemed repatriation tax as described in Footnote 13 – Income Taxes in the Notes to the Consolidated Financial Statements.  

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FINANCIAL CONDITION

Vehicle Financing Volume and Net Earning Assets

The composition of our vehicle contract volume and market share is summarized below:

	Three Months Ended
	June 30,						Percentage
(units in thousands):	2018			2017			Change
TMNA new sales volume1		455			470			(3	)%
Vehicle financing volume:2
New retail contracts		156			147			6	%
Used retail contracts		65			68			(4	)%
Lease contracts		136			131			4	%
Total		357			346			3	%
TMNA subvened vehicle financing volume (units included in the above table):
New retail contracts		116			82			41	%
Used retail contracts		13			21			(38	)%
Lease contracts		130			119			9	%
Total		259			222			17	%
TMNA subvened vehicle financing volume as a percent of vehicle financing volume:
New retail contracts		74.4	%		55.8	%
Used retail contracts		20.0	%		30.9	%
Lease contracts		95.6	%		90.8	%
Overall subvened contracts		72.5	%		64.2	%
Market share:3
Retail contracts		34.1	%		31.1	%
Lease contracts		29.9	%		27.6	%
Total		64.0	%		58.7	%

¹ Represents total domestic TMNA sales of new Toyota and Lexus vehicles excluding sales under dealer rental car and commercial fleet programs and sales of a private Toyota distributor.  TMNA new sales volume was comprised of 86 percent Toyota and 14 percent Lexus for both the first quarter of fiscal 2019 and fiscal 2018.

² Total financing volume was comprised of approximately 81 percent Toyota, 16 percent Lexus, and 3 percent non-Toyota/Lexus for the first quarter of fiscal 2019.  Total financing volume was comprised of approximately 80 percent Toyota, 17 percent Lexus, and 3 percent non-Toyota/Lexus for the first quarter of fiscal 2018.

³ Represents the percentage of total domestic TMNA sales of new Toyota and Lexus vehicles financed by us, excluding sales under dealer rental car and commercial fleet programs and sales of a private Toyota distributor.

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Vehicle Financing Volume

The volume of our retail and lease contracts, which are acquired primarily from Toyota and Lexus dealers, is substantially dependent upon TMNA new sales volume as well as the level of TMNA sponsored subvention and other incentive programs.  Vehicle sales by TMNA decreased 3 percent for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 due to a decline in consumer demand for Toyota and Lexus vehicles.  Despite declines in vehicle sales by TMNA, our financing volume increased 3 percent and our overall market share increased 5 percentage points for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 primarily due to higher levels of subvention.

The composition of our net earning assets is summarized below:

	June 30,		March 31,
(Dollars in millions)	2018		2018		Change
Net Earning Assets
Finance receivables, net
Retail finance receivables, net	$	52,756	$	52,378		1	%
Dealer financing, net1		17,710		17,269		3	%
Total finance receivables, net		70,466		69,647		1	%
Investments in operating leases, net		38,748		38,697		-	%
Net earning assets	$	109,214	$	108,344		1	%
Dealer Financing
(Number of dealers serviced)
Toyota and Lexus dealers1		982		988		(1	)%
Dealers outside of the Toyota/Lexus dealer network		363		364		-	%
Total number of dealers receiving wholesale financing		1,345		1,352		(1	)%
Dealer inventory outstanding (units in thousands)		342		334		2	%

¹ Includes wholesale and other credit arrangements in which we participate as part of a syndicate of lenders.

Retail Contract Volume and Earning Assets

Our new retail contract volume increased 6 percent and our retail market share increased 3 percentage points during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018.  The increase of both new retail contract volume and market share during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 was attributable to higher levels of subvention.  Our retail finance receivables, net increased 1 percent at June 30, 2018 as compared to March 31, 2018 as a result of an increase in the average amount financed.  

Lease Contract Volume and Earning Assets

Our lease contract volume increased 4 percent and our lease market share increased 2 percentage points during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018.  The increase of both lease financing volume and market share during the first quarter of fiscal 2019 was attributable to higher levels of subvention.  Our investments in operating leases, net, remained relatively unchanged at June 30, 2018, as compared to March 31, 2018.  

Dealer Financing and Earning Assets

Dealer financing, net at June 30, 2018, increased 3 percent from March 31, 2018 due primarily to an increase in dealer inventory outstanding.

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Residual Value Risk

The primary factors affecting our exposure to residual value risk are the levels at which residual values are established at lease inception, current economic conditions and outlook, projected end-of-term market values, and the resulting impact on depreciation expense and lease return rates.

On a quarterly basis, we review the estimated end-of-term market values of leased vehicles to assess the appropriateness of our carrying values.  To the extent the estimated end-of-term market value of a leased vehicle is lower than the residual value established at lease inception, the residual value of the leased vehicle is adjusted downward so that the carrying value at lease end will approximate the estimated end-of-term market value.  For investments in operating leases, adjustments are made on a straight-line basis over the remaining terms of the lease contracts and are included in Depreciation on operating leases in our Consolidated Statements of Income as a change in accounting estimate.  

Depreciation on Operating Leases

Depreciation on operating leases and average operating lease units outstanding are as follows:

	Three Months Ended
	June 30,				Percentage
	2018		2017		Change
Depreciation on operating leases    (dollars in millions)	$	1,766	$	1,681		5	%
Average operating lease units    outstanding    (in thousands)		1,485		1,448		3	%

Depreciation expense on operating leases increased 5 percent during the first quarter of fiscal 2019 as compared to the same period in fiscal 2018 due to an increase in the average operating lease units outstanding as well as deterioration in expected used vehicle values for Toyota and Lexus vehicles as compared to the first quarter of fiscal 2018.  As a result of the increased focus on leasing in recent years, by both us and the automotive finance industry, we expect maturities will increase in fiscal 2019, which will result in an increase in the supply of used vehicles and could unfavorably impact used vehicle values.  Higher average operating lease units outstanding and the resulting increase in future maturities, a higher supply of used vehicles, as well as deterioration in actual and expected used vehicle values for Toyota and Lexus vehicles could unfavorably impact return rates, residual values, and depreciation expense.

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Credit Risk

Credit Loss Experience

Our credit loss experience may be affected by a number of factors including the economic environment, our purchasing, servicing and collections practices, used vehicle market conditions and subvention.  We continuously evaluate and refine our purchasing practices and collection efforts to minimize risk.  In addition, subvention contributes to our overall portfolio quality, as subvened contracts typically have higher credit quality than non-subvened contracts.

The following table provides information related to our credit loss experience:

	June 30,			March 31,			June 30,
	2018			2018			2017
Net charge-offs as a percentage of average gross    earning assets1
Finance receivables		0.34	%		0.44	%		0.38	%
Operating leases		0.26	%		0.31	%		0.31	%
Total		0.31	%		0.39	%		0.36	%
Default frequency as a percentage of outstanding    contracts		1.60	%		1.46	%		1.42	%
Average loss severity per unit2	$	7,602		$	7,497		$	7,511
Aggregate balances for accounts 60 or more days    past due as a percentage of gross earning assets3
Finance receivables4		0.35	%		0.32	%		0.33	%
Operating leases4		0.28	%		0.27	%		0.27	%
Total		0.33	%		0.30	%		0.31	%

¹ Net charge-off ratios have been annualized using three month results for the periods ended June 30, 2018 and 2017.

² Average loss per unit upon disposition of repossessed vehicles or charge-off prior to repossession.

³ Substantially all retail and operating lease receivables do not involve recourse to the dealer in the event of customer default.

⁴ Includes accounts in bankruptcy and excludes accounts for which vehicles have been repossessed.

The level of credit losses primarily reflects two factors: default frequency and loss severity.  Net charge-offs as a percentage of average gross earning assets decreased from 0.36 percent at June 30, 2017 and 0.39 percent at March 31, 2018 to 0.31 percent at June 30, 2018 due to recent focus on late stage collection activities and an increase in recoveries.  Default frequency as a percentage of outstanding contracts increased to 1.60 percent for the first quarter of fiscal 2019 compared to 1.42 percent for the same period in fiscal 2018 as a result of higher delinquencies.  Our average loss severity for the first quarter of fiscal 2019 increased slightly to $7,602 from $7,511 in the first quarter of fiscal 2018.  Our delinquencies increased to 0.33 percent for the first quarter of fiscal 2019 compared to 0.31 percent for the same period in fiscal 2018 and 0.30 percent at March 31, 2018 due to shifts in payment behavior as consumer debt levels rise.  Despite increases in our default frequency, loss severity, and delinquencies for the first quarter of fiscal 2019, we have experienced lower repossession volume driven by our recent focus on late stage collections.  Changes in the economy that impact the consumer such as increasing interest rates, and a rise in the unemployment rate as well as higher debt balances, coupled with deterioration in actual and expected used vehicle values, could increase our credit losses.  In addition, a decline in the effectiveness of our collection practices could also increase our credit losses.

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Allowance for Credit Losses

We maintain an allowance for credit losses to cover probable and estimable losses as of the balance sheet date resulting from the non-performance of our customers and dealers under their contractual obligations.  The determination of the allowance involves significant assumptions, complex analyses, and management judgment.

The allowance for credit losses for our consumer portfolio is established through a process that estimates probable losses incurred as of the balance sheet date based upon consistently applied statistical analyses of portfolio data.  This process utilizes delinquency migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, and incorporates current and expected trends and other relevant factors, including used vehicle market conditions, economic conditions, unemployment rates, purchase quality mix, and operational factors.  This process, along with management judgment, is used to establish the allowance for credit losses to cover probable and estimable losses incurred as of the balance sheet date.  Movement in any of these factors would cause changes in estimated probable losses.

The allowance for credit losses for our dealer portfolio is established by aggregating dealer financing receivables into loan-risk pools, which are determined based on the risk characteristics of the loan (e.g. secured by vehicles, real estate or dealership assets).  We analyze the loan-risk pools using internally developed risk ratings for each dealer.  In addition, we have established procedures that focus on managing high risk loans in our dealer portfolio.  Our field operations management and special assets group are consulted each quarter to determine if any specific dealer loan is considered impaired.  If impaired loans are identified, specific reserves are established, as appropriate, and the loan is removed from the loan-risk pool for separate monitoring.

The following table provides information related to our allowance for credit losses:

	Three Months Ended
	June 30,
(Dollars in millions)	2018			2017
Allowance for credit losses at beginning of period	$	597		$	622
Provision for credit losses		89			85
Charge-offs, net of recoveries1		(86	)		(96	)
Allowance for credit losses at end of period	$	600		$	611

¹ Charge-offs are shown net of recoveries of $27 million and $23 million for the three months ended June 30, 2018 and 2017, respectively.

Our allowance for credit losses decreased $11 million from $611 million at June 30, 2017 to $600 million at June 30, 2018 as a result of lower credit loss experience, which was partially offset by overall growth of the consumer portfolio, as well as deterioration in the financial performance of certain dealers.  Changes in the economy that impact the consumer such as increasing interest rates and a rise in the unemployment rate as well as higher debt balances, coupled with deterioration in actual and expected used vehicle values, could result in increases to our allowance for credit losses.  In addition, a decline in the effectiveness of our collection practices could also increase our allowance for credit losses.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk relating to our ability to meet our financial obligations when they come due.  Our liquidity strategy is to ensure that we maintain the ability to fund assets and repay liabilities in a timely and cost-effective manner, even in adverse market conditions.  Our strategy includes raising funds via the global capital markets and through loans, credit facilities, and other transactions as well as generating liquidity from our earning assets.  This strategy has led us to develop a diversified borrowing base that is distributed across a variety of markets, geographies, investors and financing structures, among other factors.

The following table summarizes the components of our outstanding funding sources at carrying value:

	June 30,		March 31,
(Dollars in millions)	2018		2018
Commercial paper1	$	27,250	$	27,313
Unsecured notes and loans payable2		58,783		57,402
Secured notes and loans payable3		14,556		13,638
Total debt	$	100,589	$	98,353

¹ Includes unamortized premium/discount.

² Includes unamortized premium/discount, debt issuance costs, the effects of gains and losses due to foreign currency translation adjustments on non-hedged notes and loans payable which are denominated in foreign currencies and other carrying value adjustments.

³ Includes unamortized premium/discount and debt issuance costs.

Liquidity management involves forecasting and maintaining sufficient capacity to meet our cash needs, including unanticipated events.  To ensure adequate liquidity through a full range of potential operating environments and market conditions, we conduct our liquidity management and business activities in a manner that will preserve and enhance funding stability, flexibility and diversity.  Key components of this operating strategy include a strong focus on developing and maintaining direct relationships with commercial paper investors and wholesale market funding providers, and maintaining the ability to sell certain assets when and if conditions warrant.

We develop and maintain contingency funding plans and regularly evaluate our liquidity position under various operating circumstances, allowing us to assess how we will be able to operate through a period of stress when access to normal sources of capital is constrained.  The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, and outline actions and procedures for effectively managing through the problem period.  In addition, we monitor the ratings and credit exposure of the lenders that participate in our credit facilities to ascertain any issues that may arise with potential draws on these facilities if that contingency becomes warranted.

We maintain broad access to a variety of domestic and global markets and may choose to realign our funding activities depending upon market conditions, relative costs, and other factors.  We believe that our funding sources, combined with operating and investing activities, provide sufficient liquidity to meet future funding requirements and business growth.  Our funding volume is primarily based on the expected net change in earning assets and debt maturities.

For liquidity purposes, we hold cash in excess of our immediate funding needs. These excess funds are invested in short-term, highly liquid and investment grade money market instruments as well as certain available-for-sale debt securities, which provide liquidity for our short-term funding needs and flexibility in the use of our other funding sources.  We maintained excess funds ranging from $7.6 billion to $10.4 billion with an average balance of $8.8 billion during the quarter ended June 30, 2018.

We may lend to or borrow from affiliates on terms based upon a number of business factors such as funds availability, cash flow timing, relative cost of funds, and market access capabilities.

Credit support is provided to us by our indirect parent Toyota Financial Services Corporation (“TFSC”), and, in turn to TFSC by TMC.  Taken together, these credit support agreements provide an additional source of liquidity to us, although we do not rely upon such credit support in our liquidity planning and capital and risk management.  The credit support agreements are not a guarantee by TMC or TFSC of any securities or obligations of TFSC or TMCC, respectively.  The fees paid pursuant to these agreements are disclosed in Note 14 – Related Party Transactions of the Notes to Consolidated Financial Statements.

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TMC’s obligations under its credit support agreement with TFSC rank pari passu with TMC’s senior unsecured debt obligations.  Refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “Liquidity and Capital Resources” in our Form 10-K for the fiscal year ended March 31, 2018 for further discussion.

We routinely monitor global financial conditions and our financial exposure to our global counterparties, particularly in those countries experiencing significant economic, fiscal or political strain and the corresponding likelihood of default.  We do not currently have exposure to sovereign counterparties in countries experiencing significant economic, fiscal or political strain or any other sovereign counterparties.  Refer to the “Liquidity and Capital Resources - Liquidity Facilities and Letters of Credit” section and “Part I, Item 1A. Risk Factors - The failure or commercial soundness of our counterparties and other financial institutions may have an effect on our liquidity, results of operations or financial condition” in our Form 10-K for the fiscal year ended March 31, 2018 for further discussion.

Commercial Paper

Short-term funding needs are met through the issuance of commercial paper in the U.S.  Commercial paper outstanding under our commercial paper programs ranged from approximately $27.1 billion to $29.1 billion during the quarter ended June 30, 2018, with an average outstanding balance of $28.3 billion.  Our commercial paper programs are supported by the liquidity facilities discussed under the heading “Liquidity Facilities and Letters of Credit.”  We believe we have ample capacity to meet our short-term funding requirements and manage our liquidity.

Unsecured Notes and Loans Payable

The following table summarizes the components of our unsecured notes and loans payable:

(Dollars in millions)	U.S.medium term notes ("MTNs") and domestic bonds				Euro MTNs ("EMTNs")			Other				Total unsecured notes and loans payable4
Balance at March 31, 2018¹	$	35,465			$	15,900		$	6,281			$	57,646
Issuances		4,896		2		-			4		3		4,900
Maturities and terminations		(2,625	)			-			(250	)			(2,875	)
Non-cash changes in foreign currency rates		-				(635	)		(11	)			(646	)
Balance at June 30, 2018¹	$	37,736			$	15,265		$	6,024			$	59,025

¹ Amounts represent par values and as such exclude unamortized premium/discount, debt issuance costs, and fair value adjustments to debt in hedge accounting relationships.  

² MTNs and domestic bonds issued during the first quarter of fiscal 2019 had terms to maturity ranging from approximately 1 year to 30 years, and had interest rates at the time of issuance ranging from 2.4 percent to 4 percent.

³ Consists of borrowings with terms to maturity of less than one year and interest rates at the time of issuance of 2 percent.

⁴ Consists of fixed and floating rate debt and other obligations.  Upon the issuance of fixed rate debt and other obligations, we generally elect to enter into pay-float swaps.  Refer to “Derivative Instruments” for further discussion.

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We maintain a shelf registration statement with the Securities and Exchange Commission (“SEC”) to provide for the issuance of debt securities in the U.S. capital markets to retail and institutional investors.  We qualify as a well-known seasoned issuer under SEC rules, which allows us to issue under our registration statement an unlimited amount of debt securities during the three year period ending January 2021.  Debt securities issued under the U.S. shelf registration statement are issued pursuant to the terms of an indenture which requires TMCC to comply with certain covenants, including negative pledge and cross-default provisions.  We are currently in compliance with these covenants.

Our EMTN program, shared with our affiliates Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc. and Toyota Finance Australia Limited (TMCC and such affiliates, the “EMTN Issuers”), provides for the issuance of debt securities in the international capital markets.  In September 2017, the EMTN Issuers renewed the EMTN program for a one-year period.  The maximum aggregate principal amount authorized under the EMTN Program to be outstanding at any time is €50.0 billion or the equivalent in other currencies, of which €22.6 billion was available for issuance at June 30, 2018.  The authorized amount is shared among all EMTN Issuers.  The authorized aggregate principal amount under the EMTN program may be increased from time to time.  Debt securities issued under the EMTN program are issued pursuant to the terms of an agency agreement.  Certain debt securities issued under the EMTN program are subject to negative pledge provisions.  Debt securities issued under our EMTN program prior to October 2007 are also subject to cross-default provisions.  We are currently in compliance with these covenants.

TMCC has entered into term loan agreements with various banks.  These term loan agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.  In addition, we may issue other debt securities through the global capital markets or enter into other unsecured financing arrangements, including those in which we agree to use the proceeds solely to acquire retail or lease contracts financing new Toyota and Lexus vehicles of specified “green” models.  The terms of these “green” bond transactions are consistent with the terms of other similar transactions except that the proceeds we receive are included in Restricted cash and cash equivalents in our Consolidated Balance Sheets, when applicable.

Secured Notes and Loans Payable

Overview

Asset-backed securitization of our earning asset portfolio provides us with an alternative source of funding.  We securitize finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”) using a variety of structures.  Our securitization transactions involve the transfer of Securitized Assets to bankruptcy-remote special purpose entities.  These bankruptcy-remote entities are used to ensure that the Securitized Assets are isolated from the claims of creditors of TMCC and that the cash flows from these assets are available solely for the benefit of the investors in these asset-backed securities.  Investors in asset-backed securities do not have recourse to our other assets, and neither TMCC nor our affiliates guarantee these obligations.  We are not required to repurchase or make reallocation payments with respect to the Securitized Assets that become delinquent or default after securitization.  As seller and servicer of the Securitized Assets, we are required to repurchase or make a reallocation payment with respect to the underlying assets that are subsequently discovered not to have met specified eligibility requirements.  This repurchase obligation is customary in securitization transactions.

We service the Securitized Assets in accordance with our customary servicing practices and procedures.  Our servicing duties include collecting payments on Securitized Assets and submitting them to a trustee for distribution to security holders and other interest holders.  We prepare monthly servicer certificates on the performance of the Securitized Assets, including collections, investor distributions, delinquencies, and credit losses.  We also perform administrative services for the special purpose entities.

Our use of special purpose entities in securitizations is consistent with conventional practice in the securitization market.  None of our officers, directors, or employees hold any equity interests or receive any direct or indirect compensation from our special purpose entities.  These entities do not own our stock or the stock of any of our affiliates.  Each special purpose entity has a limited purpose and generally is permitted only to purchase assets, issue asset-backed securities, and make payments to the security holders, other interest holders and certain service providers as required under the terms of the transactions.

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Our securitizations are structured to provide credit enhancement to reduce the risk of loss to security holders and other interest holders in the asset-backed securities.  Credit enhancement may include some or all of the following:

• Overcollateralization:  The principal of the Securitized Assets that exceeds the principal amount of the related secured debt.

• Excess spread:  The expected interest collections on the Securitized Assets that exceed the expected fees and expenses of the special purpose entity, including the interest payable on the debt, net of swap settlements, if any.

• Cash reserve funds:  A portion of the proceeds from the issuance of asset-backed securities may be held by the securitization trust in a segregated reserve fund and may be used to pay principal and interest to security holders and other interest holders if collections on the underlying receivables are insufficient.

• Yield supplement arrangements:  Additional overcollateralization may be provided to supplement the future contractual interest payments from securitized receivables with relatively low contractual interest rates.

• Subordinated notes:  The subordination of principal and interest payments on subordinated notes may provide additional credit enhancement to holders of senior notes.

In addition to the credit enhancement described above, we may enter into interest rate swaps with our special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets.  We also recognize interest expense on the secured debt issued by the special purpose entities and maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Securitization

We maintain shelf registration statements with the SEC to provide for the issuance of securities backed by Securitized Assets in the U.S. capital markets.  We regularly sponsor public securitization trusts that issue securities backed by retail finance receivables, including registered securities that we retain.  Funding obtained from our public term securitization transactions is repaid as the underlying Securitized Assets amortize.  None of these securities have defaulted, experienced any events of default or failed to pay principal in full at maturity.  As of June 30, 2018 and March 31, 2018, we did not have any outstanding lease securitization transactions registered with the SEC.

We periodically enter into term securitization transactions whereby we agree to use the proceeds solely to acquire retail and lease contracts financing new Toyota and Lexus vehicles of certain specified “green” models.  The terms of these “green” securitization transactions are consistent with the terms of our other similar transactions except that the proceeds we receive are included in Restricted cash and cash equivalents in our Consolidated Balance Sheets, when applicable.

We also regularly execute private securitization transactions of Securitized Assets with bank-sponsored multi-seller asset-backed conduits.  Funding obtained from our private securitization transactions is repaid as the underlying Securitized Assets amortize.  

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Liquidity Facilities and Letters of Credit

For additional liquidity purposes, we maintain syndicated credit facilities with certain banks.

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2017, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2019, 2021, and 2023, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of June 30, 2018 and March 31, 2018.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of June 30, 2018, TMCC had committed bank credit facilities totaling $5.6 billion of which $2.1 billion, $825 million, $2.2 billion, and $475 million mature in fiscal 2019, 2020, 2021, and 2022, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of June 30, 2018 and March 31, 2018. We are currently in compliance with the covenants and conditions of the credit agreements described above.

Credit Ratings

The cost and availability of unsecured financing is influenced by credit ratings, which are intended to be an indicator of the creditworthiness of a particular company, security, or obligation.  Lower ratings generally result in higher borrowing costs as well as reduced access to capital markets.  Credit ratings are not recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning credit rating organization.  Each credit rating organization may have different criteria for evaluating risk, and therefore ratings should be evaluated independently for each organization.  Our credit ratings depend in part on the existence of the credit support agreements of TFSC and TMC.  Refer to “Part I, Item 1A. Risk Factors - Our borrowing costs and access to the unsecured debt capital markets depend significantly on the credit ratings of TMCC and its parent companies and our credit support arrangements” in our fiscal 2018 Form 10-K.

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DERIVATIVE INSTRUMENTS

Risk Management Strategy

Our liabilities consist mainly of fixed and floating rate debt, denominated in U.S dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, interest rate caps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements. All of our derivative activities are authorized and monitored by our management and our Asset-Liability Committee (“ALCO”) which provides a framework for financial controls and governance to manage market risk.

Accounting for Derivative Instruments

All derivative instruments are recorded on the balance sheet at fair value, taking into consideration the effects of legally enforceable master netting agreements that allow us to net settle positive and negative positions and offset cash collateral held with the same counterparty on a net basis.  Changes in the fair value of derivatives are recorded in Interest expense in our Consolidated Statements of Income.

Our derivative contracts are governed by International Swaps and Derivatives Association (“ISDA”) Master Agreements.  Substantially all of these ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement at market value in the event of a ratings downgrade of the other party below a specified threshold.  We have daily valuation and collateral exchange arrangements with all of our counterparties.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  However, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at June 30, 2018, if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.

We categorize derivatives as those designated for hedge accounting (“hedge accounting derivatives”) and those that are not designated for hedge accounting (“non-hedge accounting derivatives”).  At the inception of a derivative contract, we may elect to designate a derivative as a hedge accounting derivative.

We may also, from time-to-time, issue debt which can be characterized as hybrid financial instruments. These obligations often contain an embedded derivative which may require bifurcation.  Changes in the fair value of the bifurcated embedded derivative are reported in Interest expense in our Consolidated Statements of Income.  As of June 30, 2018 and March 31, 2018, we had no outstanding embedded derivatives that are required to be bifurcated. Refer to Note 1 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Form 10-K for the fiscal year ended March 31, 2018, and Note 7 – Derivatives, Hedging Activities and Interest Expense of the Notes to Consolidated Financial Statements in this Form 10-Q for additional information.

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Derivative Assets and Liabilities

The following table summarizes our derivative assets and liabilities, which are included in Other assets and Other liabilities in our Consolidated Balance Sheets:

	June 30,			March 31,
(Dollars in millions)	2018			2018
Gross derivatives assets, net of credit valuation adjustment	$	1,073		$	1,358
Less: Counterparty netting and collateral		(991	)		(1,297	)
Derivative assets, net	$	82		$	61
Gross derivative liabilities, net of credit valuation adjustment	$	1,234		$	828
Less: Counterparty netting and collateral		(1,230	)		(822	)
Derivative liabilities, net	$	4		$	6

Collateral represents cash received or deposited under reciprocal arrangements that we have entered into with our derivative counterparties.  As of June 30, 2018, we held collateral of $438 million, which offset derivative assets, and we posted collateral of $677 million, which offset derivative liabilities.  In addition, there was $553 million of counterparty netting included for both derivative assets and derivative liabilities as of June 30, 2018.  We also held excess collateral of $2 million which we did not use to offset derivative assets, and we posted excess collateral of $71 million which we did not use to offset derivative liabilities.  As of March 31, 2018, we held collateral of $737 million, which offset derivative assets, and we posted collateral of $262 million which offset derivative liabilities.  In addition, there was $560 million of counterparty netting included for both derivative assets and derivative liabilities.  We also held excess collateral of $11 million, which we did not use to offset derivative assets, and we posted excess collateral of $3 million which we did not use to offset derivative liabilities.  

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Derivative Counterparty Credit Risk

We manage derivative counterparty credit risk by maintaining policies for entering into derivative contracts, exercising our rights under our derivative contracts, requiring the posting of collateral and actively monitoring our exposure to counterparties.

All of our derivative counterparties to which we had credit exposure at June 30, 2018 were assigned investment grade ratings by a credit rating organization.  Our counterparty credit risk could be adversely affected by deterioration of the global economy and financial distress in the banking industry.

Our ISDA Master Agreements contain reciprocal collateral arrangements which help mitigate our exposure to the credit risk associated with our counterparties.  As of June 30, 2018, we have daily valuation and collateral exchange arrangements with all of our counterparties.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization requirement, which has significantly reduced counterparty credit risk exposure.  Under our ISDA Master Agreements, cash is the only permissible form of collateral.  Neither we nor our counterparties are required to hold collateral in a segregated account.  Our collateral agreements include legal right of offset provisions, pursuant to which collateral amounts are netted against derivative assets or derivative liabilities, the net amount of which is included in Other assets or Other liabilities in our Consolidated Balance Sheets.

In addition, many of our ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement and related transactions at market value in the event of a ratings downgrade below a specified threshold.  Refer to “Part I. Item 1A. Risk Factors” in our fiscal 2018 Form 10-K for further discussion.

A summary of our net counterparty credit exposure by credit rating (net of collateral held) is presented below:

	June 30,		March 31,
(Dollars in millions)	2018		2018
Credit Rating
AA	$	5	$	5
A		79		58
Total net counterparty credit exposure	$	84	$	63

We exclude from the table above credit valuation adjustments which were not significant as of June 30, 2018 and March 31, 2018 related to non-performance risk of our counterparties.  All derivative credit valuation adjustments are recorded in Interest expense in our Consolidated Statements of Income.  

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NEW ACCOUNTING STANDARDS

Refer to Note 1 – Interim Financial Data of the Notes to Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

Guarantees

TMCC has guaranteed the payments of principal and interest with respect to the bond obligations that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  Refer to Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for further discussion.

Lending Commitments

A description of our lending commitments is included under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements” and Note 15 - Related Party Transactions of the Notes to Consolidated Financial Statements in our fiscal 2018 Form 10-K, as well as in Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements.

Indemnification

Refer to Note 12 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for a description of agreements containing indemnification provisions.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (the principal executive officer and principal financial officer) and Chief Accounting Officer (the principal accounting officer), of the effectiveness of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).  Based on this evaluation, the Chief Executive Officer (“CEO”) and Chief Accounting Officer (“CAO”) concluded that the disclosure controls and procedures were effective as of June 30, 2018, to ensure that information required to be disclosed in reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods specified by the SEC’s rules, regulations, and forms and that such information is accumulated and communicated to our CEO and CAO, as appropriate, to allow timely decisions regarding required disclosures.

There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

69

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Litigation

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Refer to Note 12 – Commitments and Contingencies of the Notes to Consolidated Financial Statements.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.  

ITEM 1A.   RISK FACTORS

There are no material changes from the risk factors set forth under “Item 1A. Risk Factors” in our fiscal 2018 Form 10-K.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4.   MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.   OTHER INFORMATION

None.

ITEM 6.   EXHIBITS

See Exhibit Index on page 71.

70

EXHIBIT INDEX

Exhibit Number	Description	Method of Filing
3.1	Restated Articles of Incorporation filed with the California Secretary of State on April 1, 2010	(1)
3.2	Bylaws as amended through December 8, 2000	(2)
12.1	Calculation of ratio of earnings to fixed charges	Filed Herewith
31.1	Certification of Chief Executive Officer	Filed Herewith
31.2	Certification of Chief Accounting Officer	Filed Herewith
32.1	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith
32.2	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith
101.INS	XBRL instance document	Filed Herewith
101.CAL	XBRL taxonomy extension calculation linkbase document	Filed Herewith
101.DEF	XBRL taxonomy extension definition linkbase document	Filed Herewith
101.LAB	XBRL taxonomy extension labels linkbase document	Filed Herewith
101.PRE	XBRL taxonomy extension presentation linkbase document	Filed Herewith
101.SCH	XBRL taxonomy extension schema document	Filed Herewith

(1) Incorporated herein by reference to the same numbered Exhibit filed with our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, Commission File Number 1-9961.

(2) Incorporated herein by reference to the same numbered Exhibit filed with our Quarterly Report on Form 10-Q for the three months ended December 31, 2000, Commission File Number 1-9961.

71

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TOYOTA MOTOR CREDIT CORPORATION
	(Registrant)
Date: August 7, 2018	By	/s/ Michael Groff
		Michael Groff
		President and Chief Executive Officer
		(Principal Executive Officer and Principal Financial Officer)
Date: August 7, 2018	By	/s/ Ron Chu
		Ron Chu
		Group Vice President and Chief Accounting Officer

72

EX-12.1

EXHIBIT 12.1

TOYOTA MOTOR CREDIT CORPORATION

CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended
	June 30,
(Dollars in millions)	2018		2017
Consolidated income before provision for income taxes	$	114	$	261
Fixed charges:
Interest1	$	682	$	448
Portion of rent expense representative of the interest    factor (deemed to be one-third)		3		2
Total fixed charges	$	685	$	450
Earnings available for fixed charges	$	799	$	711
Ratio of earnings to fixed charges		1.17		1.58

¹ Components of interest expense are discussed under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Interest Expense.”

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael Groff, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Toyota Motor Credit Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2018	By	/s/ Michael Groff
		Michael Groff
		President and
		Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Ron Chu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Toyota Motor Credit Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 7, 2018	By	/s/ Ron Chu
		Ron Chu
		Group Vice President and
		Chief Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Toyota Motor Credit Corporation (the "Company") on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Groff, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By	/s/ Michael Groff
	Michael Groff
	President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)
	August 7, 2018

* A signed original of this written statement required by Section 906 has been provided to Toyota Motor Credit Corporation and will be retained by Toyota Motor Credit Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Toyota Motor Credit Corporation (the "Company") on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ron Chu, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By	/s/ Ron Chu
	Ron Chu
	Group Vice President and Chief Accounting Officer
	August 7, 2018

* A signed original of this written statement required by Section 906 has been provided to Toyota Motor Credit Corporation and will be retained by Toyota Motor Credit Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Jun. 30, 2018	Jul. 31, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Entity Registrant Name	Toyota Motor Credit Corporation
Entity Central Index Key	0000834071
Current Fiscal Year End Date	--03-31
Trading Symbol	TMCC
Entity Filer Category	Non-accelerated Filer
Entity Common Stock Shares Outstanding		91,500
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

XML

Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Financing revenues:
Operating lease	$ 2,126	$ 1,981
Retail	535	474
Dealer	175	143
Total financing revenues	2,836	2,598
Depreciation on operating leases	1,766	1,681
Interest expense	682	448
Net financing revenues	388	469
Insurance earned premiums and contract revenues	224	216
Investment and other income, net	40	88
Net financing revenues and other revenues	652	773
Expenses:
Provision for credit losses	89	85
Operating and administrative	324	313
Insurance losses and loss adjustment expenses	125	114
Total expenses	538	512
Income before income taxes	114	261
Provision for income taxes	22	96
Net income	$ 92	$ 165

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 92	$ 165
Other comprehensive loss, net of tax:
Net unrealized (losses) gains on available-for-sale marketable securities [net of tax provision of $0 and ($10), respectively]	(4)	17
Reclassification adjustment for net gains on available-for-sale marketable securities included in investment and other income, net [net of tax provision of $0 and $16, respectively]	0	(25)
Other comprehensive loss	(4)	(8)
Comprehensive income	$ 88	$ 157

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net unrealized (losses) gains on available-for-sale marketable securities, tax provision	$ 0	$ (10)
Reclassification adjustment for net gains on available-for-sale marketable securities included in investment and other income, net of tax provision	$ 0	$ 16

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
ASSETS
Cash and cash equivalents	$ 5,581	$ 3,540
Restricted cash and cash equivalents	1,048	1,219
Investments in marketable securities	5,603	5,829
Finance receivables, net	70,466	69,647
Investments in operating leases, net	38,748	38,697
Other assets	1,617	1,614
Total assets	123,063	120,546
LIABILITIES AND SHAREHOLDER’S EQUITY
Debt	100,589	98,353
Deferred income taxes	5,310	5,326
Other liabilities	4,306	3,987
Total liabilities	110,205	107,666
Commitments and contingencies (Refer to Note 12)
Shareholder’s equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued and outstanding) at June 30, 2018 and March 31, 2018	915	915
Additional paid-in capital	2	2
Accumulated other comprehensive loss	(21)	(29)
Retained earnings	11,962	11,992
Total shareholder's equity	12,858	12,880
Total liabilities and shareholder's equity	$ 123,063	$ 120,546

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Mar. 31, 2018
Statement Of Financial Position [Abstract]
Common Stock, Par or Stated Value Per Share
Common Stock, Shares Authorized	100,000	100,000
Common Stock, Shares, Issued	91,500	91,500
Common Stock, Shares, Outstanding	91,500	91,500

XML

Consolidated Balance Sheets (Supplemental) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
ASSETS
Finance receivables, net	$ 70,466	$ 69,647
Investments in operating leases, net	38,748	38,697
Other assets	1,617	1,614
Total assets	123,063	120,546
LIABILITIES
Debt	100,589	98,353
Other liabilities	4,306	3,987
Total liabilities	110,205	107,666
Variable Interest Entity, Primary Beneficiary
ASSETS
Finance receivables, net	11,573	11,927
Investments in operating leases, net	7,713	5,706
Other assets	126	125
Total assets	19,412	17,758
LIABILITIES
Debt	14,556	13,638
Other liabilities	10	10
Total liabilities	$ 14,566	$ 13,648

XML

Consolidated Statements of Shareholder's Equity - USD ($) $ in Millions	Total	Capital stock	Additional paid-in capital	Accumulated other comprehensive income (loss)	Retained earnings
Balance at Mar. 31, 2017	$ 9,524	$ 915	$ 2	$ 25	$ 8,582
Net income	165	0	0	0	165
Other comprehensive loss, net of tax	(8)	0	0	(8)	0
Balance at Jun. 30, 2017	9,681	915	2	17	8,747
Balance at Mar. 31, 2018	12,880	915	2	(29)	11,992
Cumulative-effect of change in accounting policy	(110)	0	0	12	(122)
Net income	92	0	0	0	92
Other comprehensive loss, net of tax	(4)	0	0	(4)	0
Balance at Jun. 30, 2018	$ 12,858	$ 915	$ 2	$ (21)	$ 11,962

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net income	$ 92	$ 165
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,784	1,696
Recognition of deferred income	(572)	(469)
Provision for credit losses	89	85
Amortization of deferred costs	155	155
Foreign currency and other adjustments to the carrying value of debt, net	(611)	708
Net losses (gains) from investments in marketable securities	25	(41)
Net change in:
Derivative assets	(21)	(10)
Other assets and accrued interest	(68)	(81)
Deferred income taxes	20	197
Derivative liabilities	(2)	(32)
Other liabilities	84	27
Net cash provided by operating activities	975	2,400
Cash flows from investing activities:
Purchase of investments in marketable securities	(673)	(3,633)
Proceeds from sales of investments in marketable securities	7	1,192
Proceeds from maturities of investments in marketable securities	862	1,478
Acquisition of finance receivables	(6,305)	(5,998)
Collection of finance receivables	6,117	6,024
Net change in wholesale and certain working capital receivables	(508)	(327)
Acquisition of investments in operating leases	(4,312)	(4,211)
Disposals of investments in operating leases	2,852	2,479
Net change in financing support provided to affiliates	11	4
Other, net	(9)	(9)
Net cash used in investing activities	(1,958)	(3,001)
Cash flows from financing activities:
Proceeds from issuance of debt	7,991	5,844
Payments on debt	(5,067)	(5,886)
Net change in commercial paper	(77)	(121)
Net change in financing support provided by affiliates	6	11
Net cash provided by (used in) financing activities	2,853	(152)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents	1,870	(753)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period	4,759	5,285
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	6,629	4,532
Supplemental disclosures:
Interest paid, net	516	444
Income taxes paid, net	$ 1	$ 3

XML

Interim Financial Data

3 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Interim Financial Data

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three months ended June 30, 2018 and 2017 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three months ended June 30, 2018 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2019 (“fiscal 2019”).

These financial statements should be read in conjunction with the Consolidated Financial Statements, significant accounting policies, and other Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2018 (“fiscal 2018”), which was filed with the Securities and Exchange Commission on June 4, 2018.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 14 – Related Party Transactions.

Note 1 – Interim Financial Data (Continued)

Recently Adopted Accounting Guidance

On April 1, 2018, we adopted the following new accounting standards:

Revenue Recognition

We adopted new guidance related to the recognition of revenue from contracts with customers (“revenue recognition guidance”). We utilized the modified retrospective approach and applied it to active agreements at the time of adoption. As such, the comparative information in this Form 10-Q has not been restated and continues to be reported under the accounting standards in effect for those periods. The majority of our total consolidated revenues are outside the scope of the standard; however, the majority of revenue reported by our Insurance operations segment falls within the scope of the revenue recognition guidance. Upon adoption, fees collected for administering certain vehicle and payment protection products are now recognized using the same measure as the related product revenue and certain dealer incentives are now capitalized and amortized over the contract term instead of expensed as incurred.

While the adoption of the revenue recognition guidance has changed the timing of recognition of certain revenues and expenses, the total revenue and expense recognized over the contract term will not change as a result of adopting the standard. We do not expect the adoption to be significant to our net income on an ongoing basis.

The cumulative effect of the changes made to our consolidated balance sheet as of April 1, 2018 for the adoption of the revenue recognition guidance was as follows:

	March 31,		Adjustments related			April 1,
	2018		to adoption			2018
Assets:
Other assets	$	1,614	$	73		$	1,687
Liabilities and shareholder's equity:
Deferred income taxes	$	5,326	$	(36	)	$	5,290
Other liabilities		3,987		219			4,206
Retained earnings		11,992		(110	)		11,882

The impact on our consolidated statement of income for the adoption of the revenue recognition guidance was as follows:

	Three Months Ended June 30, 2018
			Effect of		Balances without
	As reported		adoption		adoption
Insurance earned premiums and contract revenues	$	224	$	4	$	228
Provision for income taxes		22		1		23
Net income		92		3		95
Comprehensive income		88		3		91

Note 1 – Interim Financial Data (Continued)

The impact on our consolidated balance sheet for the adoption of revenue recognition guidance was as follows:

	June 30, 2018
			Effect of			Balances without
	As reported		adoption			adoption
Assets:
Other assets	$	1,617	$	(73	)	$	1,544
Liabilities and shareholder's equity:
Deferred income taxes	$	5,310	$	37		$	5,347
Other liabilities		4,306		(223	)		4,083
Retained earnings		11,962		113			12,075

In connection with the adoption of revenue recognition guidance, we have updated our accounting policies as follows:

Revenue Recognition

Insurance Contract Revenues

The Insurance operations segment offers vehicle and payment protection products on Toyota, Lexus and other domestic and import vehicles that are sold by dealers along with the sale of a vehicle.

We receive the contractually determined dealer cost at the inception of the contract.  Revenue is then deferred and recognized over the term of the contract according to earnings factors established by management that are based upon historical loss experience.  Contracts sold range in term from 3 to 120 months and are typically cancellable at any time. The effect of subsequent cancellations is recorded as an offset to unearned contract revenues in Other liabilities on our Consolidated Balance Sheets.

Note 1 – Interim Financial Data (Continued)

Recognition and Measurement

We adopted new guidance addressing certain aspects of recognition, measurement, presentation, and disclosure of financial instruments that requires entities to measure equity investments at fair value and recognize any changes in fair value in net income.  On April 1, 2018 we recognized the cumulative effect of adoption by recording a reduction to our opening retained earnings of approximately $12 million, net of income taxes.  

In connection with the adoption of the new recognition and measurement guidance, we have updated our accounting policies as follows:

Investments in Marketable Securities

Available-for-Sale (“AFS”) Debt Securities

Debt securities designated as available-for-sale are recorded at fair value using quoted market prices where available with unrealized gains or losses included in accumulated other comprehensive income (“AOCI”), net of applicable taxes.  Realized gains and losses are determined using the specific identification method and are included in Investment and other income, net within our Consolidated Statements of Income.

Equity Investments

Beginning on April 1, 2018, equity investments are recorded at fair value using quoted market prices where available, with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income. Realized gains and losses from sales are determined using the first in first out method.  

Other Recently Adopted Standards

We adopted new guidance intended to reduce diversity in practice in the classification of certain cash receipts and cash payments in the statement of cash flows. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

We adopted new guidance clarifying how restricted cash and cash equivalents should be classified and presented on the statement of cash flows. This guidance was intended to reduce diversity in practice in the classification of restricted cash and cash equivalents on the statement of cash flows.  Effective April 1, 2018, we no longer report the change in restricted cash and cash equivalents in the operating and investing sections in our Consolidated Statements of Cash Flows.  Restricted cash and cash equivalents are now included in the beginning and end of the period cash and cash equivalents on the Consolidated Statements of Cash Flows. These changes have been applied using a retrospective transition method to each period presented.

We early adopted new guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cut and Jobs Act of 2017 (“TCJA”).  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.  

Note 1 – Interim Financial Data (Continued)

Accounting Guidance Issued But Not Yet Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued new guidance that introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard.  The FASB also subsequently issued guidance amending and clarifying various aspects of the new leases guidance.  The new leasing standard represents a wholesale change to lease accounting for lessees and requires additional disclosures regarding leasing arrangements. This accounting guidance is effective for us on April 1, 2019.  Upon adoption, we expect to recognize lease liabilities and right-of-use assets (at their present value) in our Consolidated Balance Sheets related to predominantly all of the future minimum lease payments as disclosed in Note 12 – Commitments and Contingencies.  We are currently evaluating the other potential impacts of this guidance from both a lessee and lessor perspective on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued new guidance that introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  This accounting guidance is effective for us on April 1, 2020.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation. We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date.  This accounting guidance is effective for us on April 1, 2019.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2017, the FASB issued new guidance that makes targeted improvements to accounting for hedging activities. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance provides new alternatives for applying hedge accounting and measuring the hedged item in fair value hedges of interest rate risk.  This accounting guidance is effective for us on April 1, 2019.  The adoption of this guidance is not expected to have a material impact on our consolidated financial statements and related disclosures.

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Fair Value Measurements

3 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 2 – Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	June 30, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	1,013	$	825		$	-		$	-		$	1,838
Certificates of deposit		-		3,500			-			-			3,500
Cash equivalents total		1,013		4,325			-			-			5,338
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations		2,480		18			-			-			2,498
Municipal debt securities		-		10			-			-			10
Certificates of deposit		-		624			-			-			624
Corporate debt securities		15		182			-			-			197
Mortgage-backed securities:
U.S. government agency		-		36			-			-			36
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			23			-			23
Asset-backed securities		-		-			38			-			38
Available-for-sale debt securities total		2,495		870			63			-			3,428
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													657
Total return bond funds		1,518		-			-			-			1,518
Equity investments total		1,518		-			-			-			2,175
Investments in marketable securities total		4,013		870			63			-			5,603
Derivative assets:
Interest rate swaps		-		915			-			-			915
Foreign currency swaps		-		158			-			-			158
Counterparty netting and collateral		-		-			-			(991	)		(991	)
Derivative assets total		-		1,073			-			(991	)		82
Assets at fair value		5,026		6,268			63			(991	)		11,023
Derivative liabilities:
Interest rate swaps		-		(663	)		(23	)		-			(686	)
Foreign currency swaps		-		(548	)		-			-			(548	)
Counterparty netting and collateral		-		-			-			1,230			1,230
Liabilities at fair value		-		(1,211	)		(23	)		1,230			(4	)
Net assets at fair value	$	5,026	$	5,057		$	40		$	239		$	11,019

Note 2 – Fair Value Measurements (Continued)

	March 31, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	347	$	550		$	-		$	-		$	897
Certificates of deposit		-		2,240			-			-			2,240
Commercial paper		-		255			-			-			255
Cash equivalents total		347		3,045			-			-			3,392
Restricted cash equivalents - money market instruments		173		709			-			-			882
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations		2,774		24			-			-			2,798
Municipal debt securities		-		11			-			-			11
Certificates of deposit		-		474			-			-			474
Commercial paper		-		52			-			-			52
Corporate debt securities		15		186			-			-			201
Mortgage-backed securities:
U.S. government agency		-		39			-			-			39
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			29			-			29
Asset-backed securities		-		-			39			-			39
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													660
Total return bond funds		1,524		-			-			-			1,524
Available-for-sale securities total		4,313		786			70			-			5,829
Derivative assets:
Interest rate swaps		-		872			-			-			872
Interest rate floors		-		1			-			-			1
Foreign currency swaps		-		485			-			-			485
Counterparty netting and collateral		-		-			-			(1,297	)		(1,297	)
Derivative assets total		-		1,358			-			(1,297	)		61
Assets at fair value		4,833		5,898			70			(1,297	)		10,164
Derivative liabilities:
Interest rate swaps		-		(607	)		(21	)		-			(628	)
Foreign currency swaps		-		(200	)		-			-			(200	)
Counterparty netting and collateral		-		-			-			822			822
Liabilities at fair value		-		(807	)		(21	)		822			(6	)
Net assets at fair value	$	4,833	$	5,091		$	49		$	(475	)	$	10,158

Note 2 – Fair Value Measurements (Continued)

Transfers between levels of the fair value hierarchy are recognized at the end of their respective reporting periods.  Transfers between levels of the fair value hierarchy during the three months ended June 30, 2018 and 2017 resulted from changes in the transparency of inputs and were not significant.

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended June 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(8	)		(8	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			2			2			-			2
Issuances		-			-			-			-			-
Sales		-			-			-			-			-
Settlements		(6	)		(3	)		(9	)		6			(3	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, June 30, 2018	$	25		$	38		$	63		$	(23	)	$	40
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date										$	(8	)	$	(8	)

	Three Months Ended June 30, 2017
																								Total net
																								assets
	Available-for-sale securities														Derivative instruments, net									(liabilities)
	U.S.											Total									Total
	government			Corporate		Mortgage-			Asset-			available-			Interest			Foreign			derivative
	and agency			debt		backed			backed			for-sale			rate			currency			assets
	obligations			securities		securities			securities			securities			swaps			swaps			(liabilities)
Fair value, April 1, 2017	$	2		$	8	$	39		$	31		$	80		$	(5	)	$	(62	)	$	(67	)	$	13
Total gains (losses)
Included in net income		-			-		-			-			-			13			7			20			20
Included in other comprehensive income		-			-		-			-			-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			-		5			11			16			-			-			-			16
Issuances		-			-		-			-			-			-			-			-			-
Sales		-			-		-			-			-			-			-			-			-
Settlements		-			-		(1	)		(7	)		(8	)		4			55			59			51
Transfers in to Level 3		-			-		-			-			-			-			-			-			-
Transfers out of Level 3		(2	)		-		-			-			(2	)		-			-			-			(2	)
Fair value, June 30, 2017	$	-		$	8	$	43		$	35		$	86		$	12		$	-		$	12		$	98
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date															$	13		$	-		$	13		$	13

Note 2 – Fair Value Measurements (Continued)

Nonrecurring Fair Value Measurements

Nonrecurring fair value measurements include Level 3 net finance receivables that are not measured at fair value on a recurring basis, but are subject to fair value adjustments utilizing the fair value of the underlying collateral when there is evidence of impairment. We did not have any significant nonrecurring fair value items as of June 30, 2018 and March 31, 2018.

Level 3 Fair Value Measurements

The Level 3 financial assets and liabilities recorded at fair value which are subject to recurring and nonrecurring fair value measurement, and the corresponding change in the fair value measurements of these assets and liabilities, were not significant to our Consolidated Balance Sheets or Consolidated Statements of Income as of and for the three months ended June 30, 2018 and as of and for the year ended March 31, 2018.

Note 2 – Fair Value Measurements (Continued)

Financial Instruments

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	June 30, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,752	$	-	$	-	$	52,323	$	52,323
Wholesale		10,800		-		-		10,847		10,847
Real estate		4,466		-		-		4,352		4,352
Working capital		2,249		-		-		2,266		2,266
Financial liabilities
Commercial paper	$	27,250	$	-	$	27,250	$	-	$	27,250
Unsecured notes and loans payable		58,783		-		56,710		2,306		59,016
Secured notes and loans payable		14,556		-		-		14,514		14,514

	March 31, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,374	$	-	$	-	$	52,081	$	52,081
Wholesale		10,365		-		-		10,413		10,413
Real estate		4,492		-		-		4,409		4,409
Working capital		2,222		-		-		2,197		2,197
Financial liabilities
Commercial paper	$	27,313	$	-	$	27,313	$	-	$	27,313
Unsecured notes and loans payable		57,402		-		55,441		2,341		57,782
Secured notes and loans payable		13,638		-		-		13,588		13,588

The carrying value of each class of finance receivables includes accrued interest and deferred fees and costs, net of deferred income and the allowance for credit losses.  Finance receivables, net, excludes related party transactions, for which the fair value approximates the carrying value, of $195 million and $189 million at June 30, 2018 and March 31, 2018, respectively.  Fair values of related party finance receivables, net would be classified as Level 3 of the fair value hierarchy.

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Investments in Marketable Securities

3 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Investments in Marketable Securities

Note 3 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments.  We classify all of our debt securities as available-for-sale.  Prior to April 1, 2018, our equity investments were also considered available-for-sale.  However, upon the adoption of new accounting guidance, all equity investments are measured at fair value with changes in fair value recognized in net income.  

Investments in marketable securities consisted of the following:

	June 30, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	2,520	$	-	$	(22	)	$	2,498
Municipal debt securities		9		1		-			10
Certificates of deposit		625		-		(1	)		624
Corporate debt securities		202		1		(6	)		197
Mortgage-backed securities:
U.S. government agency		37		-		(1	)		36
Non-agency residential		1		1		-			2
Non-agency commercial		24		-		(1	)		23
Asset-backed securities		38		-		-			38
Total available-for-sale debt securities	$	3,456	$	3	$	(31	)	$	3,428
Equity investments								$	2,175
Total investments in marketable securities								$	5,603

	March 31, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations	$	2,821	-		$	(23	)	$	2,798
Municipal debt securities		10		1	-				11
Certificates of deposit		475	-			(1	)		474
Commercial paper		52	-		-				52
Corporate debt securities		203		1		(3	)		201
Mortgage-backed securities:
U.S. government agency		38		1		-			39
Non-agency residential		1		1	-				2
Non-agency commercial		30	-			(1	)		29
Asset-backed securities		39	-		-				39
Equity investments		2,196		11		(23	)		2,184
Total investments in marketable securities	$	5,865	$	15	$	(51	)	$	5,829

A portion of our equity investments are investments in funds that are privately placed and managed by an open-end investment management company (the “Trust”).  If we elect to redeem shares, the Trust will normally redeem all shares for cash, but may, in unusual circumstances, redeem amounts exceeding the lesser of $250 thousand or 1 percent of the Trust’s asset value by payment in kind of securities held by the respective fund during any 90-day period.

We also invest in actively traded open-end mutual funds.  Redemptions are subject to normal terms and conditions as described in each fund’s prospectus.

Note 3 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

Available-for-sale debt securities in a continuous loss position for less than twelve months and for greater than twelve months were not significant as of June 30, 2018.  Available-for-sale debt securities and equity investments in a continuous loss position for less than twelve months and for greater than twelve months were not significant as of March 31, 2018.

Gains and Losses on Securities

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Available-for-sale securities:
Realized gains on sales	$	-		$	41
Equity investments:
Unrealized losses recognized	$	(25	)

Prior to April 1, 2018, available-for-sale securities included debt securities and equity investments.  Upon adoption of the new accounting guidance, equity investments are measured at fair value with changes in fair value recognized in net income.

Contractual Maturities

The amortized cost, fair value, and contractual maturities of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	June 30, 2018
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	2,386	$	2,376
Due after 1 year through 5 years		755		746
Due after 5 years through 10 years		142		137
Due after 10 years		73		70
Mortgage-backed and asset-backed securities1		100		99
Total	$	3,456	$	3,428

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Finance Receivables, Net

3 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Finance Receivables, Net

Note 4 – Finance Receivables, Net

Finance receivables, net consist of retail receivables and dealer financing, which includes accrued interest and deferred fees and costs, net of the allowance for credit losses and deferred income.  Finance receivables, net also includes securitized retail receivables, which represent retail receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements, as discussed further in Note 10 – Variable Interest Entities.  Cash flows from these securitized retail receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Finance receivables, net consisted of the following:

	June 30,			March 31,
	2018			2018
Retail receivables	$	42,047		$	41,265
Securitized retail receivables		11,776			12,130
Dealer financing		17,860			17,420
		71,683			70,815
Deferred origination (fees) and costs, net		629			630
Deferred income		(1,383	)		(1,335	)
Allowance for credit losses
Retail and securitized retail receivables		(313	)		(312	)
Dealer financing		(150	)		(151	)
Total allowance for credit losses		(463	)		(463	)
Finance receivables, net	$	70,466		$	69,647

Credit Quality Indicators

We are exposed to credit risk on our finance receivables.  Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

Retail Loan Portfolio Segment

The retail loan portfolio segment consists of one class of finance receivables. While we use various credit quality metrics to develop our allowance for credit losses on the retail loan portfolio segment, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables.  Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables.  Payment status also impacts charge-offs.

Individual borrower accounts within the retail loan segment are segregated into aging categories based on the number of days outstanding.  The aging for each class of finance receivables is updated monthly.

Note 4 – Finance Receivables, Net (Continued)

Dealer Products Portfolio Segment

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealer group, which includes affiliated entities, are aggregated and evaluated collectively by dealer or dealer group.  This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four categories representing distinct credit quality indicators based on internal risk assessments.  The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The four credit quality indicators are:

• Performing – Account not classified as either Credit Watch, At Risk or Default

• Credit Watch – Account designated for elevated attention

• At Risk – Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors

• Default – Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	June 30,		March 31,
	2018		2018
Aging of finance receivables:
Current	$	52,928	$	52,559
30-59 days past due		642		613
60-89 days past due		186		158
90 days or greater past due		67		65
Total	$	53,823	$	53,395

	Wholesale				Real Estate				Working Capital
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Credit quality indicators:
Performing	$	9,769	$	9,451	$	4,019	$	4,070	$	2,140	$	2,118
Credit Watch		1,084		946		524		484		117		105
At Risk		106		75		45		29		52		33
Default		4		41		-		47		-		21
Total	$	10,963	$	10,513	$	4,588	$	4,630	$	2,309	$	2,277

Note 4 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	111	$	107	$	111	$	107	$	10	$	14
Real estate		54		86		54		86		3		5
Working capital		52		55		52		55		49		51
Total	$	217	$	248	$	217	$	248	$	62	$	70
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	103	$	83	$	103	$	83
Real estate		141		142		141		142
Working capital		21		22		21		22
Total	$	265	$	247	$	265	$	247
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	225	$	222	$	223	$	220
Total impaired account balances:
Retail loan	$	225	$	222	$	223	$	220
Wholesale		214		190		214		190
Real estate		195		228		195		228
Working capital		73		77		73		77
Total	$	707	$	717	$	705	$	715

As of June 30, 2018 and March 31, 2018, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was $208 million and $249 million, respectively, and there were no charge-offs against the allowance for credit losses for these finance receivables.  Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.  As of June 30, 2018 and March 31, 2018, impaired finance receivables in the retail portfolio segment recorded at the fair value of the collateral less estimated selling costs were not significant and therefore excluded from the table above.  Refer to Note 6 – Allowance for Credit Losses for details related to the retail loan portfolio segment’s impaired account balances which are aggregated and evaluated for impairment when determining the allowance for credit losses.

Note 4 – Finance Receivables, Net (Continued)

The following table summarizes the average impaired loans by class of finance receivables as of the balance sheet date:

	Three Months Ended June 30,
	2018		2017
Impaired account balances individually evaluated   for impairment with an allowance:
Wholesale	$	109	$	109
Real estate		70		94
Working capital		53		39
Total	$	232	$	242
Impaired account balances individually evaluated   for impairment without an allowance:
Wholesale	$	93	$	134
Real estate		141		100
Working capital		22		-
Total	$	256	$	234
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	224	$	222
Total impaired account balances:
Retail loan	$	224	$	222
Wholesale		202		243
Real estate		211		194
Working capital		75		39
Total	$	712	$	698

The primary source of interest income recognized on the loans in the table above is from performing troubled debt restructurings.  Interest income on impaired finance receivables and interest income recognized using a cash-basis method of accounting during the three months ended June 30, 2018 and 2017 were not significant.

Note 4 – Finance Receivables, Net (Continued)

Troubled Debt Restructuring

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three months ended June 30, 2018 and 2017 was not significant for each class of finance receivables.  Troubled debt restructurings for non-bankrupt accounts within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer.  For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three.  Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal or interest rate adjustments during the three months ended June 30, 2018 and 2017.

We consider finance receivables under bankruptcy protection within the retail loan class to be troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection, regardless of the ultimate outcome of the bankruptcy proceedings.  The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal.  For the three months ended June 30, 2018 and 2017, the financial impact of troubled debt restructurings related to finance receivables under bankruptcy protection was not significant to our Consolidated Statements of Income and Consolidated Balance Sheets. 

Payment Defaults

Finance receivables modified as troubled debt restructurings for which there was a subsequent payment default during the three months ended June 30, 2018 and 2017, and for which the modification occurred within twelve months of the payment default, were not significant for all classes of such receivables.

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Investments in Operating Leases, Net

3 Months Ended

Jun. 30, 2018

Leases Operating [Abstract]

Investments in Operating Leases, Net

Note 5 – Investments in Operating Leases, Net

Investments in operating leases, net consist of leases, net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Securitized investments in operating leases represent beneficial interests in a pool of certain vehicle leases that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements as discussed further in Note 10 - Variable Interest Entities.  Cash flows from these securitized investments in operating leases are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Investments in operating leases, net consisted of the following:

	June 30,			March 31,
	2018			2018
Investments in operating leases	$	40,462		$	42,863
Securitized investments in operating leases		10,573			7,869
		51,035			50,732
Deferred origination (fees) and costs, net		(227	)		(224	)
Deferred income		(1,852	)		(1,700	)
Accumulated depreciation		(10,071	)		(9,977	)
Allowance for credit losses		(137	)		(134	)
Investments in operating leases, net	$	38,748		$	38,697

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Allowance for Credit Losses

3 Months Ended

Jun. 30, 2018

Loans And Leases Receivable Disclosure [Abstract]

Allowance for Credit Losses

Note 6 – Allowance for Credit Losses

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

	Three Months Ended
	June 30,
	2018			2017
Allowance for credit losses at beginning of period	$	597		$	622
Provision for credit losses		89			85
Charge-offs, net of recoveries		(86	)		(96	)
Allowance for credit losses at end of period	$	600		$	611

Charge-offs are shown net of recoveries of $27 million and $23 million for the three months ended June 30, 2018 and 2017, respectively.

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses for finance receivables and finance receivables by portfolio segment:

	Three Months Ended June 30, 2018
	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(75	)		-			(75	)
Recoveries		14			-			14
Provision for credit losses		62			(1	)		61
Ending balance, June 30, 2018	$	313		$	150		$	463
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	62		$	62
Ending balance: Collectively evaluated for impairment	$	313		$	88		$	401
Finance Receivables:
Ending balance, June 30, 2018	$	53,823		$	17,860		$	71,683
Ending balance: Individually evaluated for impairment	$	-		$	482		$	482
Ending balance: Collectively evaluated for impairment	$	53,823		$	17,378		$	71,201

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2018, as they are deemed to be insignificant for individual evaluation, and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment.  The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2018 includes $1,043 million in finance receivables that are guaranteed by Toyota Motor North America, Inc. (“TMNA”), and $138 million in finance receivables that are guaranteed by third party private Toyota distributors.  These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMNA and third party private Toyota distributors.

Note 6 – Allowance for Credit Losses (Continued)

	Three Months Ended June 30, 2017
	Retail Loan			DealerProducts		Total
Beginning balance, April 1, 2017	$	344		$	123	$	467
Charge-offs		(79	)		-		(79	)
Recoveries		13			-		13
Provision for credit losses		44			8		52
Ending balance, June 30, 2017	$	322		$	131	$	453
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	47	$	47
Ending balance: Collectively evaluated for impairment	$	322		$	84	$	406
Finance Receivables:
Ending balance, June 30, 2017	$	51,375		$	18,275	$	69,650
Ending balance: Individually evaluated for impairment	$	-		$	494	$	494
Ending balance: Collectively evaluated for impairment	$	51,375		$	17,781	$	69,156

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2017, as they are deemed to be insignificant for individual evaluation and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment.  The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2017 includes $1,056 million in finance receivables that are guaranteed by TMNA, and $173 million in finance receivables that are guaranteed by third party private Toyota distributors.  These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMNA and third party private Toyota distributors.

Note 6 – Allowance for Credit Losses (Continued)

Past Due Finance Receivables and Investments in Operating Leases

The following table shows aggregate balances of finance receivables and investments in operating leases 60 or more days past due:

	June 30,		March 31,
	2018		2018
Aggregate balances 60 or more days past due
Finance receivables	$	253	$	223
Investments in operating leases		108		106
Total	$	361	$	329

Substantially all finance receivables and investments in operating leases do not involve recourse to the dealer in the event of customer default.  Finance receivables and investments in operating leases 60 or more days past due include contracts in bankruptcy and contracts greater than 120 days past due, which are recorded at the fair value of collateral less estimated costs to sell.  Contracts for which vehicles have been repossessed are excluded.

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class:

	June 30, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	642	$	186	$	67	$	895	$	52,928	$	53,823	$	49
Wholesale		-		-		-		-		10,963		10,963		-
Real estate		-		-		-		-		4,588		4,588		-
Working capital		-		-		-		-		2,309		2,309		-
Total	$	642	$	186	$	67	$	895	$	70,788	$	71,683	$	49

	March 31, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	613	$	158	$	65	$	836	$	52,559	$	53,395	$	46
Wholesale		-		-		-		-		10,513		10,513		-
Real estate		-		-		-		-		4,630		4,630		-
Working capital		-		-		-		-		2,277		2,277		-
Total	$	613	$	158	$	65	$	836	$	69,979	$	70,815	$	46

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Derivatives, Hedging Activities and Interest Expense

3 Months Ended

Jun. 30, 2018

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives, Hedging Activities and Interest Expense

Note 7 – Derivatives, Hedging Activities and Interest Expense

Derivative Instruments

Our liabilities consist mainly of fixed and floating rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, interest rate caps and foreign currency swaps to hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements.  All of our derivative activities are authorized and monitored by our management and our Asset Liability Committee which provides a framework for financial controls and governance to manage market risk.

Credit Risk Related Contingent Features

Our derivative contracts are governed by International Swaps and Derivatives Association (“ISDA”) Master Agreements.  Substantially all of these ISDA Master Agreements contain reciprocal ratings triggers providing either party with an option to terminate the agreement at market value in the event of a ratings downgrade of the other party below a specified threshold.  We have daily valuation and collateral exchange arrangements with all of our counterparties.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  However, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at June 30, 2018, if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.  

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

Derivative Activity Impact on Financial Statements

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	June 30, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	67,920	$	915	$	67,920	$	915
Interest rate floors		-		-		847		-		847		-
Foreign currency swaps		26		5		3,742		153		3,768		158
Total	$	26	$	5	$	72,509	$	1,068	$	72,535	$	1,073
Counterparty netting and collateral held												(991	)
Carrying value of derivative    contracts – Other assets											$	82
Other liabilities:
Interest rate swaps	$	-	$	-	$	47,220	$	686	$	47,220	$	686
Foreign currency swaps		93		3		9,369		545		9,462		548
Total	$	93	$	3	$	56,589	$	1,231	$	56,682	$	1,234
Counterparty netting and collateral posted												(1,230	)
Carrying value of derivative    contracts – Other liabilities											$	4

As of June 30, 2018, we held collateral of $438 million, which offset derivative assets and we posted collateral of $677 million, which offset derivative liabilities.  In addition, there was $553 million in counterparty netting included for both derivative assets and derivative liabilities.  We also held excess collateral of $2 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets.  We posted excess collateral of $71 million which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.   

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

	March 31, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	71,464	$	872	$	71,464	$	872
Interest rate floors		-		-		847		1		847		1
Foreign currency swaps		119		8		7,248		477		7,367		485
Total	$	119	$	8	$	79,559	$	1,350	$	79,678	$	1,358
Counterparty netting and collateral held												(1,297	)
Carrying value of derivative    contracts – Other assets											$	61
Other liabilities:
Interest rate swaps	$	-	$	-	$	41,513	$	628	$	41,513	$	628
Foreign currency swaps		-		-		5,863		200		5,863		200
Total	$	-	$	-	$	47,376	$	828	$	47,376	$	828
Counterparty netting and collateral posted												(822	)
Carrying value of derivative    contracts – Other liabilities											$	6

As of March 31, 2018, we held collateral of $737 million, which offset derivative assets and we posted collateral of $262 million, which offset derivative liabilities.  In addition, there was $560 million in counterparty netting included for both derivative assets and derivative liabilities.  We also held excess collateral of $11 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets.  We posted excess collateral of $3 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Interest expense on debt	$	601		$	467
Interest income on derivatives		(25	)		(16	)
Interest expense on debt and derivatives, net		576			451
(Gain) loss on non-hedge accounting debt denominated in foreign currencies		(646	)		650
Loss (gain) on non-hedge accounting foreign currency swaps		683			(650	)
Loss (gain) on U.S. dollar non-hedge accounting interest rate swaps		69			(3	)
Total interest expense	$	682		$	448

Interest expense on debt and derivatives represents net interest settlements and changes in accruals.  Gains and losses on hedge accounting derivatives and debt denominated in foreign currencies exclude net interest settlements and changes in accruals.  Ineffectiveness related to hedge accounting derivatives was not significant for the three months ended June 30, 2018 and 2017.  Cash flows associated with hedge accounting, non-hedge accounting, and de-designated derivatives are reported in Net cash provided by operating activities in our Consolidated Statements of Cash Flows.

The relative fair value allocation of derivative credit value adjustments for counterparty and non-performance credit risk within interest expense was not significant for the three months ended June 30, 2018 and 2017 as we are fully collateralized on substantially all of our derivatives without regard to credit ratings.

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Other Assets and Other Liabilities

3 Months Ended

Jun. 30, 2018

Other Assets And Other Liabilities [Abstract]

Other Assets and Other Liabilities

Note 8 – Other Assets and Other Liabilities

Other assets and other liabilities consisted of the following:

	June 30,		March 31,
	2018		2018
Other assets:
Notes receivable from affiliates	$	56	$	68
Used vehicles held for sale		420		366
Derivative assets		82		61
Other assets		1,059		1,119
Total other assets	$	1,617	$	1,614
Other liabilities:
Unearned insurance premiums and contract revenues	$	2,522	$	2,271
Accounts payable and accrued expenses		1,113		1,054
Deferred income		477		468
Income taxes payable		3		2
Derivative liabilities		4		6
Other liabilities		187		186
Total other liabilities	$	4,306	$	3,987

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Debt

3 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Note 9 – Debt

Debt and the related weighted average contractual interest rates are summarized as follows:

					Weighted average
					contractual interest rates
	June 30,		March 31,		June 30,			March 31,
	2018		2018		2018			2018
Commercial paper	$	27,250	$	27,313		2.18	%		1.80	%
Unsecured notes and loans payable		58,783		57,402		2.34	%		2.18	%
Secured notes and loans payable		14,556		13,638		2.22	%		1.95	%
Total debt	$	100,589	$	98,353		2.28	%		2.04	%

The carrying value of our debt includes unamortized premiums, discounts and debt issuance costs of $360 million and $353 million as of June 30, 2018 and March 31, 2018, respectively.  The face value of commercial paper, unsecured notes and loans payable and secured notes and loans payable was $27.3 billion, $59.0 billion, and $14.6 billion, respectively, as of June 30, 2018, and $27.4 billion, $57.6 billion and $13.7 billion, respectively, as of March 31, 2018.

As of June 30, 2018, our commercial paper had a weighted average remaining maturity of 75 days, while our unsecured and secured notes and loans payable mature on various dates through fiscal 2049.  Weighted average contractual interest rates are calculated based on original notional or par value before consideration of premium or discount.

Our unsecured notes and loans payable consist of both fixed and variable rate debt with contractual interest rates ranging from 0.0 percent to 5.0 percent at both June 30, 2018 and March 31, 2018.  Upon issuance of fixed rate notes, we generally elect to enter into interest rate swaps to convert fixed rate payments on notes to floating rate payments.

Our unsecured notes and loans payable contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.

Certain unsecured notes and loans payable are denominated in various foreign currencies, and include the impact of translation adjustments.  At June 30, 2018 and March 31, 2018, the carrying values of these foreign currency denominated unsecured notes and loans payable were $12.7 billion and $13.3 billion, respectively.  Concurrent with the issuance of these foreign currency unsecured notes and loans payable, we entered into currency swaps in the same notional amount to convert non-U.S. currency payments to U.S. dollar denominated payments.

Our secured notes and loans payable are denominated in U.S. dollars and consist of both fixed and variable rate debt with contractual interest rates ranging from 1.1 percent to 3.1 percent at June 30, 2018 and 1.1 percent to 2.5 percent at March 31, 2018.  Secured notes and loans payable are issued using on-balance sheet securitization trusts, as further discussed in Note 10 – Variable Interest Entities.  These notes are repayable only from collections on the underlying securitized retail finance receivables and the beneficial interests in investments in operating leases and from related credit enhancements.

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Variable Interest Entities

3 Months Ended

Jun. 30, 2018

Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]

Variable Interest Entities

Note 10 – Variable Interest Entities

Consolidated Variable Interest Entities

We use one or more special purpose entities that are considered Variable Interest Entities (“VIEs”) to issue asset-backed securities to third party bank-sponsored asset-backed securitization vehicles and to investors in securitization transactions.  The securities issued by these VIEs are backed by the cash flows related to retail finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”).  We hold variable interests in the VIEs that could potentially be significant to the VIEs.  We determined that we are the primary beneficiary of the securitization trusts because (i) our servicing responsibilities for the Securitized Assets give us the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant.

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	June 30, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	662	$	11,776	$	11,573	$	5	$	9,631	$	8
Investments in operating leases		366		10,573		7,713		121		4,925		2
Total	$	1,028	$	22,349	$	19,286	$	126	$	14,556	$	10

	March 31, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	729	$	12,130	$	11,927	$	7	$	9,958	$	7
Investments in operating leases		297		7,869		5,706		118		3,680		3
Total	$	1,026	$	19,999	$	17,633	$	125	$	13,638	$	10

Restricted Cash, including cash equivalents, shown in the table above represents collections from the underlying Gross Securitized Assets shown in the table above and certain reserve deposits held by TMCC for the VIEs and is included as part of Restricted cash and cash equivalents on our Consolidated Balance Sheets.  Gross Securitized Assets represent finance receivables and beneficial interests in investments in operating leases securitized for the asset-backed securities issued.  Net Securitized Assets shown in the table above are presented net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Other Assets represent used vehicles held-for-sale that were repossessed by or returned to TMCC for the benefit of the VIEs.  The related debt of these consolidated VIEs is presented net of $1,461 million and $1,520 million of securities retained by TMCC at June 30, 2018 and March 31, 2018, respectively.  Other Liabilities represents accrued interest on the debt of the consolidated VIEs.

The assets of the VIEs and the restricted cash and cash equivalents held by TMCC serve as the sole source of repayment for the asset-backed securities issued by these entities.  Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities.

As the primary beneficiary of these entities, we are exposed to credit, residual value, interest rate, and prepayment risk from the Securitized Assets in the VIEs.  However, our exposure to these risks did not change as a result of the transfer of the assets to the VIEs.  We may also be exposed to interest rate risk arising from the secured notes issued by the VIEs.

Note 10 – Variable Interest Entities (Continued)

In addition, we entered into interest rate swaps with certain special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

The transfers of the Securitized Assets to the special purpose entities in our securitizations are considered to be sales for legal purposes.  However, the Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets and interest expense on the secured debt issued by the special purpose entities.  We also maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Non-consolidated Variable Interest Entities

We provide lending to Toyota and Lexus dealers through the Toyota Dealer Investment Group’s Dealer Capital Program (“TDIG Program”) operated by our affiliate TMNA, which has an equity interest in these dealerships.  Dealers participating in this program have been determined to be VIEs.  We do not consolidate the dealerships in this program as we are not the primary beneficiary and any exposure to loss is limited to the amount of the credit facility.  Amounts due from these dealers under the TDIG Program that are classified as Finance receivables, net in our Consolidated Balance Sheets as of June 30, 2018 and March 31, 2018 and revenues earned from these dealers during the three months ended June 30, 2018 and 2017 were not significant. 

We also have other lending relationships, which have been determined to be VIEs, but these relationships are not consolidated as we are not the primary beneficiary.  Amounts due under these relationships as of June 30, 2018 and March 31, 2018 and revenues earned under these relationships during the three months ended June 30, 2018 and 2017 were not significant.

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Liquidity Facilities and Letters of Credit

3 Months Ended

Jun. 30, 2018

Line Of Credit Facility [Abstract]

Liquidity Facilities and Letters of Credit

Note 11 – Liquidity Facilities and Letters of Credit

For additional liquidity purposes, we maintain syndicated credit facilities with certain banks.

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2017, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2019, 2021, and 2023, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of June 30, 2018 and March 31, 2018.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of June 30, 2018, TMCC had committed bank credit facilities totaling $5.6 billion of which $2.1 billion, $825 million, $2.2 billion, and $475 million mature in fiscal 2019, 2020, 2021, and 2022, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of June 30, 2018 and March 31, 2018. We are currently in compliance with the covenants and conditions of the credit agreements described above.

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Commitments and Contingencies

3 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12 – Commitments and Contingencies

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	June 30,		March 31,
	2018		2018
Commitments:
Credit facilities commitments with dealers	$	1,329	$	1,286
Minimum lease commitments		158		162
Total commitments		1,487		1,448
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,587	$	1,548

Wholesale financing is not considered to be a contractual commitment as the arrangements are not binding arrangements under which TMCC is required to perform.

We are party to a 15-year lease agreement, which expires in August 2032, with TMNA for our headquarters facility in Plano, Texas.  Minimum lease commitments in the table above include $103 million and $105 million for facilities leases with affiliates at June 30, 2018 and March 31, 2018, respectively.  At June 30, 2018, minimum future commitments under lease agreements to which we are a lessee, including those with affiliates, are as follows:

	Futureminimum
Years ending March 31,	leasepayments
2019	$	18
2020		21
2021		17
2022		19
2023		13
Thereafter		70
Total	$	158

Commitments

We provide fixed and variable rate working capital loans, revolving lines of credit, and real estate financing to dealers and various multi-franchise organizations referred to as dealer groups for facilities construction and refurbishment, working capital requirements, real estate purchases, business acquisitions and other general business purposes.  These loans are typically secured with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate, and may be guaranteed by individual or corporate guarantees of affiliated dealers, dealer groups, or dealer principals.  Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover our exposure under such agreements.  Our pricing reflects market conditions, the competitive environment, the level of support dealers provide our retail, lease and insurance business and the credit worthiness of each dealer.  Amounts drawn under these facilities are reviewed for collectability on a quarterly basis, in conjunction with our evaluation of the allowance for credit losses.

Guarantees and Other Contingencies

TMCC has guaranteed bond obligations totaling $100 million in principal that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  The bonds mature in the following fiscal years ending March 31: 2028 - $20 million; 2029 - $50 million; 2030 - $10 million; 2031 - $10 million; and 2032 - $10 million.  TMCC would be required to perform under the guarantees in the event of non-payment on the bonds and other related obligations.  TMCC is entitled to reimbursement by the applicable affiliates for any amounts paid.  TMCC receives a nominal annual fee for guaranteeing such payments.  TMCC has not been required to perform under any of these affiliate bond guarantees as of June 30, 2018 and March 31, 2018.

Note 12 – Commitments and Contingencies (Continued)

Indemnification

In the ordinary course of business, we enter into agreements containing indemnification provisions standard in the industry related to several types of transactions, including, but not limited to, debt funding, derivatives, securitization transactions, and our vendor and supplier agreements.  Performance under these indemnities would occur upon a breach of the representations, warranties or covenants made or given, or a third party claim. In addition, we have agreed in certain debt and derivative issuances, and subject to certain exceptions, to gross-up payments due to third parties in the event that withholding tax is imposed on such payments.  In addition, certain of our funding arrangements may require us to pay lenders for increased costs due to certain changes in laws or regulations.  Due to the difficulty in predicting events, which could cause a breach of the indemnification provisions or trigger a gross-up or other payment obligation, we are not able to estimate our maximum exposure to future payments that could result from claims made under such provisions.  We have not made any material payments in the past as a result of these provisions, and as of June 30, 2018, we determined that it is not probable that we will be required to make any material payments in the future.  As of June 30, 2018 and March 31, 2018, no amounts have been recorded under these indemnification provisions.

Litigation and Governmental Proceedings

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.

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Income Taxes

3 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 – Income Taxes

Our effective tax rate was 19 percent for the three months ended June 30, 2018 compared to 37 percent for the same period in fiscal 2018.  Our provision for income taxes was $22 million for the first quarter of fiscal 2019, compared to $96 million for the same period in fiscal 2018.  The decreases in the effective tax rate and the provision for income taxes for the first quarter of fiscal 2019 compared to the same period in fiscal 2018 were due to the reduction of the federal statutory income tax rate by the TCJA from 35 percent to 21 percent, the decrease in our income before taxes and the adjustment to the deemed repatriation tax as described below.  

Our assessment of the impact of the TCJA is substantially complete, and is reflected in our financial statements as of June 30, 2018 and for the three months then ended. During the first quarter of fiscal 2019, we recorded an adjustment resulting in a tax benefit of $10 million related to the provisional deemed repatriation tax previously recorded in fiscal 2018.  This adjustment is a result of new information which became available during the first quarter of fiscal 2019.  Upon completion of our fiscal 2018 income tax return, we may identify additional revaluation adjustments to our recorded deferred tax liabilities, including the deemed repatriation tax. The issuance of future administrative guidance may further clarify the interpretation of the new law and require adjustments to the provisional amount we recorded for the deemed repatriation tax. Any adjustment required to this provisional amount is not expected to be material.

Tax-related Contingencies

As of June 30, 2018, we remain under IRS examination for fiscal 2018 and 2019.  The IRS examination for fiscal 2017 was concluded in the first quarter of fiscal 2019.

We periodically review our uncertain tax positions.  Our assessment is based on many factors including any ongoing IRS audits.  For the three months ended June 30, 2018, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets were $1.9 billion and $1.6 billion at June 30, 2018 and March 31, 2018, and were primarily due to the deferred deduction of allowance for credit and residual value losses and federal tax loss carryforward which has no expiration.  The total deferred tax liability, net of these deferred tax assets, was $5.3 billion at both June 30, 2018 and March 31, 2018.  Realization with respect to the federal tax loss carryforward is dependent on generating sufficient income.  Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized.  The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.

On August 3, 2018, the IRS and Department of the Treasury proposed regulations that provide guidance regarding the additional first year depreciation deduction under section 168(k) of the Internal Revenue Code.  These proposed regulations reflect changes made by the TCJA.  Under the proposed regulations, there will be an increase to our deferred tax assets driven by our federal tax loss carryforwards and an increase to our deferred tax liability related to vehicle depreciation.  As a result, we expect no significant change to our deferred tax liability, net of deferred tax assets on our Consolidated Balance Sheets.

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Related Party Transactions

3 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Note 14 – Related Party Transactions

As of June 30, 2018, there were no material changes to our related party agreements or relationships as described in our fiscal 2018 Form 10-K.  The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended
	June 30,
	2018			2017
Total financing revenues:
Manufacturers’ subvention and other revenues	$	472		$	368
Interest expense:
Credit support fees incurred	$	24		$	23
Interest and other expenses	$	1		$	1
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44
Investment and other income, net:
Interest and other income	$	2		$	4
Expenses:
Operating and administrative	$	23		$	19
Insurance losses and loss adjustment expenses1	$	(2	)	$	(5	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

Note 14 – Related Party Transactions (Continued)

	June 30,			March 31,
	2018			2018
Assets:
Cash and cash equivalents
Commercial paper	$	-		$	255
Investments in marketable securities
Commercial paper	$	-		$	52
Finance receivables, net
Accounts receivable	$	197		$	191
Deferred retail subvention income	$	(1,332	)	$	(1,279	)
Investments in operating leases, net
Investments in operating leases, net	$	6		$	6
Deferred lease subvention income	$	(1,833	)	$	(1,682	)
Other assets
Notes receivable	$	56		$	68
Other receivables, net	$	174		$	310
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	344		$	328
Other payables, net	$	59		$	74
Notes payable	$	24		$	18

TMCC receives subvention payments from TMNA which results in a gross monthly subvention receivable.  As of June 30, 2018 and March 31, 2018, the subvention receivable from TMNA was $193 million and $279 million, respectively. The subvention receivable is recorded in Other receivables, net in Other assets as of June 30, 2018 and March 31, 2018.  We have a master netting agreement with TMNA which allows us to net settle payments for shared services and subvention transactions.

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Segment Information

3 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information

Note 15 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended June 30, 2018
	Finance		Insurance			Intercompany
	operations		operations			eliminations			Total
Total financing revenues	$	2,836	$	-		$	-		$	2,836
Depreciation on operating leases		1,766		-			-			1,766
Interest expense		687		-			(5	)		682
Net financing revenues		383		-			5			388
Insurance earned premiums and contract revenues		-		224			-			224
Investment and other income (loss), net		48		(3	)		(5	)		40
Net financing and other revenues		431		221			-			652
Expenses:
Provision for credit losses		89		-			-			89
Operating and administrative expenses		241		83			-			324
Insurance losses and loss adjustment expenses		-		125			-			125
Total expenses		330		208			-			538
Income before income taxes		101		13			-			114
Provision for income taxes		19		3			-			22
Net income	$	82	$	10		$	-		$	92
Total assets at June 30, 2018	$	119,335	$	4,815		$	(1,087	)	$	123,063

Insurance operations – Revenue Recognition

For the first quarter of fiscal 2019, approximately 84 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the revenue recognition guidance.

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three months ended June 30, 2018.

We had $2.2 billion of unearned insurance premiums and contract revenues within the scope of the new revenue recognition guidance included in Other liabilities as of April 1, 2018 and June 30, 2018.  We recognized $176 million of the unearned amount in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three months ended June 30, 2018, which was included in Other liabilities as of April 1, 2018. We expect to recognize as revenue approximately $504 million of the unearned amount in the remainder of fiscal 2019, $559 million in fiscal 2020, and $1.1 billion thereafter.

Note 15 – Segment Information (Continued)

	Three Months Ended June 30, 2017
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,598	$	-	$	-		$	2,598
Depreciation on operating leases		1,681		-		-			1,681
Interest expense		451		-		(3	)		448
Net financing revenues		466		-		3			469
Insurance earned premiums and contract revenues		-		216		-			216
Investment and other income, net		32		59		(3	)		88
Net financing and other revenues		498		275		-			773
Expenses:
Provision for credit losses		85		-		-			85
Operating and administrative expenses		233		80		-			313
Insurance losses and loss adjustment expenses		-		114		-			114
Total expenses		318		194		-			512
Income before income taxes		180		81		-			261
Provision for income taxes		65		31		-			96
Net income	$	115	$	50	$	-		$	165
Total assets at June 30, 2017	$	117,011	$	4,605	$	(1,087	)	$	120,529

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Interim Financial Data (Policies)

3 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three months ended June 30, 2018 and 2017 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three months ended June 30, 2018 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2019 (“fiscal 2019”).

These financial statements should be read in conjunction with the Consolidated Financial Statements, significant accounting policies, and other Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2018 (“fiscal 2018”), which was filed with the Securities and Exchange Commission on June 4, 2018.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 14 – Related Party Transactions.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

On April 1, 2018, we adopted the following new accounting standards:

Revenue Recognition

We adopted new guidance related to the recognition of revenue from contracts with customers (“revenue recognition guidance”). We utilized the modified retrospective approach and applied it to active agreements at the time of adoption. As such, the comparative information in this Form 10-Q has not been restated and continues to be reported under the accounting standards in effect for those periods. The majority of our total consolidated revenues are outside the scope of the standard; however, the majority of revenue reported by our Insurance operations segment falls within the scope of the revenue recognition guidance. Upon adoption, fees collected for administering certain vehicle and payment protection products are now recognized using the same measure as the related product revenue and certain dealer incentives are now capitalized and amortized over the contract term instead of expensed as incurred.

While the adoption of the revenue recognition guidance has changed the timing of recognition of certain revenues and expenses, the total revenue and expense recognized over the contract term will not change as a result of adopting the standard. We do not expect the adoption to be significant to our net income on an ongoing basis.

The cumulative effect of the changes made to our consolidated balance sheet as of April 1, 2018 for the adoption of the revenue recognition guidance was as follows:

	March 31,		Adjustments related			April 1,
	2018		to adoption			2018
Assets:
Other assets	$	1,614	$	73		$	1,687
Liabilities and shareholder's equity:
Deferred income taxes	$	5,326	$	(36	)	$	5,290
Other liabilities		3,987		219			4,206
Retained earnings		11,992		(110	)		11,882

The impact on our consolidated statement of income for the adoption of the revenue recognition guidance was as follows:

	Three Months Ended June 30, 2018
			Effect of		Balances without
	As reported		adoption		adoption
Insurance earned premiums and contract revenues	$	224	$	4	$	228
Provision for income taxes		22		1		23
Net income		92		3		95
Comprehensive income		88		3		91

Note 1 – Interim Financial Data (Continued)

The impact on our consolidated balance sheet for the adoption of revenue recognition guidance was as follows:

	June 30, 2018
			Effect of			Balances without
	As reported		adoption			adoption
Assets:
Other assets	$	1,617	$	(73	)	$	1,544
Liabilities and shareholder's equity:
Deferred income taxes	$	5,310	$	37		$	5,347
Other liabilities		4,306		(223	)		4,083
Retained earnings		11,962		113			12,075

In connection with the adoption of revenue recognition guidance, we have updated our accounting policies as follows:

Revenue Recognition

Revenue Recognition

Insurance Contract Revenues

The Insurance operations segment offers vehicle and payment protection products on Toyota, Lexus and other domestic and import vehicles that are sold by dealers along with the sale of a vehicle.

We receive the contractually determined dealer cost at the inception of the contract.  Revenue is then deferred and recognized over the term of the contract according to earnings factors established by management that are based upon historical loss experience.  Contracts sold range in term from 3 to 120 months and are typically cancellable at any time. The effect of subsequent cancellations is recorded as an offset to unearned contract revenues in Other liabilities on our Consolidated Balance Sheets.

Recognition and Measurement

Recognition and Measurement

We adopted new guidance addressing certain aspects of recognition, measurement, presentation, and disclosure of financial instruments that requires entities to measure equity investments at fair value and recognize any changes in fair value in net income.  On April 1, 2018 we recognized the cumulative effect of adoption by recording a reduction to our opening retained earnings of approximately $12 million, net of income taxes.  

In connection with the adoption of the new recognition and measurement guidance, we have updated our accounting policies as follows:

Investments in Marketable Securities

Available-for-Sale (“AFS”) Debt Securities

Debt securities designated as available-for-sale are recorded at fair value using quoted market prices where available with unrealized gains or losses included in accumulated other comprehensive income (“AOCI”), net of applicable taxes.  Realized gains and losses are determined using the specific identification method and are included in Investment and other income, net within our Consolidated Statements of Income.

Equity Investments

Beginning on April 1, 2018, equity investments are recorded at fair value using quoted market prices where available, with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income. Realized gains and losses from sales are determined using the first in first out method.  

Other Recently Adopted Standards

Other Recently Adopted Standards

We adopted new guidance intended to reduce diversity in practice in the classification of certain cash receipts and cash payments in the statement of cash flows. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

We adopted new guidance clarifying how restricted cash and cash equivalents should be classified and presented on the statement of cash flows. This guidance was intended to reduce diversity in practice in the classification of restricted cash and cash equivalents on the statement of cash flows.  Effective April 1, 2018, we no longer report the change in restricted cash and cash equivalents in the operating and investing sections in our Consolidated Statements of Cash Flows.  Restricted cash and cash equivalents are now included in the beginning and end of the period cash and cash equivalents on the Consolidated Statements of Cash Flows. These changes have been applied using a retrospective transition method to each period presented.

We early adopted new guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cut and Jobs Act of 2017 (“TCJA”).  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.  

Accounting Guidance Issued But Not Yet Adopted

Accounting Guidance Issued But Not Yet Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued new guidance that introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard.  The FASB also subsequently issued guidance amending and clarifying various aspects of the new leases guidance.  The new leasing standard represents a wholesale change to lease accounting for lessees and requires additional disclosures regarding leasing arrangements. This accounting guidance is effective for us on April 1, 2019.  Upon adoption, we expect to recognize lease liabilities and right-of-use assets (at their present value) in our Consolidated Balance Sheets related to predominantly all of the future minimum lease payments as disclosed in Note 12 – Commitments and Contingencies.  We are currently evaluating the other potential impacts of this guidance from both a lessee and lessor perspective on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued new guidance that introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  This accounting guidance is effective for us on April 1, 2020.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation. We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In March 2017, the FASB issued new guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date.  This accounting guidance is effective for us on April 1, 2019.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2017, the FASB issued new guidance that makes targeted improvements to accounting for hedging activities. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance provides new alternatives for applying hedge accounting and measuring the hedged item in fair value hedges of interest rate risk.  This accounting guidance is effective for us on April 1, 2019.  The adoption of this guidance is not expected to have a material impact on our consolidated financial statements and related disclosures.

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Interim Financial Data (Tables)

3 Months Ended

Jun. 30, 2018

Accounting Standards Update 2014-09 [Member]

Schedule of Cumulative Effect and Impact on Consolidated Financial Statements for Adoption of Revenue Recognition Guidance

The cumulative effect of the changes made to our consolidated balance sheet as of April 1, 2018 for the adoption of the revenue recognition guidance was as follows:

	March 31,		Adjustments related			April 1,
	2018		to adoption			2018
Assets:
Other assets	$	1,614	$	73		$	1,687
Liabilities and shareholder's equity:
Deferred income taxes	$	5,326	$	(36	)	$	5,290
Other liabilities		3,987		219			4,206
Retained earnings		11,992		(110	)		11,882

The impact on our consolidated statement of income for the adoption of the revenue recognition guidance was as follows:

	Three Months Ended June 30, 2018
			Effect of		Balances without
	As reported		adoption		adoption
Insurance earned premiums and contract revenues	$	224	$	4	$	228
Provision for income taxes		22		1		23
Net income		92		3		95
Comprehensive income		88		3		91

Note 1 – Interim Financial Data (Continued)

The impact on our consolidated balance sheet for the adoption of revenue recognition guidance was as follows:

	June 30, 2018
			Effect of			Balances without
	As reported		adoption			adoption
Assets:
Other assets	$	1,617	$	(73	)	$	1,544
Liabilities and shareholder's equity:
Deferred income taxes	$	5,310	$	37		$	5,347
Other liabilities		4,306		(223	)		4,083
Retained earnings		11,962		113			12,075

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Fair Value Measurements (Tables)

3 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	June 30, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	1,013	$	825		$	-		$	-		$	1,838
Certificates of deposit		-		3,500			-			-			3,500
Cash equivalents total		1,013		4,325			-			-			5,338
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations		2,480		18			-			-			2,498
Municipal debt securities		-		10			-			-			10
Certificates of deposit		-		624			-			-			624
Corporate debt securities		15		182			-			-			197
Mortgage-backed securities:
U.S. government agency		-		36			-			-			36
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			23			-			23
Asset-backed securities		-		-			38			-			38
Available-for-sale debt securities total		2,495		870			63			-			3,428
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													657
Total return bond funds		1,518		-			-			-			1,518
Equity investments total		1,518		-			-			-			2,175
Investments in marketable securities total		4,013		870			63			-			5,603
Derivative assets:
Interest rate swaps		-		915			-			-			915
Foreign currency swaps		-		158			-			-			158
Counterparty netting and collateral		-		-			-			(991	)		(991	)
Derivative assets total		-		1,073			-			(991	)		82
Assets at fair value		5,026		6,268			63			(991	)		11,023
Derivative liabilities:
Interest rate swaps		-		(663	)		(23	)		-			(686	)
Foreign currency swaps		-		(548	)		-			-			(548	)
Counterparty netting and collateral		-		-			-			1,230			1,230
Liabilities at fair value		-		(1,211	)		(23	)		1,230			(4	)
Net assets at fair value	$	5,026	$	5,057		$	40		$	239		$	11,019

	March 31, 2018
									Counterparty
									netting &			Fair
	Level 1		Level 2			Level 3			collateral			value
Cash equivalents:
Money market instruments	$	347	$	550		$	-		$	-		$	897
Certificates of deposit		-		2,240			-			-			2,240
Commercial paper		-		255			-			-			255
Cash equivalents total		347		3,045			-			-			3,392
Restricted cash equivalents - money market instruments		173		709			-			-			882
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations		2,774		24			-			-			2,798
Municipal debt securities		-		11			-			-			11
Certificates of deposit		-		474			-			-			474
Commercial paper		-		52			-			-			52
Corporate debt securities		15		186			-			-			201
Mortgage-backed securities:
U.S. government agency		-		39			-			-			39
Non-agency residential		-		-			2			-			2
Non-agency commercial		-		-			29			-			29
Asset-backed securities		-		-			39			-			39
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value													660
Total return bond funds		1,524		-			-			-			1,524
Available-for-sale securities total		4,313		786			70			-			5,829
Derivative assets:
Interest rate swaps		-		872			-			-			872
Interest rate floors		-		1			-			-			1
Foreign currency swaps		-		485			-			-			485
Counterparty netting and collateral		-		-			-			(1,297	)		(1,297	)
Derivative assets total		-		1,358			-			(1,297	)		61
Assets at fair value		4,833		5,898			70			(1,297	)		10,164
Derivative liabilities:
Interest rate swaps		-		(607	)		(21	)		-			(628	)
Foreign currency swaps		-		(200	)		-			-			(200	)
Counterparty netting and collateral		-		-			-			822			822
Liabilities at fair value		-		(807	)		(21	)		822			(6	)
Net assets at fair value	$	4,833	$	5,091		$	49		$	(475	)	$	10,158

Assets and Liabilities Measured on Recurring Basis Using Significant Unobservable Inputs

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended June 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(8	)		(8	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			2			2			-			2
Issuances		-			-			-			-			-
Sales		-			-			-			-			-
Settlements		(6	)		(3	)		(9	)		6			(3	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, June 30, 2018	$	25		$	38		$	63		$	(23	)	$	40
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date										$	(8	)	$	(8	)

	Three Months Ended June 30, 2017
																								Total net
																								assets
	Available-for-sale securities														Derivative instruments, net									(liabilities)
	U.S.											Total									Total
	government			Corporate		Mortgage-			Asset-			available-			Interest			Foreign			derivative
	and agency			debt		backed			backed			for-sale			rate			currency			assets
	obligations			securities		securities			securities			securities			swaps			swaps			(liabilities)
Fair value, April 1, 2017	$	2		$	8	$	39		$	31		$	80		$	(5	)	$	(62	)	$	(67	)	$	13
Total gains (losses)
Included in net income		-			-		-			-			-			13			7			20			20
Included in other comprehensive income		-			-		-			-			-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		-			-		5			11			16			-			-			-			16
Issuances		-			-		-			-			-			-			-			-			-
Sales		-			-		-			-			-			-			-			-			-
Settlements		-			-		(1	)		(7	)		(8	)		4			55			59			51
Transfers in to Level 3		-			-		-			-			-			-			-			-			-
Transfers out of Level 3		(2	)		-		-			-			(2	)		-			-			-			(2	)
Fair value, June 30, 2017	$	-		$	8	$	43		$	35		$	86		$	12		$	-		$	12		$	98
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date															$	13		$	-		$	13		$	13

Financial Assets and Liabilities Not Carried at Fair Value on Recurring Basis on Consolidated Balance Sheets

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	June 30, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,752	$	-	$	-	$	52,323	$	52,323
Wholesale		10,800		-		-		10,847		10,847
Real estate		4,466		-		-		4,352		4,352
Working capital		2,249		-		-		2,266		2,266
Financial liabilities
Commercial paper	$	27,250	$	-	$	27,250	$	-	$	27,250
Unsecured notes and loans payable		58,783		-		56,710		2,306		59,016
Secured notes and loans payable		14,556		-		-		14,514		14,514

	March 31, 2018
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	52,374	$	-	$	-	$	52,081	$	52,081
Wholesale		10,365		-		-		10,413		10,413
Real estate		4,492		-		-		4,409		4,409
Working capital		2,222		-		-		2,197		2,197
Financial liabilities
Commercial paper	$	27,313	$	-	$	27,313	$	-	$	27,313
Unsecured notes and loans payable		57,402		-		55,441		2,341		57,782
Secured notes and loans payable		13,638		-		-		13,588		13,588

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Investments in Marketable Securities (Tables)

3 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Summary of Investments in Marketable Securities

Investments in marketable securities consisted of the following:

	June 30, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	2,520	$	-	$	(22	)	$	2,498
Municipal debt securities		9		1		-			10
Certificates of deposit		625		-		(1	)		624
Corporate debt securities		202		1		(6	)		197
Mortgage-backed securities:
U.S. government agency		37		-		(1	)		36
Non-agency residential		1		1		-			2
Non-agency commercial		24		-		(1	)		23
Asset-backed securities		38		-		-			38
Total available-for-sale debt securities	$	3,456	$	3	$	(31	)	$	3,428
Equity investments								$	2,175
Total investments in marketable securities								$	5,603

	March 31, 2018
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale securities:
Debt securities:
U.S. government and agency obligations	$	2,821	-		$	(23	)	$	2,798
Municipal debt securities		10		1	-				11
Certificates of deposit		475	-			(1	)		474
Commercial paper		52	-		-				52
Corporate debt securities		203		1		(3	)		201
Mortgage-backed securities:
U.S. government agency		38		1		-			39
Non-agency residential		1		1	-				2
Non-agency commercial		30	-			(1	)		29
Asset-backed securities		39	-		-				39
Equity investments		2,196		11		(23	)		2,184
Total investments in marketable securities	$	5,865	$	15	$	(51	)	$	5,829

Schedule of Gains and Losses on Investments in Marketable Securities Presented in Our Consolidated Statement of Income

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Available-for-sale securities:
Realized gains on sales	$	-		$	41
Equity investments:
Unrealized losses recognized	$	(25	)

Summary of Contractual Maturities of Available-For-Sale Debt Securities

The amortized cost, fair value, and contractual maturities of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	June 30, 2018
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	2,386	$	2,376
Due after 1 year through 5 years		755		746
Due after 5 years through 10 years		142		137
Due after 10 years		73		70
Mortgage-backed and asset-backed securities1		100		99
Total	$	3,456	$	3,428

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Finance Receivables, Net (Tables)

3 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Net Financing Receivables

Finance receivables, net consisted of the following:

	June 30,			March 31,
	2018			2018
Retail receivables	$	42,047		$	41,265
Securitized retail receivables		11,776			12,130
Dealer financing		17,860			17,420
		71,683			70,815
Deferred origination (fees) and costs, net		629			630
Deferred income		(1,383	)		(1,335	)
Allowance for credit losses
Retail and securitized retail receivables		(313	)		(312	)
Dealer financing		(150	)		(151	)
Total allowance for credit losses		(463	)		(463	)
Finance receivables, net	$	70,466		$	69,647

Finance Receivable Credit Quality Indicators

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	June 30,		March 31,
	2018		2018
Aging of finance receivables:
Current	$	52,928	$	52,559
30-59 days past due		642		613
60-89 days past due		186		158
90 days or greater past due		67		65
Total	$	53,823	$	53,395

	Wholesale				Real Estate				Working Capital
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Credit quality indicators:
Performing	$	9,769	$	9,451	$	4,019	$	4,070	$	2,140	$	2,118
Credit Watch		1,084		946		524		484		117		105
At Risk		106		75		45		29		52		33
Default		4		41		-		47		-		21
Total	$	10,963	$	10,513	$	4,588	$	4,630	$	2,309	$	2,277

Summary of Impaired Loans by Class of Finance Receivable

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
	2018		2018		2018		2018		2018		2018
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	111	$	107	$	111	$	107	$	10	$	14
Real estate		54		86		54		86		3		5
Working capital		52		55		52		55		49		51
Total	$	217	$	248	$	217	$	248	$	62	$	70
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	103	$	83	$	103	$	83
Real estate		141		142		141		142
Working capital		21		22		21		22
Total	$	265	$	247	$	265	$	247
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	225	$	222	$	223	$	220
Total impaired account balances:
Retail loan	$	225	$	222	$	223	$	220
Wholesale		214		190		214		190
Real estate		195		228		195		228
Working capital		73		77		73		77
Total	$	707	$	717	$	705	$	715

The following table summarizes the average impaired loans by class of finance receivables as of the balance sheet date:

	Three Months Ended June 30,
	2018		2017
Impaired account balances individually evaluated   for impairment with an allowance:
Wholesale	$	109	$	109
Real estate		70		94
Working capital		53		39
Total	$	232	$	242
Impaired account balances individually evaluated   for impairment without an allowance:
Wholesale	$	93	$	134
Real estate		141		100
Working capital		22		-
Total	$	256	$	234
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	224	$	222
Total impaired account balances:
Retail loan	$	224	$	222
Wholesale		202		243
Real estate		211		194
Working capital		75		39
Total	$	712	$	698

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Investments in Operating Leases, Net (Tables)

3 Months Ended

Jun. 30, 2018

Leases Operating [Abstract]

Investments in Operating Leases, Net

Investments in operating leases, net consisted of the following:

	June 30,			March 31,
	2018			2018
Investments in operating leases	$	40,462		$	42,863
Securitized investments in operating leases		10,573			7,869
		51,035			50,732
Deferred origination (fees) and costs, net		(227	)		(224	)
Deferred income		(1,852	)		(1,700	)
Accumulated depreciation		(10,071	)		(9,977	)
Allowance for credit losses		(137	)		(134	)
Investments in operating leases, net	$	38,748		$	38,697

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Allowance for Credit Losses (Tables)

3 Months Ended

Jun. 30, 2018

Loans And Leases Receivable Disclosure [Abstract]

Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

	Three Months Ended
	June 30,
	2018			2017
Allowance for credit losses at beginning of period	$	597		$	622
Provision for credit losses		89			85
Charge-offs, net of recoveries		(86	)		(96	)
Allowance for credit losses at end of period	$	600		$	611

Allowance for Credit Losses for Finance Receivables and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses for finance receivables and finance receivables by portfolio segment:

	Three Months Ended June 30, 2018
	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(75	)		-			(75	)
Recoveries		14			-			14
Provision for credit losses		62			(1	)		61
Ending balance, June 30, 2018	$	313		$	150		$	463
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	62		$	62
Ending balance: Collectively evaluated for impairment	$	313		$	88		$	401
Finance Receivables:
Ending balance, June 30, 2018	$	53,823		$	17,860		$	71,683
Ending balance: Individually evaluated for impairment	$	-		$	482		$	482
Ending balance: Collectively evaluated for impairment	$	53,823		$	17,378		$	71,201

	Three Months Ended June 30, 2017
	Retail Loan			DealerProducts		Total
Beginning balance, April 1, 2017	$	344		$	123	$	467
Charge-offs		(79	)		-		(79	)
Recoveries		13			-		13
Provision for credit losses		44			8		52
Ending balance, June 30, 2017	$	322		$	131	$	453
Allowance for Credit Losses for Finance Receivables:
Ending balance: Individually evaluated for impairment	$	-		$	47	$	47
Ending balance: Collectively evaluated for impairment	$	322		$	84	$	406
Finance Receivables:
Ending balance, June 30, 2017	$	51,375		$	18,275	$	69,650
Ending balance: Individually evaluated for impairment	$	-		$	494	$	494
Ending balance: Collectively evaluated for impairment	$	51,375		$	17,781	$	69,156

Past Due Finance Receivables and Investments in Operating Leases

The following table shows aggregate balances of finance receivables and investments in operating leases 60 or more days past due:

	June 30,		March 31,
	2018		2018
Aggregate balances 60 or more days past due
Finance receivables	$	253	$	223
Investments in operating leases		108		106
Total	$	361	$	329

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class:

	June 30, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	642	$	186	$	67	$	895	$	52,928	$	53,823	$	49
Wholesale		-		-		-		-		10,963		10,963		-
Real estate		-		-		-		-		4,588		4,588		-
Working capital		-		-		-		-		2,309		2,309		-
Total	$	642	$	186	$	67	$	895	$	70,788	$	71,683	$	49

	March 31, 2018
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	613	$	158	$	65	$	836	$	52,559	$	53,395	$	46
Wholesale		-		-		-		-		10,513		10,513		-
Real estate		-		-		-		-		4,630		4,630		-
Working capital		-		-		-		-		2,277		2,277		-
Total	$	613	$	158	$	65	$	836	$	69,979	$	70,815	$	46

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Derivatives, Hedging Activities and Interest Expense (Tables)

3 Months Ended

Jun. 30, 2018

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Activity Impact on Consolidated Balance Sheet

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	June 30, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	67,920	$	915	$	67,920	$	915
Interest rate floors		-		-		847		-		847		-
Foreign currency swaps		26		5		3,742		153		3,768		158
Total	$	26	$	5	$	72,509	$	1,068	$	72,535	$	1,073
Counterparty netting and collateral held												(991	)
Carrying value of derivative    contracts – Other assets											$	82
Other liabilities:
Interest rate swaps	$	-	$	-	$	47,220	$	686	$	47,220	$	686
Foreign currency swaps		93		3		9,369		545		9,462		548
Total	$	93	$	3	$	56,589	$	1,231	$	56,682	$	1,234
Counterparty netting and collateral posted												(1,230	)
Carrying value of derivative    contracts – Other liabilities											$	4

Note 7 – Derivatives, Hedging Activities and Interest Expense (Continued)

	March 31, 2018
	Hedge accounting				Non-hedge
	derivatives				accountingderivatives				Total
			Fair				Fair				Fair
	Notional		value		Notional		value		Notional		value
Other assets:
Interest rate swaps	$	-	$	-	$	71,464	$	872	$	71,464	$	872
Interest rate floors		-		-		847		1		847		1
Foreign currency swaps		119		8		7,248		477		7,367		485
Total	$	119	$	8	$	79,559	$	1,350	$	79,678	$	1,358
Counterparty netting and collateral held												(1,297	)
Carrying value of derivative    contracts – Other assets											$	61
Other liabilities:
Interest rate swaps	$	-	$	-	$	41,513	$	628	$	41,513	$	628
Foreign currency swaps		-		-		5,863		200		5,863		200
Total	$	-	$	-	$	47,376	$	828	$	47,376	$	828
Counterparty netting and collateral posted												(822	)
Carrying value of derivative    contracts – Other liabilities											$	6

Components of Interest Expense

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended
	June 30,
	2018			2017
Interest expense on debt	$	601		$	467
Interest income on derivatives		(25	)		(16	)
Interest expense on debt and derivatives, net		576			451
(Gain) loss on non-hedge accounting debt denominated in foreign currencies		(646	)		650
Loss (gain) on non-hedge accounting foreign currency swaps		683			(650	)
Loss (gain) on U.S. dollar non-hedge accounting interest rate swaps		69			(3	)
Total interest expense	$	682		$	448

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Other Assets and Other Liabilities (Tables)

3 Months Ended

Jun. 30, 2018

Other Assets And Other Liabilities [Abstract]

Other Assets and Other Liabilities

Other assets and other liabilities consisted of the following:

	June 30,		March 31,
	2018		2018
Other assets:
Notes receivable from affiliates	$	56	$	68
Used vehicles held for sale		420		366
Derivative assets		82		61
Other assets		1,059		1,119
Total other assets	$	1,617	$	1,614
Other liabilities:
Unearned insurance premiums and contract revenues	$	2,522	$	2,271
Accounts payable and accrued expenses		1,113		1,054
Deferred income		477		468
Income taxes payable		3		2
Derivative liabilities		4		6
Other liabilities		187		186
Total other liabilities	$	4,306	$	3,987

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Debt (Tables)

3 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt and Related Weighted Average Contractual Interest Rates

Debt and the related weighted average contractual interest rates are summarized as follows:

					Weighted average
					contractual interest rates
	June 30,		March 31,		June 30,			March 31,
	2018		2018		2018			2018
Commercial paper	$	27,250	$	27,313		2.18	%		1.80	%
Unsecured notes and loans payable		58,783		57,402		2.34	%		2.18	%
Secured notes and loans payable		14,556		13,638		2.22	%		1.95	%
Total debt	$	100,589	$	98,353		2.28	%		2.04	%

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Variable Interest Entities (Tables)

3 Months Ended

Jun. 30, 2018

Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]

Schedule of Variable Interest Entities, Securitization Transactions Assets and Liabilities

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	June 30, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	662	$	11,776	$	11,573	$	5	$	9,631	$	8
Investments in operating leases		366		10,573		7,713		121		4,925		2
Total	$	1,028	$	22,349	$	19,286	$	126	$	14,556	$	10

	March 31, 2018
			VIE Assets						VIE Liabilities
			Gross		Net
	Restricted Cash		Securitized Assets		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	729	$	12,130	$	11,927	$	7	$	9,958	$	7
Investments in operating leases		297		7,869		5,706		118		3,680		3
Total	$	1,026	$	19,999	$	17,633	$	125	$	13,638	$	10

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Commitments and Contingencies (Tables)

3 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	June 30,		March 31,
	2018		2018
Commitments:
Credit facilities commitments with dealers	$	1,329	$	1,286
Minimum lease commitments		158		162
Total commitments		1,487		1,448
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,587	$	1,548

Future Minimum Lease Payments under Non-cancelable Operating Leases

At June 30, 2018, minimum future commitments under lease agreements to which we are a lessee, including those with affiliates, are as follows:

	Futureminimum
Years ending March 31,	leasepayments
2019	$	18
2020		21
2021		17
2022		19
2023		13
Thereafter		70
Total	$	158

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Related Party Transactions (Tables)

3 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions Included in Consolidated Statements of Income

The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended
	June 30,
	2018			2017
Total financing revenues:
Manufacturers’ subvention and other revenues	$	472		$	368
Interest expense:
Credit support fees incurred	$	24		$	23
Interest and other expenses	$	1		$	1
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44
Investment and other income, net:
Interest and other income	$	2		$	4
Expenses:
Operating and administrative	$	23		$	19
Insurance losses and loss adjustment expenses1	$	(2	)	$	(5	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

Related Party Transactions Included in Consolidated Balance Sheets

The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	June 30,			March 31,
	2018			2018
Assets:
Cash and cash equivalents
Commercial paper	$	-		$	255
Investments in marketable securities
Commercial paper	$	-		$	52
Finance receivables, net
Accounts receivable	$	197		$	191
Deferred retail subvention income	$	(1,332	)	$	(1,279	)
Investments in operating leases, net
Investments in operating leases, net	$	6		$	6
Deferred lease subvention income	$	(1,833	)	$	(1,682	)
Other assets
Notes receivable	$	56		$	68
Other receivables, net	$	174		$	310
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	344		$	328
Other payables, net	$	59		$	74
Notes payable	$	24		$	18

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Segment Information (Tables)

3 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended June 30, 2018
	Finance		Insurance			Intercompany
	operations		operations			eliminations			Total
Total financing revenues	$	2,836	$	-		$	-		$	2,836
Depreciation on operating leases		1,766		-			-			1,766
Interest expense		687		-			(5	)		682
Net financing revenues		383		-			5			388
Insurance earned premiums and contract revenues		-		224			-			224
Investment and other income (loss), net		48		(3	)		(5	)		40
Net financing and other revenues		431		221			-			652
Expenses:
Provision for credit losses		89		-			-			89
Operating and administrative expenses		241		83			-			324
Insurance losses and loss adjustment expenses		-		125			-			125
Total expenses		330		208			-			538
Income before income taxes		101		13			-			114
Provision for income taxes		19		3			-			22
Net income	$	82	$	10		$	-		$	92
Total assets at June 30, 2018	$	119,335	$	4,815		$	(1,087	)	$	123,063

Note 15 – Segment Information (Continued)

	Three Months Ended June 30, 2017
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,598	$	-	$	-		$	2,598
Depreciation on operating leases		1,681		-		-			1,681
Interest expense		451		-		(3	)		448
Net financing revenues		466		-		3			469
Insurance earned premiums and contract revenues		-		216		-			216
Investment and other income, net		32		59		(3	)		88
Net financing and other revenues		498		275		-			773
Expenses:
Provision for credit losses		85		-		-			85
Operating and administrative expenses		233		80		-			313
Insurance losses and loss adjustment expenses		-		114		-			114
Total expenses		318		194		-			512
Income before income taxes		180		81		-			261
Provision for income taxes		65		31		-			96
Net income	$	115	$	50	$	-		$	165
Total assets at June 30, 2017	$	117,011	$	4,605	$	(1,087	)	$	120,529

XML

Interim Financial Data - Cumulative Effect of Changes in Consolidated Balance Sheet for Adoption of Revenue Recognition (Details) - USD ($) $ in Millions	Jun. 30, 2018	Apr. 01, 2018	Mar. 31, 2018
ASSETS
Other assets	$ 1,617		$ 1,614
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes	5,310		5,326
Other liabilities	4,306		3,987
Retained earnings	11,962		$ 11,992
Accounting Standards Update 2014-09 [Member]
ASSETS
Other assets		$ 1,687
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes		5,290
Other liabilities		4,206
Retained earnings		11,882
Adjustments Related to Adoption [Member] | Accounting Standards Update 2014-09 [Member]
ASSETS
Other assets	(73)	73
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes	37	(36)
Other liabilities	(223)	219
Retained earnings	$ 113	$ (110)

XML

Interim Financial Data - Impact on Consolidated Statement of Income for the Adoption of Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Summary Of Significant Accounting Policies [Line Items]
Insurance earned premiums and contract revenues	$ 224	$ 216
Provision for income taxes	22	96
Net income	92	165
Comprehensive income	88	$ 157
Effect of Adoption [Member] | Accounting Standards Update 2014-09 [Member]
Summary Of Significant Accounting Policies [Line Items]
Insurance earned premiums and contract revenues	4
Provision for income taxes	1
Net income	3
Comprehensive income	3
Balances without Adoption [Member] | Accounting Standards Update 2014-09 [Member]
Summary Of Significant Accounting Policies [Line Items]
Insurance earned premiums and contract revenues	228
Provision for income taxes	23
Net income	95
Comprehensive income	$ 91

XML

Interim Financial Data - Impact on Consolidated Balance Sheet for the Adoption of Revenue Recognition (Details) - USD ($) $ in Millions	Jun. 30, 2018	Apr. 01, 2018	Mar. 31, 2018
ASSETS
Other assets	$ 1,617		$ 1,614
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes	5,310		5,326
Other liabilities	4,306		3,987
Retained earnings	11,962		$ 11,992
Accounting Standards Update 2014-09 [Member]
ASSETS
Other assets		$ 1,687
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes		5,290
Other liabilities		4,206
Retained earnings		11,882
Effect of Adoption [Member] | Accounting Standards Update 2014-09 [Member]
ASSETS
Other assets	(73)	73
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes	37	(36)
Other liabilities	(223)	219
Retained earnings	113	$ (110)
Balances without Adoption [Member] | Accounting Standards Update 2014-09 [Member]
ASSETS
Other assets	1,544
LIABILITIES AND SHAREHOLDER’S EQUITY
Deferred income taxes	5,347
Other liabilities	4,083
Retained earnings	$ 12,075

XML

Interim Financial Data - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Apr. 01, 2018
Accounting Standards Update 2014-09 [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Insurance Policy Term	3 months
Accounting Standards Update 2014-09 [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Insurance Policy Term	120 months
Accounting Standards Update 2016-01 [Member]
Summary Of Significant Accounting Policies [Line Items]
Cumulative effect of adoption of the guidance, reduction in retained earnings		$ 12

XML

Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	$ 3,428
Equity investments	2,175	$ 2,184
Investments in marketable securities total	5,603	5,829
Derivative assets	82	61
Counterparty netting and collateral	(438)	(737)
Derivative liabilities	(4)	(6)
Counterparty netting and collateral	677	262
U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2,498	2,798
Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	10	11
Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	197	201
U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	36	39
Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2	2
Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	23	29
Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	38	39
Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	5,338	3,392
Available-for-sale securities, Debt securities	3,428
Equity investments	2,175
Investments in marketable securities total	5,603
Derivative assets	82	61
Counterparty netting and collateral	(991)	(1,297)
Assets at fair value	11,023	10,164
Counterparty netting and collateral	1,230	822
Liabilities at fair value	(4)	(6)
Net assets at fair value	11,019	10,158
Derivative asset liability collateral obligation right to return reclaim cash offset	239	(475)
Available-for-sale securities total		5,829
Recurring [Member] | Money market instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	1,838	897
Restricted cash equivalents		882
Recurring [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	3,500	2,240
Available-for-sale securities, Debt securities	624	474
Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents		255
Available-for-sale securities, Debt securities		52
Recurring [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2,498	2,798
Recurring [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	10	11
Recurring [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	197	201
Recurring [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	36	39
Recurring [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2	2
Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	23	29
Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	38	39
Recurring [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	1,518
Available-for-sale securities, Equity investments		1,524
Recurring [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	158	485
Derivative liabilities	(548)	(200)
Recurring [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	915	872
Derivative liabilities	(686)	(628)
Recurring [Member] | Interest rate floors [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets		1
Recurring [Member] | Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	1,013	347
Available-for-sale securities, Debt securities	2,495
Equity investments	1,518
Investments in marketable securities total	4,013
Derivative assets	0	0
Counterparty netting and collateral	0	0
Assets at fair value	5,026	4,833
Counterparty netting and collateral	0	0
Liabilities at fair value	0	0
Net assets at fair value	5,026	4,833
Available-for-sale securities total		4,313
Recurring [Member] | Level 1 [Member] | Money market instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	1,013	347
Restricted cash equivalents		173
Recurring [Member] | Level 1 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents		0
Available-for-sale securities, Debt securities		0
Recurring [Member] | Level 1 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2,480	2,774
Recurring [Member] | Level 1 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	15	15
Recurring [Member] | Level 1 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	1,518
Available-for-sale securities, Equity investments		1,524
Recurring [Member] | Level 1 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 1 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 1 [Member] | Interest rate floors [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets		0
Recurring [Member] | Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	4,325	3,045
Available-for-sale securities, Debt securities	870
Equity investments	0
Investments in marketable securities total	870
Derivative assets	1,073	1,358
Counterparty netting and collateral	0	0
Assets at fair value	6,268	5,898
Counterparty netting and collateral	0	0
Liabilities at fair value	(1,211)	(807)
Net assets at fair value	5,057	5,091
Available-for-sale securities total		786
Recurring [Member] | Level 2 [Member] | Money market instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	825	550
Restricted cash equivalents		709
Recurring [Member] | Level 2 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	3,500	2,240
Available-for-sale securities, Debt securities	624	474
Recurring [Member] | Level 2 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents		255
Available-for-sale securities, Debt securities		52
Recurring [Member] | Level 2 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	18	24
Recurring [Member] | Level 2 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	10	11
Recurring [Member] | Level 2 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	182	186
Recurring [Member] | Level 2 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	36	39
Recurring [Member] | Level 2 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0
Available-for-sale securities, Equity investments		0
Recurring [Member] | Level 2 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	158	485
Derivative liabilities	(548)	(200)
Recurring [Member] | Level 2 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	915	872
Derivative liabilities	(663)	(607)
Recurring [Member] | Level 2 [Member] | Interest rate floors [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets		1
Recurring [Member] | Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Available-for-sale securities, Debt securities	63
Equity investments	0
Investments in marketable securities total	63
Derivative assets	0	0
Counterparty netting and collateral	0	0
Assets at fair value	63	70
Counterparty netting and collateral	0	0
Liabilities at fair value	(23)	(21)
Net assets at fair value	40	49
Available-for-sale securities total		70
Recurring [Member] | Level 3 [Member] | Money market instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Restricted cash equivalents		0
Recurring [Member] | Level 3 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents		0
Available-for-sale securities, Debt securities		0
Recurring [Member] | Level 3 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2	2
Recurring [Member] | Level 3 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	23	29
Recurring [Member] | Level 3 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	38	39
Recurring [Member] | Level 3 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0
Available-for-sale securities, Equity investments		0
Recurring [Member] | Level 3 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 3 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	(23)	(21)
Recurring [Member] | Level 3 [Member] | Interest rate floors [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets		0
Recurring [Member] | Fixed income mutual funds measured at net asset value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	657
Available-for-sale securities, Equity investments		660
Recurring [Member] | Fixed income mutual funds measured at net asset value [Member] | Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0
Available-for-sale securities, Equity investments		0
Recurring [Member] | Fixed income mutual funds measured at net asset value [Member] | Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0
Available-for-sale securities, Equity investments		0
Recurring [Member] | Fixed income mutual funds measured at net asset value [Member] | Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	$ 0
Available-for-sale securities, Equity investments		$ 0

XML

Fair Value Measurements - Assets and Liabilities Measured on Recurring Basis Using Significant Unobservable Inputs (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	$ 49	$ 13
Total gains (losses) included in net income	(8)	20
Total gains (losses) included in other comprehensive income	0	0
Purchases	2	16
Issuances	0	0
Sales	0	0
Settlements	(3)	51
Transfers in to Level 3	0	0
Transfers out of Level 3	0	(2)
Fair value	40	98
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	(8)	13
Derivative [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
The amount of total gains (losses) included in net income attributable to assets held at the reporting date		13
Fair value		(67)
Total gains (losses) included in net income		20
Total gains (losses) included in other comprehensive income		0
Purchases		0
Issuances		0
Sales		0
Settlements		59
Transfers in to Level 3		0
Transfers out of Level 3		0
Fair value		12
Available-for-sale debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	70	80
Total gains (losses) included in net income	0	0
Total gains (losses) included in other comprehensive income	0	0
Purchases	2	16
Issuances	0	0
Sales	0	0
Settlements	(9)	(8)
Transfers in to Level 3	0	0
Transfers out of Level 3	0	(2)
Fair value	63	86
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0
Available-for-sale debt securities [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value		2
Total gains (losses) included in net income		0
Total gains (losses) included in other comprehensive income		0
Purchases		0
Issuances		0
Sales		0
Settlements		0
Transfers in to Level 3		0
Transfers out of Level 3		(2)
Fair value		0
The amount of total gains (losses) included in net income attributable to assets held at the reporting date		0
Available-for-sale debt securities [Member] | Mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	31	39
Total gains (losses) included in net income	0	0
Total gains (losses) included in other comprehensive income	0	0
Purchases	0	5
Issuances	0	0
Sales	0	0
Settlements	(6)	(1)
Transfers in to Level 3	0	0
Transfers out of Level 3	0	0
Fair value	25	43
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0
Available-for-sale debt securities [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	39	31
Total gains (losses) included in net income	0	0
Total gains (losses) included in other comprehensive income	0	0
Purchases	2	11
Issuances	0	0
Sales	0	0
Settlements	(3)	(7)
Transfers in to Level 3	0	0
Transfers out of Level 3	0	0
Fair value	38	35
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0
Available-for-sale debt securities [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value		8
Total gains (losses) included in net income		0
Total gains (losses) included in other comprehensive income		0
Purchases		0
Issuances		0
Sales		0
Settlements		0
Transfers in to Level 3		0
Transfers out of Level 3		0
Fair value		8
The amount of total gains (losses) included in net income attributable to assets held at the reporting date		0
Interest rate swaps [Member] | Derivative [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	(8)	13
Fair value	(21)	(5)
Total gains (losses) included in net income	(8)	13
Total gains (losses) included in other comprehensive income	0	0
Purchases	0	0
Issuances	0	0
Sales	0	0
Settlements	6	4
Transfers in to Level 3	0	0
Transfers out of Level 3	0	0
Fair value	$ (23)	12
Foreign currency swaps [Member] | Derivative [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
The amount of total gains (losses) included in net income attributable to assets held at the reporting date		0
Fair value		(62)
Total gains (losses) included in net income		7
Total gains (losses) included in other comprehensive income		0
Purchases		0
Issuances		0
Sales		0
Settlements		55
Transfers in to Level 3		0
Transfers out of Level 3		0
Fair value		$ 0

XML

Fair Value Measurements - Assets and Liabilities Not Carried at Fair Value on Recurring Basis on Consolidated Balance Sheets (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Carrying value [Member]
Financial liabilities
Commercial paper	$ 27,250	$ 27,313
Unsecured notes and loans payable	58,783	57,402
Secured notes and loans payable	14,556	13,638
Fair value [Member]
Financial liabilities
Commercial paper	27,250	27,313
Unsecured notes and loans payable	59,016	57,782
Secured notes and loans payable	14,514	13,588
Fair value [Member] | Level 1 [Member]
Financial liabilities
Commercial paper	0	0
Unsecured notes and loans payable	0	0
Secured notes and loans payable	0	0
Fair value [Member] | Level 2 [Member]
Financial liabilities
Commercial paper	27,250	27,313
Unsecured notes and loans payable	56,710	55,441
Secured notes and loans payable	0	0
Fair value [Member] | Level 3 [Member]
Financial liabilities
Commercial paper	0	0
Unsecured notes and loans payable	2,306	2,341
Secured notes and loans payable	14,514	13,588
Retail Loan [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	52,752	52,374
Retail Loan [Member] | Fair value [Member]
Financial assets
Finance receivables, net	52,323	52,081
Retail Loan [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Retail Loan [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Retail Loan [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	52,323	52,081
Wholesale [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	10,800	10,365
Wholesale [Member] | Fair value [Member]
Financial assets
Finance receivables, net	10,847	10,413
Wholesale [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Wholesale [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Wholesale [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	10,847	10,413
Real estate [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	4,466	4,492
Real estate [Member] | Fair value [Member]
Financial assets
Finance receivables, net	4,352	4,409
Real estate [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Real estate [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Real estate [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	4,352	4,409
Working capital [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	2,249	2,222
Working capital [Member] | Fair value [Member]
Financial assets
Finance receivables, net	2,266	2,197
Working capital [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Working capital [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Working capital [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	$ 2,266	$ 2,197

XML

Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Fair Value Disclosures [Abstract]
Finance receivables from related party	$ 195	$ 189

XML

Investments in Marketable Securities - Summary of Investments in Marketable Securities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Jun. 30, 2018
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost		$ 3,456
Available-for-sale debt securities, Unrealized gains		3
Available-for-sale debt securities, Unrealized losses		(31)
Available-for-sale debt securities, Fair value		3,428
Equity investments, Amortized cost	$ 2,196
Equity investments, Unrealized gains	11
Equity investments, Unrealized losses	(23)
Equity investments, Fair value	2,184	2,175
Total investments in marketable securities, Amortized cost	5,865
Total investments in marketable securities, Unrealized gain	15
Total investments in marketable securities, Unrealized losses	(51)
Investments in marketable securities	5,829	5,603
Equity investments	2,184	2,175
U.S. government and agency obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	2,821	2,520
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	(23)	(22)
Available-for-sale debt securities, Fair value	2,798	2,498
Municipal debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	10	9
Available-for-sale debt securities, Unrealized gains	1	1
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	11	10
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	475	625
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	(1)	(1)
Available-for-sale debt securities, Fair value	474	624
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	52
Available-for-sale debt securities, Unrealized gains	0
Available-for-sale debt securities, Unrealized losses	0
Available-for-sale debt securities, Fair value	52
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	203	202
Available-for-sale debt securities, Unrealized gains	1	1
Available-for-sale debt securities, Unrealized losses	(3)	(6)
Available-for-sale debt securities, Fair value	201	197
U.S. government agency mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	38	37
Available-for-sale debt securities, Unrealized gains	1	0
Available-for-sale debt securities, Unrealized losses	0	(1)
Available-for-sale debt securities, Fair value	39	36
Non-agency residential mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	1	1
Available-for-sale debt securities, Unrealized gains	1	1
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	2	2
Non-agency commercial mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	30	24
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	(1)	(1)
Available-for-sale debt securities, Fair value	29	23
Asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	39	38
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	$ 39	$ 38

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Investments in Marketable Securities - Additional Information (Details)	3 Months Ended
	Jun. 30, 2018 USD ($)
Marketable Securities [Abstract]
Private placement share redemption percentage	1.00%
Private placement share redemption amount	$ 250,000
Share redemption period	90 days

XML

Investments in Marketable Securities - Schedule of Gains and Losses on Investments in Marketable Securities Presented in Our Consolidated Statement of Income (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Available-for-sale securities:
Realized gains on sales	$ 0	$ 41
Equity investments:
Unrealized losses recognized	$ (25)

XML

Investments in Marketable Securities - Summary of Contractual Maturities of AFS Debt Securities (Details) $ in Millions	Jun. 30, 2018 USD ($)
Available-for-sale debt securities, Amortized Cost
Due within 1 Year, Amortized Cost	$ 2,386
Due after 1 Year through 5 Years, Amortized Cost	755
Due after 5 Years through 10 Years, Amortized Cost	142
Due after 10 Years, Amortized Cost	73
Mortgage-backed and asset-backed securities, Amortized Cost	100	[1]
Available-for-sale debt securities, Amortized cost	3,456
Available-for-sale debt securities, Fair Value
Due within 1 Year, Fair Value	2,376
Due after 1 Year through 5 Years, Fair Value	746
Due after 5 Years through 10 Years, Fair Value	137
Due after 10 Years, Fair Value	70
Mortgage-backed and asset-backed securities, Fair Value	99	[1]
Total, Fair Value	$ 3,428

[1] Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Finance Receivables, Net (Net Financing Receivables) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	$ 71,683	$ 70,815
Finance receivables, net	70,466	69,647
Finance Receivables, Net [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	71,683	70,815	$ 69,650
Deferred origination (fees) and costs, net	629	630
Deferred income	(1,383)	(1,335)
Allowance for credit losses	(463)	(463)	$ (453)	$ (467)
Finance receivables, net	70,466	69,647
Finance Receivables, Net [Member] | Retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	42,047	41,265
Finance Receivables, Net [Member] | Securitized retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	11,776	12,130
Finance Receivables, Net [Member] | Dealer financing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	17,860	17,420
Allowance for credit losses	(150)	(151)
Finance Receivables, Net [Member] | Retail and securitized retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ (313)	$ (312)

XML

Finance Receivables, Net (Finance Receivable Credit Quality Indicators) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Current	$ 70,788	$ 69,979
Financing receivables, past due	895	836
Total Finance Receivables	71,683	70,815
Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	52,928	52,559
Financing receivables, past due	895	836
Total Finance Receivables	53,823	53,395
Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	10,963	10,513
Financing receivables, past due	0	0
Total Finance Receivables	10,963	10,513
Wholesale [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	9,769	9,451
Wholesale [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	1,084	946
Wholesale [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	106	75
Wholesale [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	4	41
Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	4,588	4,630
Financing receivables, past due	0	0
Total Finance Receivables	4,588	4,630
Real estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	4,019	4,070
Real estate [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	524	484
Real estate [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	45	29
Real estate [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	0	47
Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	2,309	2,277
Financing receivables, past due	0	0
Total Finance Receivables	2,309	2,277
Working capital [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	2,140	2,118
Working capital [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	117	105
Working capital [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	52	33
Working capital [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	0	21
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	642	613
30-59 Days Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	642	613
30-59 Days Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
30-59 Days Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
30-59 Days Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	186	158
60-89 Days Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	186	158
60-89 Days Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
60-89 Days Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
60-89 Days Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	67	65
90 Days or Greater Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	67	65
90 Days or Greater Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
90 Days or Greater Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
90 Days or Greater Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	$ 0	$ 0

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Finance Receivables, Net (Summary of Impaired Loans by Class of Finance Receivable) (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	$ 217		$ 248
Impaired Finance Receivables Individually Evaluated with No Related Allowance	265		247
Impaired Finance Receivables	707		717
Unpaid Principal Balance
Unpaid Principal Balance Individually Evaluated with Related Allowance	217		248
Unpaid Principal Balance Individually Evaluated with No Related Allowance	265		247
Unpaid Principal Balance	705		715
Individually Evaluated Allowance	62		70
Average Impaired Finance Receivables
Average Impaired Finance Receivables Individually Evaluated For Impairment with An Allowance	232	$ 242
Average Impaired Finance Receivables Individually Evaluated For Impairment Without An Allowance	256	234
Average Impaired Finance Receivables	712	698
Wholesale [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	111		107
Impaired Finance Receivables Individually Evaluated with No Related Allowance	103		83
Impaired Finance Receivables	214		190
Unpaid Principal Balance
Unpaid Principal Balance Individually Evaluated with Related Allowance	111		107
Unpaid Principal Balance Individually Evaluated with No Related Allowance	103		83
Unpaid Principal Balance	214		190
Individually Evaluated Allowance	10		14
Average Impaired Finance Receivables
Average Impaired Finance Receivables Individually Evaluated For Impairment with An Allowance	109	109
Average Impaired Finance Receivables Individually Evaluated For Impairment Without An Allowance	93	134
Average Impaired Finance Receivables	202	243
Real estate [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	54		86
Impaired Finance Receivables Individually Evaluated with No Related Allowance	141		142
Impaired Finance Receivables	195		228
Unpaid Principal Balance
Unpaid Principal Balance Individually Evaluated with Related Allowance	54		86
Unpaid Principal Balance Individually Evaluated with No Related Allowance	141		142
Unpaid Principal Balance	195		228
Individually Evaluated Allowance	3		5
Average Impaired Finance Receivables
Average Impaired Finance Receivables Individually Evaluated For Impairment with An Allowance	70	94
Average Impaired Finance Receivables Individually Evaluated For Impairment Without An Allowance	141	100
Average Impaired Finance Receivables	211	194
Working capital [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	52		55
Impaired Finance Receivables Individually Evaluated with No Related Allowance	21		22
Impaired Finance Receivables	73		77
Unpaid Principal Balance
Unpaid Principal Balance Individually Evaluated with Related Allowance	52		55
Unpaid Principal Balance Individually Evaluated with No Related Allowance	21		22
Unpaid Principal Balance	73		77
Individually Evaluated Allowance	49		51
Average Impaired Finance Receivables
Average Impaired Finance Receivables Individually Evaluated For Impairment with An Allowance	53	39
Average Impaired Finance Receivables Individually Evaluated For Impairment Without An Allowance	22	0
Average Impaired Finance Receivables	75	39
Retail Loan [Member]
Impaired Finance Receivables
Impaired Finance Receivables Aggregated And Evaluated For Impairment	225		222
Impaired Finance Receivables	225		222
Unpaid Principal Balance
Unpaid Principal Balance Aggregated And Evaluated For Impairment	223		220
Unpaid Principal Balance	223		$ 220
Average Impaired Finance Receivables
Average Impaired Finance Receivables Account Balances Aggregated And Evaluated For Impairment	224	222
Average Impaired Finance Receivables	$ 224	$ 222

XML

Finance Receivables, Net - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Receivables [Abstract]
Dealer products portfolio segment accounts on nonaccrual status	$ 208	$ 249

XML

Investments in Operating Leases, Net (Investments in Operating Leases, Net) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases, net	$ 38,748	$ 38,697
Investments in operating leases [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	40,462	42,863
Securitized investments in operating leases [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	10,573	7,869
Investments In Operating Leases, Net [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	51,035	50,732
Deferred origination (fees) and costs, net	(227)	(224)
Deferred income	(1,852)	(1,700)
Accumulated depreciation	(10,071)	(9,977)
Allowance for credit losses	$ (137)	$ (134)

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Allowance for Credit Losses - Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases
Allowance for credit losses at beginning of period	$ 597	$ 622
Provision for credit losses	89	85
Charge-offs, net of recoveries	(86)	(96)
Allowance for credit losses at end of period	$ 600	$ 611

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Allowance for Credit Losses - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
Recoveries from credit loss charge-offs	$ 27	$ 23
Finance Receivables, Net [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	71,201	69,156
Finance Receivables, Net [Member] | Retail and Commercial Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Impaired finance receivables aggregated and collectively evaluated for impairment	225	225
Finance Receivables, Net [Member] | Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	17,378	17,781
Finance Receivables, Net [Member] | TMNA [Member] | Financial Guarantee [Member] | Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	1,043	1,056
Finance Receivables, Net [Member] | Private Toyota Distributors [Member] | Financial Guarantee [Member] | Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	$ 138	$ 173

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Allowance for Credit Losses - Allowance for Credit Losses for Finance Receivables and Finance Receivables by Portfolio Segment (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Allowance for Credit Losses for Finance Receivables:
Provision for credit losses	$ 89	$ 85
Finance Receivables:
Total Finance Receivables	71,683		$ 70,815
Retail Loan [Member]
Finance Receivables:
Total Finance Receivables	53,823		53,395
Finance Receivables, Net [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	463	467
Charge-offs	(75)	(79)
Recoveries	14	13
Provision for credit losses	61	52
Allowance for credit losses at end of period	463	453
Ending balance: Individually evaluated for impairment	62	47
Ending balance: Collectively evaluated for impairment	401	406
Finance Receivables:
Total Finance Receivables	71,683	69,650	$ 70,815
Ending balance: Individually evaluated for impairment	482	494
Ending balance: Collectively evaluated for impairment	71,201	69,156
Finance Receivables, Net [Member] | Retail Loan [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	312	344
Charge-offs	(75)	(79)
Recoveries	14	13
Provision for credit losses	62	44
Allowance for credit losses at end of period	313	322
Ending balance: Individually evaluated for impairment	0	0
Ending balance: Collectively evaluated for impairment	313	322
Finance Receivables:
Total Finance Receivables	53,823	51,375
Ending balance: Individually evaluated for impairment	0	0
Ending balance: Collectively evaluated for impairment	53,823	51,375
Finance Receivables, Net [Member] | Dealer Products [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	151	123
Charge-offs	0	0
Recoveries	0	0
Provision for credit losses	(1)	8
Allowance for credit losses at end of period	150	131
Ending balance: Individually evaluated for impairment	62	47
Ending balance: Collectively evaluated for impairment	88	84
Finance Receivables:
Total Finance Receivables	17,860	18,275
Ending balance: Individually evaluated for impairment	482	494
Ending balance: Collectively evaluated for impairment	$ 17,378	$ 17,781

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Allowance for Credit Losses - Past Due Finance Receivables and Investments in Operating Leases (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Past Due Finance Receivables and Investments in Operating Leases
Finance receivables	$ 253	$ 223
Investments in operating leases	108	106
Total	$ 361	$ 329

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Allowance for Credit Losses - Aging of Finance Receivables by Class (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 895	$ 836
Current	70,788	69,979
Total Finance Receivables	71,683	70,815
90 Days or Greater Past Due and Accruing	49	46
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	642	613
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	186	158
90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	67	65
Retail Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	895	836
Current	52,928	52,559
Total Finance Receivables	53,823	53,395
90 Days or Greater Past Due and Accruing	49	46
Retail Loan [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	642	613
Retail Loan [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	186	158
Retail Loan [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	67	65
Wholesale [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	10,963	10,513
Total Finance Receivables	10,963	10,513
90 Days or Greater Past Due and Accruing	0	0
Wholesale [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Wholesale [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Wholesale [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	4,588	4,630
Total Finance Receivables	4,588	4,630
90 Days or Greater Past Due and Accruing	0	0
Real estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Real estate [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Real estate [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	2,309	2,277
Total Finance Receivables	2,309	2,277
90 Days or Greater Past Due and Accruing	0	0
Working capital [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 0	$ 0

XML

Derivatives, Hedging Activities and Interest Expense - Derivative Activity Impact on Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Derivatives Fair Value [Line Items]
Carrying value of derivative contracts – Other assets	$ 82	$ 61
Carrying value of derivative contracts – Other liabilities	4	6
Counterparty netting and collateral held	(438)	(737)
Other assets [Member]
Derivatives Fair Value [Line Items]
Notional	72,535	79,678
Fair value	1,073	1,358
Counterparty netting and collateral held	(991)	(1,297)
Other assets [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	67,920	71,464
Fair value	915	872
Other assets [Member] | Interest rate floors [Member]
Derivatives Fair Value [Line Items]
Notional	847	847
Fair value	0	1
Other assets [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	3,768	7,367
Fair value	158	485
Other liabilities [Member]
Derivatives Fair Value [Line Items]
Notional	56,682	47,376
Fair value	1,234	828
Counterparty netting and collateral posted	(1,230)	(822)
Other liabilities [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	47,220	41,513
Fair value	686	628
Other liabilities [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	9,462	5,863
Fair value	548	200
Hedge accounting derivatives [Member] | Other assets [Member]
Derivatives Fair Value [Line Items]
Notional	26	119
Fair value	5	8
Hedge accounting derivatives [Member] | Other assets [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	0	0
Fair value	0	0
Hedge accounting derivatives [Member] | Other assets [Member] | Interest rate floors [Member]
Derivatives Fair Value [Line Items]
Notional	0	0
Fair value	0	0
Hedge accounting derivatives [Member] | Other assets [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	26	119
Fair value	5	8
Hedge accounting derivatives [Member] | Other liabilities [Member]
Derivatives Fair Value [Line Items]
Notional	93	0
Fair value	3	0
Hedge accounting derivatives [Member] | Other liabilities [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	0	0
Fair value	0	0
Hedge accounting derivatives [Member] | Other liabilities [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	93	0
Fair value	3	0
Non-hedge accounting derivatives [Member] | Other assets [Member]
Derivatives Fair Value [Line Items]
Notional	72,509	79,559
Fair value	1,068	1,350
Non-hedge accounting derivatives [Member] | Other assets [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	67,920	71,464
Fair value	915	872
Non-hedge accounting derivatives [Member] | Other assets [Member] | Interest rate floors [Member]
Derivatives Fair Value [Line Items]
Notional	847	847
Fair value	0	1
Non-hedge accounting derivatives [Member] | Other assets [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	3,742	7,248
Fair value	153	477
Non-hedge accounting derivatives [Member] | Other liabilities [Member]
Derivatives Fair Value [Line Items]
Notional	56,589	47,376
Fair value	1,231	828
Non-hedge accounting derivatives [Member] | Other liabilities [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	47,220	41,513
Fair value	686	628
Non-hedge accounting derivatives [Member] | Other liabilities [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	9,369	5,863
Fair value	545	200
Carrying value [Member] | Other assets [Member]
Derivatives Fair Value [Line Items]
Carrying value of derivative contracts – Other assets	82	61
Carrying value [Member] | Other liabilities [Member]
Derivatives Fair Value [Line Items]
Carrying value of derivative contracts – Other liabilities	$ 4	$ 6

XML

Derivatives, Hedging Activities and Interest Expense - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Derivatives Fair Value [Line Items]
Collateral held	$ 438	$ 737
Counterparty netting and collateral	677	262
Counterparty netting, derivative assets	553	560
Counterparty netting, derivative liabilities	553	560
Other liabilities [Member]
Derivatives Fair Value [Line Items]
Collateral held in excess of the fair value of derivative assets	2	11
Other assets [Member]
Derivatives Fair Value [Line Items]
Collateral held	991	1,297
Collateral posted in excess of the fair value of derivative liabilities	$ 71	$ 3

XML

Derivatives, Hedging Activities and Interest Expense - Components of Interest Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Derivative Instruments Gain Loss [Line Items]
Interest expense on debt	$ 601	$ 467
Interest income on derivatives	(25)	(16)
Interest expense on debt and derivatives, net	576	451
Total interest expense	682	448
Interest expense [Member]
Derivative Instruments Gain Loss [Line Items]
(Gain) loss on non-hedge accounting debt denominated in foreign currencies	(646)	650
Loss (gain) on non-hedge accounting foreign currency swaps	683	(650)
Loss (gain) on U.S. dollar non-hedge accounting interest rate swaps	$ 69	$ (3)

XML

Other Assets and Other Liabilities - Other Assets and Other Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Other assets:
Notes receivable from affiliates	$ 56	$ 68
Used vehicles held for sale	420	366
Derivative assets	82	61
Other assets	1,059	1,119
Total other assets	1,617	1,614
Other liabilities:
Unearned insurance premiums and contract revenues	2,522	2,271
Accounts payable and accrued expenses	1,113	1,054
Deferred income	477	468
Income taxes payable	3	2
Derivative liabilities	4	6
Other liabilities	187	186
Total other liabilities	$ 4,306	$ 3,987

XML

Debt - Debt and Related Weighted Average Contractual Interest Rates (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Debt Instrument [Line Items]
Commercial paper	$ 27,250	$ 27,313
Debt	$ 100,589	$ 98,353
Weighted average contractual interest rates	2.28%	2.04%
Unsecured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt	$ 58,783	$ 57,402
Weighted average contractual interest rates	2.34%	2.18%
Secured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt	$ 14,556	$ 13,638
Weighted average contractual interest rates	2.22%	1.95%
Commercial paper [Member]
Debt Instrument [Line Items]
Weighted average contractual interest rates	2.18%	1.80%

XML

Debt - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Debt Instrument [Line Items]
Debt instrument, unamortized premiums, discounts and debt issuance costs	$ 360	$ 353
Commercial paper [Member]
Debt Instrument [Line Items]
Debt instrument, face amount	$ 27,300	27,400
Commercial paper average remaining maturity period	75 days
Unsecured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt instrument, face amount	$ 59,000	57,600
Debt maturity year	2049
Debt denominated in foreign currency	$ 12,700	$ 13,300
Unsecured notes and loans payable [Member] | Floating and Fixed Rate [Member] | Minimum [Member]
Debt Instrument [Line Items]
Contractual interest rate	0.00%	0.00%
Unsecured notes and loans payable [Member] | Floating and Fixed Rate [Member] | Maximum [Member]
Debt Instrument [Line Items]
Contractual interest rate	5.00%	5.00%
Secured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt instrument, face amount	$ 14,600	$ 13,700
Debt maturity year	2049
Secured notes and loans payable [Member] | Floating and Fixed Rate [Member] | Minimum [Member]
Debt Instrument [Line Items]
Contractual interest rate	1.10%	1.10%
Secured notes and loans payable [Member] | Floating and Fixed Rate [Member] | Maximum [Member]
Debt Instrument [Line Items]
Contractual interest rate	3.10%	2.50%

XML

Variable Interest Entities - Schedule of Assets and Liabilities related to Variable Interest Entities Securitization Transactions (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Variable Interest Entity [Line Items]
Restricted Cash	$ 1,048	$ 1,219
Net Securitized Assets	70,466	69,647
Other Assets	1,617	1,614
Debt	100,589	98,353
Other liabilities	4,306	3,987
Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	1,028	1,026
Gross Securitized Assets	22,349	19,999
Net Securitized Assets	19,286	17,633
Other Assets	126	125
Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	14,556	13,638
Other liabilities	10	10
Retail Finance Receivables [Member] | Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	662	729
Gross Securitized Assets	11,776	12,130
Net Securitized Assets	11,573	11,927
Other Assets	5	7
Retail Finance Receivables [Member] | Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	9,631	9,958
Other liabilities	8	7
Investments In Operating Leases, Net [Member] | Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	366	297
Gross Securitized Assets	10,573	7,869
Net Securitized Assets	7,713	5,706
Other Assets	121	118
Investments In Operating Leases, Net [Member] | Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	4,925	3,680
Other liabilities	$ 2	$ 3

XML

Variable Interest Entities - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]
Securities retained by TMCC	$ 1,461	$ 1,520

XML

Liquidity Facilities and Letters of Credit - Additional Information (Details) - USD ($)	1 Months Ended
	Nov. 30, 2017	Jun. 30, 2018	Mar. 31, 2018
364 Day Credit Agreement Expiring 2019 [Member]
Line Of Credit Facility [Line Items]
Initiation date	Nov. 30, 2017
Maximum borrowing capacity	$ 5,000,000,000
Credit facilities amount outstanding		$ 0	$ 0
Three Year Agreement Expiring 2021 [Member]
Line Of Credit Facility [Line Items]
Initiation date	Nov. 30, 2017
Maximum borrowing capacity	$ 5,000,000,000
Credit facilities amount outstanding		0	0
Five Year Agreement Expiring 2023 [Member]
Line Of Credit Facility [Line Items]
Initiation date	Nov. 30, 2017
Maximum borrowing capacity	$ 5,000,000,000
Credit facilities amount outstanding		0	0
Total Committed Bank Credit Facilities [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		5,600,000,000
Committed Bank Credit Facility Expiring 2019 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		2,100,000,000
Credit facilities amount outstanding		0	0
Committed Bank Credit Facility Expiring 2020 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		825,000,000
Credit facilities amount outstanding		0	0
Committed Bank Credit Facility Expiring 2021 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		2,200,000,000
Credit facilities amount outstanding		0	0
Committed Bank Credit Facility Expiring 2022 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity		475,000,000
Credit facilities amount outstanding		$ 0	$ 0

XML

Commitments and Contingencies - Commitments and Guarantees (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Commitments:
Credit facilities commitments with dealers	$ 1,329	$ 1,286
Minimum lease commitments	158	162
Total commitments	1,487	1,448
Total commitments and guarantees	1,587	1,548
Performance Guarantee [Member] | Putnam and Gibson Counties [Member]
Commitments:
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 100	$ 100

XML

Commitments and Contingencies - Additional Information (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Commitments And Contingencies [Line Items]
Minimum lease commitments	$ 158,000,000	$ 162,000,000
Indemnification provisions	0	0
Putnam and Gibson Counties [Member] | Performance Guarantee [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 100,000,000	100,000,000
TMNA [Member]
Commitments And Contingencies [Line Items]
15-year lease agreement between TMCC and TMNA	15 years
Lease agreement expiration date	Aug. 31, 2032
TMCC-affiliated companies [Member]
Commitments And Contingencies [Line Items]
Minimum lease commitments	$ 103,000,000	$ 105,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	100,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2028 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	20,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2029 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	50,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2030 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	10,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2031 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	10,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2032 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 10,000,000

XML

Commitments and Contingencies - Future Minimum Lease Payments under Non-cancelable Operating Leases (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Future minimum lease payments under non-cancelable operating leases
2019	$ 18
2020	21
2021	17
2022	19
2023	13
Thereafter	70
Total	$ 158	$ 162

XML

Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Effective tax rate	19.00%	37.00%
Provision for income taxes	$ 22	$ 96
Provision for income taxes at U.S. federal statutory tax rate	21.00%	35.00%
Tax Cuts and Jobs Act, Accounting Complete	true
Provisional deemed repatriation tax	$ 10
Deferred tax assets	1,900		$ 1,600
Net deferred income tax liability	$ 5,300		$ 5,300

XML

Related Party Transactions - Related Party Transactions Included in Consolidated Statements of Income (Details) - USD ($) $ in Millions		3 Months Ended
		Jun. 30, 2018	Jun. 30, 2017
Total financing revenues:
Manufacturers’ subvention and other revenues		$ 472	$ 368
Interest expense:
Credit support fees incurred		24	23
Interest and other expenses		1	1
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues		224	216
Expenses:
Operating and administrative		324	313
TMCC-affiliated companies [Member]
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues		45	44
Investment and other income, net:
Interest and other income		2	4
Expenses:
Operating and administrative		23	19
Insurance losses and loss adjustment expenses	[1]	$ (2)	$ (5)

[1] Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

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Related Party Transactions - Related Party Transactions Included in Consolidated Balance Sheets (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
Cash and cash equivalents
Cash and cash equivalents	$ 5,581	$ 3,540
Finance receivables, net
Accounts receivable	197	191
Deferred retail subvention income	(1,332)	(1,279)
Investments in operating leases, net
Investments in operating leases, net	38,748	38,697
Deferred lease subvention income	(1,833)	(1,682)
Other assets
Notes receivable from affiliates	56	68
Other receivables, net	174	310
Other liabilities
Unearned insurance premiums and contract revenues	2,522	2,271
Other payables, net	59	74
Notes payable	24	18
Commercial paper [Member]
Cash and cash equivalents
Cash and cash equivalents	0	255
TMCC-affiliated companies [Member]
Investments in marketable securities
Commercial paper	0	52
Investments in operating leases, net
Investments in operating leases, net	6	6
Other liabilities
Unearned insurance premiums and contract revenues	$ 344	$ 328

XML

Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Mar. 31, 2018
TMNA [Member]
Related Party Transaction [Line Items]
Subvention support receivable	$ 193	$ 279

XML

Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Segment Reporting Information [Line Items]
Total financing revenues	$ 2,836	$ 2,598
Depreciation on operating leases	1,766	1,681
Interest expense	682	448
Net financing revenues	388	469
Insurance earned premiums and contract revenues	224	216
Investment and other income (loss), net	40	88
Net financing revenues and other revenues	652	773
Expenses:
Provision for credit losses	89	85
Operating and administrative expenses	324	313
Insurance losses and loss adjustment expenses	125	114
Total expenses	538	512
Income before income taxes	114	261
Provision for income taxes	22	96
Net income	92	165
Total assets	123,063	120,529	$ 120,546
Intercompany Eliminations [Member]
Segment Reporting Information [Line Items]
Total financing revenues	0	0
Depreciation on operating leases	0	0
Interest expense	(5)	(3)
Net financing revenues	5	3
Insurance earned premiums and contract revenues	0	0
Investment and other income (loss), net	(5)	(3)
Net financing revenues and other revenues	0	0
Expenses:
Provision for credit losses	0	0
Operating and administrative expenses	0	0
Insurance losses and loss adjustment expenses	0	0
Total expenses	0	0
Income before income taxes	0	0
Provision for income taxes	0	0
Net income	0	0
Total assets	(1,087)	(1,087)
Finance Operations [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total financing revenues	2,836	2,598
Depreciation on operating leases	1,766	1,681
Interest expense	687	451
Net financing revenues	383	466
Insurance earned premiums and contract revenues	0	0
Investment and other income (loss), net	48	32
Net financing revenues and other revenues	431	498
Expenses:
Provision for credit losses	89	85
Operating and administrative expenses	241	233
Insurance losses and loss adjustment expenses	0	0
Total expenses	330	318
Income before income taxes	101	180
Provision for income taxes	19	65
Net income	82	115
Total assets	119,335	117,011
Insurance Operations [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total financing revenues	0	0
Depreciation on operating leases	0	0
Interest expense	0	0
Net financing revenues	0	0
Insurance earned premiums and contract revenues	224	216
Investment and other income (loss), net	(3)	59
Net financing revenues and other revenues	221	275
Expenses:
Provision for credit losses	0	0
Operating and administrative expenses	83	80
Insurance losses and loss adjustment expenses	125	114
Total expenses	208	194
Income before income taxes	13	81
Provision for income taxes	3	31
Net income	10	50
Total assets	$ 4,815	$ 4,605

XML

Segment Information - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Apr. 01, 2018
Segment Reporting Information [Line Items]
Insurance earned premiums and contract revenues recognized		$ 176
Other liabilities [Member]
Segment Reporting Information [Line Items]
Unearned insurance premiums and contract revenues		$ 2,200	$ 2,200
Scenario, Forecast [Member]
Segment Reporting Information [Line Items]
Percentage of insurance earned premiums and contract revenues accounted under revenue recognition	84.00%

XML

Segment Information - Additional Information (Details1) $ in Millions	Jun. 30, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-07-01
Segment Reporting Information [Line Items]
Revenue, remaining performance obligation, amount	$ 504
Revenue, remaining performance obligation, expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-04-01
Segment Reporting Information [Line Items]
Revenue, remaining performance obligation, amount	$ 559
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-04-01
Segment Reporting Information [Line Items]
Revenue, remaining performance obligation, amount	$ 1,100
Revenue, remaining performance obligation, expected timing of satisfaction, period