Full Year 2026 Honda Motor Co Ltd Earnings Call

May 14, 2026

Speaker #1: はい、皆様、本日はお忙しい中。

Speaker #2: Thank you very much for your participation today. It is a pleasure to be the schedule, and I'd like to make a start of the financial results of this conference for the fiscal year ending March 31, 2026, and the 2026 business briefing updates.

Speaker #2: My name is Olivia from Corporate Communications, MC today. Thank you. And let me introduce the speakers today. The director, president, and representative executive officer, Toshihiro Mibe, nice to meet you.

Speaker #2: My name is Mibe. Director, executive vice president, and representative executive. Executive officer, Noriya Kaihara, Kaihara speaking. Nice to meet you. Executive officer and chief financial officer, Masao Kawaguchi.

Speaker #2: My name is Kawaguchi. Nice to meet you. Mr. Mibe will give you the summary of the financial status now, followed by Mr. Kaihara to talk about the FIE March 26 results and expectations for March 27.

Speaker #2: Later, Mr. Mibe will give you the business updates for HONDA. So Mibe, day four is yours.

Speaker #3: And thank you for showing understanding towards HONDA's business activities. And now, explain our financial results for the fiscal year ended March 2026 and our outlook for this fiscal year.

Speaker #3: First, summary of our results. In the fiscal year ended 2026, the EV business environment underwent significant change. In response, we swiftly reorganized our EV business and related investments.

Speaker #3: By the third quarter, we recorded EV-related losses of 267.1 billion yen, including provisions for losses and impairment losses on EVs already being sold in the United States.

Speaker #3: In addition, as explained on March 12, the North America-produced EV models launched and development were canceled. In the fourth quarter, we posted additional 1 trillion 310.6 billion yen in losses, as a result, the fiscal year ended March 2026, EV-related losses totaled 1 trillion 577.8 billion yen.

Speaker #3: Consequently, operating profit for the fiscal year ended March 2026 was a loss of 414.3 billion yen. Excluding the part of the EV-related losses that correspond to operating profit, i.e., 1 trillion 453.6 billion yen, operating profit was 1 trillion 39.63 billion yen.

Speaker #3: Motorcycle business, due to sales increase and mainly India and Brazil, we achieved record high unit sales and operating profit. Automobile business, facing harsh business environment due to higher tariff burden and drop in unit sales and due to semiconductor supply shortage and others, we made company-wide effort to reduce cost and consequently excluding EV-related losses, we were profitable.

Speaker #3: Operating cash flow after R&D adjustments, which represents the source of future investments, came to 2 trillion 657.9 billion yen, maintaining strong cash-generating capability as was the case in the previous fiscal year.

Speaker #3: Next, consolidated earnings outlook for FY ending March 2027. Regarding EV-related losses, while it is difficult at this point to give a precise amount, we reviewed details to our best means and set the EV-related losses at 500 billion yen for the fiscal year ending March 2027.

Speaker #3: Though there is concern over the current Middle East situation and impact of rising material prices, operating profit excluding EV-related losses is forecast to be 1 trillion yen.

Speaker #3: Operating profit including EV-related losses is forecasted to be a surplus of 500 billion yen. By business segment, motorcycle business, with the expansion of production capacity in India to capture the strong demand, we will aim for a record unit sales of 22.8 million units.

Speaker #3: Automobile business in Asia, due to model change, unit sales will be retained. While gasoline and hybrid model sales will be enhanced, mainly in North America, to boost profitability.

Speaker #3: Shareholder returns in the fiscal year ending March 2027 will be an annual dividend of 70 yen, the same year on year. About our financial soundness.

Speaker #3: As explained, R&D adjusted operating cash flow will maintain strong cash-generating capability. The operating company's net cash balance at the end of March 2026 was 3.3 trillion yen, meaning we have ample cash at hand.

Speaker #3: Regarding equity to asset ratio, supported by retained earnings, accumulated from the past, the financial position of our operating company is excluding financial services business maintains equity ratio of 55%, showing a high level of financial soundness.

Speaker #3: Next, the details of our financial results will be explained by Mr. Kaihara. First, results of the fiscal year ended March 2026. Followed by the outlook for the fiscal year ending March 2027.

Speaker #3: Fiscal year ending March 2026, total group unit sales year on year were motorcycles, mainly due to the increase in Asia and South America, 22,101,000 units; automobile business, due to drop in Asia, mainly China, 3,387,000 units; byproducts, mainly due to decline in Asia, 3,589,000 units.

Speaker #3: The consolidated financial results of the fiscal year ended March 2026. Both fiscal years ending March 2026 and 2027 will post EV-related losses due to revising HONDA's automobile electrification strategy.

Speaker #3: This makes it difficult to see the underlying business performance. Therefore, we are disclosing operating profit before reflecting EV losses is referred to as adjusted profit.

Speaker #3: The consolidated results of the fiscal year ended March 2026 compared to the previous year are as follows. Operating profit, a loss of 414.3 billion yen, down 1 trillion 627.8 billion yen.

Speaker #3: Share of profit, loss of investments accounted for by equity method, a loss of 162 billion yen, down 163 billion yen. Net profit loss attributable to owners of the parent was a loss of 423.9 billion, down 1 trillion 259.7 billion yen.

Speaker #3: Excluding EV-related losses, adjusted operating profit was 1 trillion 39.3 billion yen. Adjusted net profit, attributable to owners of the parent, 795.5 billion yen. And next, the change in operating profit compared to the previous fiscal year.

Speaker #3: Operating profit, a loss of 414.3 billion yen, down 1 trillion 162,627.8 billion yen. Contributing factors are sales impacts due to mainly semiconductor supply shortage, though automobile unit sales declined; motorcycle unit sales increased, reaching an increase of 117.8 billion yen.

Speaker #3: Price and cost impact price revision effect up 292.3 billion. Expenses down 118.5 billion. R&D down 41.7 billion. Current currency effect down 77 billion. TAF impacts down 346.9 billion yen.

Speaker #3: Adjusted operating profit excluding EV-related losses was 1 trillion 39.3 billion yen. Next, regarding operating profits by business segments for motorcycles, operating profit was 731.9 billion yen, achieving the record highest.

Speaker #3: Automobiles, due to the impact of the EV-related losses of 1.4536 trillion yen, we put up the losses of 1.4111 trillion yen. However, adjusted operating profit excluding EV-related losses marked 42.5 billion yen.

Speaker #3: Financial service businesses marked the operating profit of 275.5 billion and the byproducts and other businesses 10.6 billion yen losses. Operating profit of motorcycle businesses was 731.9 billion yen, up by 68.4 billion yen year on year, breakdown of factors for changes are sales impact, positive by 86 billion yen due to sales unit increase, mainly in Asia and South America; price and cost impact was positive by 70.4 billion yen due to effective price revisions, and so on.

Speaker #1: About ¥275.5 billion, and the power production and other businesses had ¥10.6 billion in year losses. Operating profit of the motorcycle business was ¥731.9 billion, up by ¥68.4 billion year on year.

Speaker #3: Expenses impact was negative by 51.5 billion yen, around the impact was positive by 3.6 billion yen. Current currency impact negative by 28 billion yen and TAF impact was negative by 12.1 billion yen.

Speaker #1: Breakdown of factors for changes are: sales impact, positive by ¥86 billion due to sales unit increase mainly in Asia and South America; price and cost impact was positive by ¥70.4 billion due to effective price revisions; and so on.

Speaker #3: Operating profit of businesses dropped by 1.6549 trillion yen, ended up being operating losses of 1.4111 yen trillion yen year on year, breakdown of the factors for changes sales impact due to the impact mainly of supply shortages of the semiconductors and resultant drop of sales volume, and the increase of the incentives impact was negative by 47.8 billion.

Speaker #1: Expenses impact was negative by ¥51.5 billion, and the 'around' impact was positive by ¥3.6 billion. For incurrence impact, negative by ¥2,628 billion, and service impact was negative by ¥12.1 billion.

Speaker #3: Price cost impact was positive by 223 billion yen due to effective price revisions, and so on. Expenses impact positive by 41.1 billion, R&D impact was negative by 47.3 billion.

Speaker #1: Operating profit of businesses dropped by 1.6549 trillion yen, ended up being operating losses of 1.4111 yen trillion yen year on year. Breakdown of the factors for changes: sales impact due to the impact mainly of supply strategies of the semiconductors and resultant drop of sales volume, and the increase of the incentives impact was negative by 47.8 billion.

Speaker #3: Current currency impact negative by 41.6 billion, and tariff impact was negative by 331.6 billion yen. The adjusted operating profit excluding AV-related losses was 42.5 billion yen.

Speaker #1: Price cost impact was positive by ¥222 billion due to effective price revisions, and so on. Expenses impact was positive by ¥41.1 billion. R&D impact was negative by ¥47.3 billion.

Speaker #3: Let me move on to the cash flow situations. Free cash flows excluding financial service businesses was 1.58 trillion yen as of the fiscal year ended March 26.

Speaker #1: For incurrence impact, negative by ¥41.6 billion, and tariff impact was negative by ¥331.6 billion. The adjusted operating profit, excluding AB-related LLCs, was ¥42.5 billion.

Speaker #3: Net cash balance at the end of fiscal year was 3.3245 trillion yen, and operating cash flow after R&D adjustment was 2.6579 trillion yen. Let me explain consolidated forecast for FRE March 2027.

Speaker #1: Let me move on to the cash flow situations. Free cash flows, excluding financial service businesses, was ¥1.58 trillion as of the fiscal year ended March 2026.

Speaker #3: Regarding group sales volume year on year, the unit sales of the motorcycle business is expected to be 22.8 million units, reflecting incremental businesses mainly in Asia and automobiles, reflecting increase mainly in North America and the reduction mainly in China and Asia.

Speaker #1: Net cash balance at the end of the fiscal year was ¥3.3245 trillion, and operating cash flow after R&D adjustment was ¥2.6579 trillion. Let me explain the consolidated forecast for FYE March 2027.

Speaker #3: It will be 3.39 million units. Profit reduction businesses 3.65 million units expected mainly reflecting incremental businesses in Asia. Regarding consolidated financial forecast of FRE March 27, operating profit will be 500 million yen.

Speaker #1: Regarding group sales volume year on year, the unit will be 22.8 million units, reflecting incremental businesses mainly in Asia and automobiles, with the increase mainly in North America and the reduction mainly in China and Asia.

Speaker #3: Profit for the period attributable to the owners of the parent is expected to be 260 billion. Operating profit after adjustment will be equivalent to the one of the previous fiscal year 1 trillion yen and profit for the period attributable to the owners of the parent after adjustment will be 620 million yen.

Speaker #1: It will be 3.39 million units. Power production businesses: 3.65 million units expected, mainly reflecting incremental businesses in Asia. Regarding the consolidated financial forecast for FYE March '27, operating profit will be ¥500 billion, and profit for the period attributable to the owners of the parent is expected to be ¥260 billion.

Speaker #3: Currency assumption for the full year is set at 145 yen for a dollar. Let me explain factors for changes of the adjusted operating profit year on year.

Speaker #3: The adjusted operating profit is down by 39.3 billion yen year on year for which the factors for changes the sales impact will be positive by 266.7 billion yen due to increase of sales unit of motorcycles and automobiles.

Speaker #1: Operating profit after adjustment will be equivalent to the one of the previous fiscal year 1 trillion yen and profit for the period attributable to the owners of the parent after adjustment will be 620 billion yen.

Speaker #1: Currency assumption for the full year is set at 145 yen to the dollar. Let me explain factors for changes of the adjusted operating profit year on year.

Speaker #3: Price and cost impact though positive effect by cost reduction and price revisions will be expected. Because of a soaring material crisis due to the impact including Middle Eastern situations.

Speaker #3: 313 billion yen negative effect is expected. Expenses negative by 8 billion. R&D impact positive by 10 billion. Current currency negative impact by 142 billion and the tariff impact by will be positive by 147 billion.

Speaker #1: The adjusted operating profit is down by ¥39.3 billion year on year, for which the factors for changes—the sales impact—will be positive by ¥266.7 billion due to an increase of sales units of motorcycles and automobiles.

Speaker #3: Expected capital expenditures as appreciation amortization and R&D spending for FRE March 27 will be as follows on the slide. Reflecting increase in CAPEX for acquisition of factory buildings and so on of the battery production JV with LG Energy Solution.

Speaker #1: Price and cost impact, though a positive effect by cost reduction and price provisions would be expected. Because of soaring material prices due to the impact, including Middle Eastern situations, a ¥313 billion negative effect is expected.

Speaker #1: Expenses were negative by $8 billion, R&D impact was positive by $10 billion, foreign currency had a negative impact of $142 billion, and the tariff impact was positive by $147 billion.

Speaker #3: Those are the numbers we would put up. Regarding payouts, end of the fiscal year dividend will be 35 yen for a share for FRE March 2026 with annual payouts to be 70 yen.

Speaker #1: Expected capital expenditures at depreciation amortization and R&D spending for FYE March 27 will be as follows on the slide. Reflecting increase in CapEx for acquisition of factory buildings and so on of the battery production JV with LG Energy Solutions.

Speaker #3: Expected annual dividend of FRE March 27 will be 70 yen for the share, same as the preceding year. Thank you very much. For your attention.

Speaker #1: Those are the numbers we would put up. Regarding payouts, end of the fiscal year dividend will be 35 yen for a share for FYE March 2026 with annual payouts to be 70 yen.

Speaker #3: Now and I to proceed to the 2026 business update but please wait until we arrange this stage. Thank you for waiting. We now like to resume.

Speaker #1: Expected annual dividend for FYE March '27 will be 70 yen per share, same as the preceding year. Thank you very much for your attention.

Speaker #2: Thank you.

Speaker #1: No need to proceed to the 2026 business update, but please wait until we arrange at this stage. Thank you for waiting. We're now going to resume.

Speaker #3: Maybe some please. And now in light of the financial results, I explained I would like to introduce the future direction of Honda's automobile business.

Speaker #3: With the aim of carbon neutrality by 2050, Honda had been taking initiatives towards the popularization phase of EVs. Yet we decided to discontinue launch of three EV models in North America.

Speaker #3: As we have already announced, this however by no means is an indication that Honda is withdrawing from the EV business. We'll continue EV sales in regions such as Japan and Asia to meet local customer needs in line with EV adoption speed.

Speaker #1: Maybe some, please.

Speaker #2: それではここからは。

Speaker #1: And now, in light of the financial results, I explained I would like to introduce the future direction of Honda's automobile business. With the aim of carbon neutrality by 2050, Honda had been taking initiative towards the popularization phase of EVs.

Speaker #3: In North America. As well. We will carefully monitor market conditions, customer demand, and lay the groundwork to deliver compelling products when the timing is right.

Speaker #1: Yet, we decided to discontinue the launch of three EV models in North America, as we have already announced. This, however, by no means is an indication that Honda is withdrawing from the EV business.

Speaker #3: That said, the fundamental issue facing our automobile business is not simply the slowdown in the EV market. In the past, Honda's automobile business underwent deep structural transformations to the point where gasoline, ice, and hybrid models alone generated close to 1 trillion yen operating profit including EV-related losses.

Speaker #1: We'll continue EV sales in regions such as Japan and Asia to meet local customer needs in line with EV adoption speed. In North America as well, we will carefully monitor market conditions and customer demand, and lay the groundwork to deliver compelling products when the timing is right.

Speaker #3: However, in North America, Honda's principal market currently profit is down due to failure to fully absorb tariff cost burden and in China and ASEAN countries where competition is increasingly intense with emerging OEMs, loss of competitiveness in sales prices and speed of offering new value to market is pushing down unit sales.

Speaker #1: That said, the fundamental issue facing our automobile business is not simply the slowdown in the EV market. In the past, Honda's automobile business underwent deep structural transformations to the point where gasoline, ICE, and hybrid models alone generated close to ¥1 trillion operating profit, including EV-related losses.

Speaker #3: We therefore believe the key to restructuring our automobile business is to one, improve our cost structure, two, increase development efficiency, and three, concentrate corporate resources in regions where we choose to take a more proactive approach and enhance the lineup with compelling products.

Speaker #1: However, in North America, Honda's principal market, current profit is down due to failure to fully absorb the tariff cost burden. And in China and ASEAN countries, where competition is increasingly intense with emerging OEMs, loss of competitiveness in sales prices and speed of offering new value to market is pushing down unit sales.

Speaker #3: Going forward, we will first focus on rebuilding automobile business structure of the next three years. Combined with the continued growth of our motorcycle and financial service businesses, which enjoys solid profit structure, we will strive to recover operating profit to record high by the fiscal year ending March 31, 2029.

Speaker #1: We therefore believe the key to restructuring our automobile business is to: one, improve our cost structure; two, increase development efficiency; and three, concentrate corporate resources in regions where we choose to take a more proactive approach and enhance the lineup with compelling products.

Speaker #3: In parallel, starting in 2027, we will begin introducing next-generation hybrid models and in North America, Japan, and India, I priority regions introduce new products in underserved product categories while carefully assessing customer our product lineups.

Speaker #1: Going forward, we will first focus on rebuilding the automobile business structure over the next three years. Combined with the continued growth of our motorcycle and financial service businesses, which enjoy a solid profit structure, we will strive to recover operating profit to a record high by the fiscal year ending March 31, 2029.

Speaker #3: We will not rely fully on ourselves but we will adopt a flexible approach that also leverages external resources in implementing these initiatives. In line with this direction, we have defined three key pillars.

Speaker #1: In parallel, starting in 2027, we will begin introducing next-generation hybrid models and, in North America, Japan, and India—our priority regions—introduce new products in underserved product categories while carefully assessing customer needs.

Speaker #3: Strategic reallocation of corporate resources. Two, a thorough strengthening of our manufacturing structure. Three, strategic utilization of external resources. Let me explain one by one.

Speaker #1: Thereby, expand our product lineups. We will not rely fully on ourselves, but we will adopt a flexible approach that also leverages external resources in implementing these initiatives.

Speaker #3: The first pillar is strategic allocation of corporate resources. Our initiatives will be broadly divided into two. The first is the reassessment of the powertrain portfolio with an eye on future demand trends.

Speaker #1: In line with this direction, we have defined three key pillars: one, strategic reallocation of corporate resources; two, thorough strengthening of our manufacturing structure; three, strategic utilization of external resources.

Speaker #3: To be more specific, we will reallocate more development and production resources into hybrid models. In doing so, we will accelerate the market launch of hybrid models ahead of the original schedule and increase compelling products.

Speaker #1: Let me explain one by one. The first pillar is the strategic allocation of corporate resources. Our initiatives will be broadly divided into two. The first is the reassessment of the powertrain portfolio, with an eye on future demand trends.

Speaker #3: Based on our belief that hybrid models where Honda has strength will continue to be the key to addressing environmental challenges until around 2030 when EVs will be more popular.

Speaker #1: To be more specific, we will reallocate more development and production resources into hybrid models. In doing so, we will accelerate the market launch of hybrid models ahead of the original schedule and increase compelling products.

Speaker #3: From 2020C, we will begin launching our next-generation hybrid models featuring both an all-new hybrid system and platform. We plan to launch 15 next-generation hybrid models globally by the end of the fiscal year ending March 2030, primarily in North America.

Speaker #1: Based on our belief that hybrid models, where Honda has strength, will continue to be the key to addressing environmental challenges until around 2030, when EVs will be more popular.

Speaker #3: In this whole are two prototypes. The Honda hybrid sedan prototype and Acura hybrid SUV prototype. Both are scheduled to be launched within the next two years.

Speaker #1: From 2020C, we will begin launching our next-generation hybrid models featuring both an all-new hybrid system and platform. We plan to launch 15 next-generation hybrid models globally by the end of the fiscal year ending March 2030, primarily in North America.

Speaker #3: We will continue to roll out new models equipped with our next-generation hybrid technology across both the Honda and Acura brands to further strengthen the hybrid vehicle lineup.

Speaker #3: To meet strong demand for large size hybrid vehicles in North America, in 2029, we will launch large size hybrid models in the D segment or above, featuring powerful driving and towing capability with high environmental performance.

Speaker #1: In this whole, there are two prototypes: the Honda Hybrid Sedan prototype and the Acura Hybrid SUV prototype. Both are scheduled to be launched within the next two years.

Speaker #3: Our next-generation hybrid system will realize the world's most efficient powertrain through advancements such as an expansion of engine, high efficiency range, and increased drive efficiency of the hybrid unit.

Speaker #1: We'll continue to roll out new models equipped with our next-generation hybrid technology across both the Honda and Acura brands to further strengthen the hybrid vehicle lineup.

Speaker #3: By combining our next-generation platforms all around evolution such as steering stability, crash safety, and further weight reduction, with the electric AWD unit, Honda will strive to improve the fuel economy by more than 10% and further evolve driving experience unique to Honda.

Speaker #1: To meet strong demand for large-size hybrid vehicles in North America, in 2029, we will launch large-size hybrid models in the D segment or above, featuring powerful driving and towing capability with high environmental performance.

Speaker #1: Our next-generation hybrid system will realize the world's most efficient powertrain through advancements such as an expansion of engine high-efficiency range and increased drive efficiency of the hybrid unit.

Speaker #3: And also, to reduce cost of many key components such as batteries and motors, we will engage in various co-creation activities with suppliers, further improve production efficiency and pursue commonalization of parts and components.

Speaker #1: By combining our next-generation platforms—all-around evolution, such as steering stability, crash safety, and further weight reduction—with the electric AWD unit, Honda will strive to improve fuel economy by more than 10% and further evolve the driving experience unique to Honda.

Speaker #3: We aim to reduce cost of our next-generation hybrid system by more than 30% vis-à-vis our 2023 models. We are also offering new mobility experience to our customers with models equipped with our next-generation ADAS under development from 2028, and we will plan to start introducing the next-generation ADAS into more than 15 models over a five-year period.

Speaker #1: And also, to reduce the cost of many key components, such as batteries and motors, we will engage in various co-creation activities with suppliers, further improve production efficiency, and pursue commonalization of parts and components.

Speaker #3: By installing Honda's next-generation ADAS to our affordable hybrid models, we want more customers to experience Honda's unique value proposition that combines the joy of driving at will and a stress-free and comfortable mobility experience.

Speaker #1: We aim to reduce the cost of our next-generation hybrid system by more than 30% vis-à-vis 2023 models. We are also offering a new mobility experience to our customers with models equipped with our next-generation ADAS, under development from 2028, and we plan to start introducing the next-generation ADAS into more than 15 models over a five-year period.

Speaker #3: To consistently meet demand, we will strengthen our production and parts supply operations for hybrid models. At our auto plant in Ohio, we will reallocate all of the excess capacity to production of gasoline, ice, and hybrid models.

Speaker #1: By installing Honda's next-generation ADAS to our affordable hybrid models, we want more customers to experience Honda's unique value proposition that combines the joy of driving at will and a stress-free and comfortable mobility experience.

Speaker #3: More furthermore, we will make all auto parts in North America capable of producing hybrid models. Next, batteries, the key to increase in production. We are working towards the production of supply of highly competitive batteries by converting part of the EV battery production lines at LH Battery Company, our joint venture with LG Energy Solution, to hybrid battery production.

Speaker #1: To consistently meet demand, we will strengthen our production and parts supply operations for hybrid models. At our auto plant in Ohio, we will reallocate all of the excess capacity to production of gasoline, ICE, and hybrid models.

Speaker #3: As for motor and inverters, we will further increase the local content of assay and component parts by more than four times to reduce risk of supply shortage and mitigate impacts of tariffs.

Speaker #1: Furthermore, we will make all auto parts in North America capable of producing hybrid models. Next, batteries—the key to increasing production. We are working towards securing a supply of highly competitive batteries by converting part of the EV battery production lines at LH Battery Company, our joint venture with LG Energy Solution, to hybrid battery production.

Speaker #3: Our second initiative, the enhancement of product lineup in each of our priority regions. We have postponed North America and Japan; we have positioned, rather, North America, Japan, and India as priority markets for future growth strategy, and will strategically allocate our resources to these markets.

Speaker #1: As for motors and inverters, we will further increase the local content of ASICs and component parts by more than four times to reduce the risk of supply shortages and mitigate the impact of tariffs.

Speaker #3: Since I have already covered North America, let me explain initiatives we will take in other regions. Japan. First, Japan. The home market of Honda is not merely a market where Honda seeks volume and share, rather it plays a critical role as a market where we redefine new technologies and value propositions, and demonstrate their level of maturity to global market.

Speaker #1: Our second initiative is the enhancement of our product lineup in each of our priority regions. We have postponed North America and Japan; instead, we have positioned North America, Japan, and India as priority markets for our future growth strategy, and will strategically allocate our resources to these markets.

Speaker #3: First is EV. In Japan, we will expand our EV model lineup, starting from the mini vehicle Kei car, a category mini vehicles are popular in Japan, and align well with EVs, which are clean and quiet.

Speaker #1: Since I have already covered North America, let me explain initiatives we will take in other regions. Japan. First, Japan. The home market of Honda is not merely a market where Honda seeks volume and share; rather, it plays a critical role as a market where we redefine new technologies and value propositions, and demonstrate their level of maturity to the global market.

Speaker #3: To be more specific, following the market launch of the Honda N Van E, in 2024, and the N One E, in 2025, we are preparing to launch in 2028 the EV version of the N Box, which has been the best-selling new vehicle in Japan for 11 consecutive years.

Speaker #1: First is EV. In Japan, we will expand our EV model lineup, starting from the mini vehicle Kei car, a category. Mini vehicles are popular in Japan and align well with EVs, which are clean and quiet.

Eiji Fujimura: Operating profit of about JPY 275.5 billion, and the power production and other businesses, JPY -10.6 billion. Operating profit of the motorcycle businesses was at JPY 731.9 billion, up by JPY 68.4 billion year on year. Breakdown of the factors for changes are sales impact, JPY +86 billion due to sales unit increase, mainly in Asia and South America. Price and cost impact was JPY +70.4 billion due to effective price revisions and so on. Expenses impact was JPY -51.5 billion. R&D impact was JPY +2.6 billion. Foreign currency impact, JPY -28 billion. Tariff impact was JPY -12.1 billion.

Speaker #3: For registered cars, the all-new EV Insight was launched in April, and the Super One compact EV will go on sale later this month. In Japan, we will focus on offering a broad EV lineup and a mass know-how for the future popularization of EVs.

Speaker #1: To be more specific, following the market launch of the Honda N-Van e in 2024, and the N1 e in 2025, we are preparing to launch in 2028 the EV version of the N-Box, which has been the best-selling new vehicle in Japan for 11 consecutive years.

Speaker #3: Moreover, in addition to the sport line and trial line models announced at the Tokyo Auto Salon this January, starting in 2027, we will introduce next-generation hybrid models, mostly in the SUV category.

Speaker #3: Then, from 2028 onward, starting with the all-new Vezel, we will equip our Q models with our new next-generation ADAS. Through these initiatives, we will enhance the lineup of high-value-added products in all vehicle categories.

Eiji Fujimura: Operating profit of other businesses dropped by JPY 1.6549 trillion, ended up in operating losses of JPY 1.4111 trillion year on year. Breakdown of the factors for changes. Sales impact due to the impact mainly of a supply shortages of the semiconductors and with resultant drop of sales volume. The increase of the incentives impact was JPY -47.8 billion. Price cost impact was JPY +222 billion due to effective price revisions and so on. Expenses impact are JPY +44.1 billion. R&D impact was JPY -47.3 billion. Foreign currency impact, JPY -41.6 billion. Tariff impact was JPY -331.6 billion.

Speaker #3: We will strive to, one, achieve new vehicle sales and greater than the current unit sales; and two, establish a solid business foundation. Next is India.

Speaker #3: India is one of the few markets in the world where growth is expected. However, currently, Honda has presence in only a limited range of product segments, and has not been able to fully expand unit sales due to an insufficient number of competitive models in each segment.

Speaker #3: While contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in India, it has been our standard practice to develop and sell all products based on global standard performance specifications, regardless of target countries and regions.

Eiji Fujimura: The adjusted operating profit, excluding AV related losses, was JPY 42.5 billion. Let me move on to the cash flow situations. Free cash flows, excluding financial service businesses, was JPY 1.58 trillion as of the fiscal year ended March 2026. Net cash balance at the end of the fiscal year was JPY 3.3245 trillion, and operating cash flow after R&D adjustment was JPY 2.6579 trillion. Let me explain consolidated forecast for FY March 2027. Regarding group sales volume year on year, the unit sales of the motorcycle business is expected to be 22.8 million units, reflecting incremental businesses mainly in Asia. Automobiles reflect increase mainly in North America and reduction mainly in China and Asia.

Speaker #3: However, climate conditions, vehicle usage, customer preferences, and others vary significantly from country to country and region to region. Environmental and other regulations are different.

Speaker #3: Our global standard approach may have been somewhat excessive. Therefore, we will redefine the best specifications that fully match the market environment and customer needs in India.

Speaker #3: And then, in 2028, we will begin introducing strategic models, tailored to the Indian market, seeking optimal balance of performance and price to satisfy customers in India.

Speaker #3: More specifically, we will launch our strategic models in two categories: vehicles under four meters in length, the largest volume segment, and midsize category. We will proactively utilize local development resources, including external resources and introduce new models as quickly as possible.

Eiji Fujimura: It will be 3.39 million units. Power production businesses, 3.65 million units are expected, mainly reflecting incremental businesses in Asia. Regarding consolidated financial forecast by FY March 2027, operating profit will be JPY 500 billion. Profit for the period attributable to the owners of the parent is expected to be JPY 260 billion. Operating profit after adjustment will be equivalent to the one of the previous fiscal year, JPY 1 trillion. Profit for the period attributable to the owners of the parent after adjustments will be JPY 640 billion. Currency assumption for the full year is set at 145 yen per dollar. Let me explain factors for changes of adjusted operating profit year on year.

Speaker #3: The solid motorcycle business will be our key strength in this market. In India, Honda's annual motorcycle sales near 6 million units, and has the largest UIO units in operation and sales networks.

Speaker #3: Honda has also a robust supply chain. In India, the price range of motorcycles, close to the price range of entry-level automobiles. So we will fully utilize our competitiveness in motorcycle business and strive to grow by steadily capturing customers' upgrading from motorcycles to automobiles.

Speaker #3: Moreover, this April, we established Honda Digital Innovation India, a digital platform company which will utilize the Honda Digital Foundation to address the diverse needs of our customers.

Speaker #3: We will enhance synergies between our motorcycle and automobile business in India. In addition, captive finance company India's scheduled to become operational before the end of the current fiscal year, ending March 2027.

Eiji Fujimura: The adjusted operating profit is down by JPY 39.3 billion year on year, for which the factors for changes. The sales impact would be JPY +266.7 billion due to increase of sales unit in motorcycles and automobiles. Price and cost impact. The positive effect by cost reduction and price revisions was expected because of soaring material prices due to the impact, including Middle Eastern situations, JPY 313 billion negative effect is expected. Expenses, JPY -8 billion. R&D impact, JPY +10 billion. Foreign currency, negative impact by JPY 142 billion. The tariff impact will be JPY +147 billion. Expected capital expenditures as depreciation, amortization and R&D spending for FY March 2027 will be as follows on the slide.

Speaker #3: Strengthening our financial services business will help expand sales opportunities for our motorcycles, and automobile products. The last part of our regional strategy is China, where we need to fundamentally strengthen our competitiveness.

Speaker #3: As you know, competition in the Chinese market is intensifying, and Honda is facing a very challenging business environment, including a decline in production and unit sales.

Speaker #3: Here, some initiatives we are taking to continue competing in the market. First, for the China domestic market, we will pursue cost reduction using locally sourced standard components while incorporating local technologies for next-generation technologies such as ADAS to keep pace with the overwhelming speed of advancement of intelligent technologies in China.

Speaker #3: Furthermore, by introducing NEVs, NEVs built on platforms provided by local partners, we will better serve the needs of customers in China. We will also apply initiatives to improve development efficiency in China, such as the use of standard components to market outside China to strengthen our products and cost competitiveness in ASEAN and other regions.

Eiji Fujimura: Reflecting increase in CapEx, for acquisition of factory buildings and so on of the battery production JV with LG Energy Solution. Those are the numbers we would put up. Regarding payouts, end of the fiscal year dividend will be JPY 35 per share for FY March 2026, with annual payouts to be JPY 70. Expected annual dividend of FY March 2027 will be JPY 70 per share, same as the preceding year. Thank you very much for your attention.

Speaker #3: The second pillar, in order to deliver competitive products, we will focus on strengthening our lead and agile manufacturing structure. I will introduce three specific initiatives we are undertaking.

Operator: Now we'd like to proceed into the 2026 business update. Please wait until we arrange the stage.

Speaker #3: First is a fundamental cost reduction. Particularly with the cost of outsourced parts, we will improve our cost structure on a global basis. One, by reassessing Honda-specific standards and utilizing standardized components.

Operator: Now we'd like to proceed into the 2026 business update. Please wait until we arrange the stage.

Speaker #3: And two, by incorporating the competitiveness of local businesses in China and India. The second is a thorough improvement of development efficiency. This initiative addresses three challenges we face in competition with emerging OEMs.

Speaker #3: They are: one, development costs; two, development duration; and three, development man-hours or workload. We will reassess the so-called engineering chain management and increase our production efficiency by reducing each of the three items by half: vis-a-vis 2025.

Speaker #3: And we call this triple half. In addition to improving efficiency in the design, testing, and production preparation, through the use of digital environment and AI, we will transform our development process by reassessing development requirements as well as product planning and development management to reduce development costs and man-hours and shorten the development time.

Speaker #3: Starting this fiscal year, we will reduce the development time for minor model change by half. Full model change development time will also be halved starting with development projects that start in 2028.

Toshihiro Mibe: Thank you for waiting. We now like to resume. Mibe-san, please. Now, in light of the financial results I explained, I would like to introduce the future direction of Honda's automobile business. With the aim of carbon neutrality by 2050, Honda has been taking this shift towards the popularization phase of EVs. We decided to discontinue launch of 3 EV models in North America, as we have already announced. This, however, by no means, is an indication that Honda is withdrawing from the EV business. We'll continue EV sales in regions such as Japan and Asia to meet local customer needs in line with EV adoption speed. In North America as well, we will carefully monitor market conditions, customer demand, and lay the groundwork to deliver compelling products when the timing is right.

Operator: Thank you for waiting. We now like to resume. Mibe-san, please.

Toshihiro Mibe: Now, in light of the financial results I explained, I would like to introduce the future direction of Honda's automobile business. With the aim of carbon neutrality by 2050, Honda has been taking this shift towards the popularization phase of EVs. We decided to discontinue launch of 3 EV models in North America, as we have already announced. This, however, by no means, is an indication that Honda is withdrawing from the EV business. We'll continue EV sales in regions such as Japan and Asia to meet local customer needs in line with EV adoption speed. In North America as well, we will carefully monitor market conditions, customer demand, and lay the groundwork to deliver compelling products when the timing is right.

Speaker #3: This will enable us to reduce up-to-date products more quickly and continuously. Finally, the building manufacturing structure resilient to business environment changes. To establish a robust manufacturing structure capable of securing profitability even when market conditions call for reduced production, we will aim for a 20% improvement in production efficiency over the next five years by one efficiently injecting and allocating resource investment in new models and equipment, and two, increased efficiency and speed through the use of digital technologies.

Speaker #3: The third pillar is the strategic use of the external resources. To build the future competitiveness in-house sourcing of the technologies, resources, and parts can be one of the effective approaches.

Speaker #3: However, it will require substantial investments and allocation of resources. And in an increasingly uncertain market environment, it might lead to the loss of the competitive advantage; therefore, as I mentioned already, we will strategically leverage the cost competitiveness and speed of local businesses in China and India and other countries or the use of industry-standard components and so on so that we can improve our competitiveness by flexible and strategic use of the external resources.

Toshihiro Mibe: That said, the fundamental issue facing our automobile business is not simply the slowdown in the EV market. In the past, Honda's automobile business underwent deep structural transformations to the point where gasoline, ICE, and hybrid models alone generated close to JPY 1 trillion in operating profit, including EV-related losses. However, in North America, Honda's principal market currently, our profit is down due to failure to fully absorb temporary cost burden. In China and ASEAN countries, where competition is increasingly intense with emerging OEMs, a loss of competitiveness in sales prices and speed of offering new value to market is pushing down unit sales. We, therefore, believe the key to restructuring our automobile business is to, one, improve our cost structure. Two, increase in development efficiency.

Speaker #3: As for batteries, we will not pursue complete in-house sourcing for the time being. Instead, we will maximize the use of the H batteries facilities.

Speaker #3: Keeping an eye on the future demand growth for EVs, we will push forward the personal efficiencies catering for highly demanded hybrid vehicles and other applications for some time so that our battery procurement strategy will be formulated focusing on the competitiveness in North America.

Speaker #3: Based on such a strategy, we have decided of our indefinite suspension of the project to build a comprehensive value chain in Canada. Which we announced last year for its post-appointment about two years.

Toshihiro Mibe: 3, concentrate corporate resources in regions where we choose to take a more proactive approach and enhance the lineup with compelling products. Going forward, we will first focus on rebuilding automobile business structure over the next 3 years. Combined with the continued growth of our motorcycle and financial service businesses, which enjoy solid profit structure, we will strive to recover operating profit to a record high by the fiscal year ending March 31, 2029. Starting in 2027, we will begin introducing next-generation hybrid models, and in North America, Japan, and India, our priority regions, introduce new products in underserved product categories while carefully assessing customer needs, thereby expand our product lineups. We will not rely fully on ourselves, but we will adopt a flexible approach that also leverages external resources in implementing these initiatives.

Speaker #3: We will carefully monitor the market conditions and will continue to reassess our procurement strategies. While working on the further refine the core of our competitive advantage, we will proactively leverage external competitiveness and resources in the areas where we determine that they can increase speed, flexibility, and cost competitiveness, thereby strengthening our overall competitiveness.

Speaker #3: Up to this point, I have explained the three pillars of our strategy to rebuild automobile business structure toward 2030. From here, I'd like to explain the directions beyond 2030.

Speaker #3: In the mid and long term, and in the even more uncertain business environments, we must lay a solid technological groundwork while ensuring a greater flexibility and wider range of options so that we will be well prepared to meet demand when it emerges.

Toshihiro Mibe: In line with this direction, we have defined 3 key pillars: strategic reallocation of corporate resources. 2, a thorough strengthening of our manufacturing structure. 3, strategic utilization of external resources. Let me explain one by one. The first pillar is strategic allocation of corporate resources. Our initiatives will be broadly divided into 2. The first is the reassessment of the powertrain portfolio with an eye on future demand trends. To be more specific, we will reallocate more development and production resources into hybrid models. In doing so, we will accelerate the market launch of hybrid models ahead of the original schedule and increase compelling products. Based on our belief that hybrid models, where Honda has strength, will continue to be the key to addressing environmental challenges until around 2030, when EVs will be more popular.

Speaker #3: First of all, our directions to achieve a carbon neutrality by 2050 remain unchanged. Because we believe it is a responsibility we must pursue as long as Honda conducts businesses as a comprehensive mobility company.

Speaker #3: Besides, we will carefully assess the market environment. Demands, trends in each region, and take a multifaceted approach to achieving carbon neutrality which we will include not only EVs but also various other technologies such as hybrid vehicles, carbon neutral fuels, carbon offset technologies, and so on.

Speaker #3: As I mentioned in the beginning, we continue laying a groundwork for the sake of the EV demands that may expand again. And in order to launch compelling products in a timely manner when the time comes, we are continuing to work to prepare for highly competitive EV hardware platforms as well as the research and development of all solid-state batteries for the future.

Toshihiro Mibe: From 2023, we will begin launching our next-generation hybrid models featuring both an all-new hybrid system and platform. We plan to launch 15 next-generation hybrid models globally by the end of the fiscal year ending March 2030, primarily in North America. In this hall are 2 prototypes: the Honda hybrid sedan prototype and Acura hybrid SUV prototype. Both are scheduled to be launched within the next 2 years. We'll continue to roll out new models equipped with our next-generation hybrid technology across both the Honda and Acura brands to further strengthen our hybrid vehicle lineup. To meet strong demand for large-sized hybrid vehicles in North America, in 2029, we will launch large-sized hybrid models in the D-segment or above, featuring powerful driving and towing capability with high environmental performance.

Speaker #3: Furthermore, we continue to pursue initiatives to enhance application on intelligent technology in order to offer the mobility experiences on board. Looking ahead, we will apply a similar OS, the original vehicle OS of Honda, to a wide range of Honda vehicles from SUVs so that the value of a cross-domain mobilities will improve.

Speaker #3: Moreover, for the E&E architecture, the key to embody the initiative, we adopted a domain-based architecture that can flexibly address changes in customer needs and market conditions, as well as a utilization of the external resources.

Speaker #3: With the adoption of unified software architecture, we will be able to achieve highly efficient development. This will enable us to continually deliver new value to customers in a timely manner while pursuing both flexibility and competitiveness.

Speaker #3: So far, I have explained the initiatives we are taking for automobile businesses. Now let me move on to the motorcycle business that shows a remarkable growth.

Toshihiro Mibe: Our next-generation hybrid system will realize the world's most efficient powertrain through advancements such as an expansion of engine, high efficiency range, and increased drive efficiency of the hybrid unit. By combining our next-generation platform's all-round evolution, such as steering stability, crash safety, and further weight reduction, with the electric AWD unit, Honda will strive to improve the fuel economy by more than 10% and further evolve driving experience unique to Honda. To reduce cost of many key components, such as batteries and motors, we will engage in various co-creation activities with suppliers, further improve production efficiency, and pursue commonalization of parts and components. We aim to reduce cost of our next-generation hybrid system by more than 30% vis-à-vis our 2023 models.

Speaker #3: As I mentioned earlier, in a financial result announcement, our motorcycle sales for the fiscal year ended March 26 with 22.1 billion units, which is approximately 40% share of the global market.

Speaker #3: The global motorcycle market is expected to grow from the current state of 50 million units to 60 million units by 2030. We will further increase our market share and enhance our presence in the market by introducing products more aligned with the increasingly diverse customer needs and by optimizing production capabilities.

Speaker #3: For example, India, largest market. Our market share is approximately 28% at the end of the fiscal year ending March 26, delivering approximately 5.8 million units.

Speaker #3: However, customer demand is showing a trend stepping up from current most popular 160 class to 125 or 160 classes. The similar trend is observed in central South America too.

Toshihiro Mibe: We will also offer new mobility experience to our customers with models equipped with our next-generation ADAS under development from 2028, and we will plan to start introducing the next-generation ADAS into more than 50 models over a 5-year period. By installing Honda's next-generation ADAS to our affordable hybrid models, we want more customers to experience Honda's unique value proposition that combines the joy of driving at will and a stress-free and comfortable mobility experience. To consistently meet demand, we will strengthen our production and parts supply operations for hybrid models. At our auto plant in Ohio, we will reallocate all of the excess capacity to production of gasoline, ICE, and hybrid models. Furthermore, we will make all auto parts in North America capable of producing hybrid models. Next, batteries, the key to increase in production.

Speaker #3: We will steadily address the shift of demands by implementing initiatives to launch attractive products and to enhance sales network and service capabilities. In central and South America, emerging motorcycle OEMs from India and China are beginning to strengthen their presence.

Speaker #3: We will be definitely taking aggressive approach by taking advantage of the competitive resources leveraged from India and China just like the automobile segment. Moreover, we will further strengthen production operations to accommodate for global expanding demands in India.

Speaker #3: We plan to expand our production capacity from the current 6.25 million units to approximately 8 million in 2028, further to evolve facilities there as an export hub.

Speaker #3: Though various initiatives such as in-house production of parts materialization of the chassis, acceleration of the local procurement, and so on, cost competitiveness and speed will be enhanced.

Toshihiro Mibe: We are working towards the production and supply of highly competitive batteries by converting part of the EV battery production lines at L-H Battery Company, our joint venture with LG Energy Solution, to hybrid battery production. As for motor and inverters, we will further increase the local content of assembly and component parts by more than four times to reduce risk of supply shortage and mitigate impacts of tariffs. Our second initiative, an enhancement of product lineup in each of our priority regions. We have positioned rather North America, Japan, and India as priority markets for our future growth strategy and will strategically allocate our resources to these markets. Since I have already covered North America, let me explain initiatives we will take in other regions. First, Japan.

Speaker #3: Thereby, we can expand exports to central South America where the conditions of the roads and the customer presence are close to India. Indonesia, Philippines, Brazil, we will progressively strengthen our motorcycle production supply operations to establish business environment to accommodate demands of there.

Speaker #3: In addition, we will further sophisticate the commercial value of the products with the development of the dual-clutch transmission Honda e-clutch and number of original technologies Honda continues to offer.

Speaker #3: Joy of riding, joy of maneuvering for customers going forward. We will create new values with novel technologies, unique to Honda, to differentiate from other emerging competitors.

Speaker #3: Regarding EVs, growth momentum of the electrification market is slowing as compared to initial projection. Nevertheless, we are observing the case like Vietnam where the shift to electric car models progresses rapidly because of the environmental regulation changes.

Toshihiro Mibe: As the home market of Honda is not merely a market where Honda seeks volume and share. Rather, it plays a critical role as a market where we redefine new technologies and value propositions and demonstrate their level of maturity to global market. First is EV. In Japan, we will expand our EV model lineup starting from the mini-vehicle, kei car, category. Mini-vehicles are popular in Japan and align well with EVs, which are clean and quiet. To be more specific, following the market launch of the Honda N-VAN e: in 2024 and the N-ONE e: in 2025, we are preparing to launch, in 2028, the EV version of the N-BOX, which has been the best-selling new vehicle in Japan for 11 consecutive years.

Speaker #3: The outlook of the uncertain. In India, we will introduce electric motorcycle models that meet customer needs as planned, and the proceed with the construction of a factory dedicated to the EV models.

Speaker #3: The development of EV models will proceed relentlessly, and we will capture changes in the market environment and customer demands and take a flexible and agile approach to product launches and the establishment of a production operations.

Speaker #3: Now, I'll explain our financial strategy. In light of what I discussed so far, as I mentioned earlier, over the next three years, we will focus on rebuilding our automobile business structure and transform the business into a stable and profitable business.

Speaker #1: For registered cars, the all-new EV Insight was launched in April, and the Super One compact EV will go on sale later this month. In Japan, we will focus on offering a broad EV lineup and amassing know-how for the future popularization of EVs.

Toshihiro Mibe: For registered cars, the all-new EV Insight was launched in April, and the Super-One compact EV will go on sale later this month. In Japan, we will focus on offering a broad EV lineup and amass know-how for the future popularization of EVs. Moreover, in addition to the Sport Line and Trail Line models announced at the Tokyo Auto Salon this January, starting in 2027, we will introduce next-generation hybrid models, mostly in the SUV category. From 2028 onward, starting with the all-new Vezel, we will equip our key models with our new next-generation ADAS. Through these initiatives, we will enhance the lineup of high value-added products in all vehicle categories. We will strive to, 1, achieve new vehicle sales greater than the current unit sales. 2, establish a solid business foundation. Next is India.

Speaker #3: In the meantime, we will continue to make investments for future growth. EV-related investments will be controlled at a certain level while ensuring a readiness to respond quickly to future EV demands.

Speaker #3: In addition, for high hybrid vehicles, we will prepare to enhance our product lineups to the priority market explained today as a result of those initiatives.

Speaker #1: Moreover, in addition to the Sport Line and Trial Line models announced at the Tokyo Auto Salon this January, starting in 2027, we will introduce next-generation hybrid models, mostly in the SUV category.

Speaker #3: Our financial targets of FYE market March 29, three years from now, we will achieve operating profit beyond 1.4 trillion yen, the all-time high that is our aim.

Speaker #1: Then, from 2028 onward, starting with the all-new Vezel, we will equip our Q models with our new next-generation ADAS. Through these initiatives, we will enhance the lineup of high-value-added products in all vehicle categories.

Speaker #3: During two years after that, based on the rebuilt business structure, we will introduce compelling products prepared for the priority markets. On the basis of such business structure as established, that way we can enhance the automobile business for growth strategy.

Speaker #1: We will strive to, one, achieve new vehicle sales greater than the current unit sales, and two, establish a solid business foundation. Next is India.

Speaker #3: In March, 2031, five years from now, the model launches in the model segments in North America, India, Japan. We'll take effect initiatives like a triple halves, triple half in the development domain.

Speaker #1: India is one of the few markets in the world where growth is expected. However, currently, Honda has presence in only a limited range of product segments, and has not been able to fully expand unit sales due to an insufficient number of competitive models in each segment.

Toshihiro Mibe: India is one of the few markets in the world where growth is expected. Currently, Honda has presence in only a limited range of product segments and has not been able to fully expand unit sales due to an insufficient number of competitive models in each segment. One contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in India. It has been our standard practice to develop and sell all products based on global standard performance specifications, regardless of target countries and regions. Climate conditions, vehicle usage, customer preferences, and others, vary significantly from country to country and region to region. Environmental and other regulations are different. Our global standard approach may have been somewhat excessive. We will redefine the best specifications that fully match the market environment and customer needs in India.

Speaker #3: We'll be actively showing the results. Thus, our business efficiency will enhance dramatically to aim for work target of 10% that has been pursuing for long.

Speaker #3: Now, let me explain our capital allocation plans until FYE March 29. In those three years, we will reallocate our resources originally scheduled for EVs to the hybrid vehicles instead.

Speaker #1: While a contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in India, it has been our standard practice to develop and sell all products based on global standard performance specifications, regardless of target countries and regions.

Speaker #3: Regarding resource allocation for EVs, though we will continue to prepare for the recovery of the EV demand in the future, for the time being, it will be kept controlled to approximately 0.8 trillion yen level over three years.

Speaker #1: However, climate conditions, vehicle usage, customer preferences, and others vary significantly from country to country and region to region. Environmental and other regulations are different.

Speaker #3: For the softwares, given the software application essential for all, including hybrid models, we plan to allocate the resources approximately 1 trillion yen that is consistent with the original plan.

Speaker #1: Our global standard approach may have been somewhat excessive. Therefore, we will redefine the best specifications that fully match the market environment and customer needs in India.

Speaker #3: ICE and hybrid models we will make a strategic investment for future growth in the priority market. So we can plan to invest a totally 4.4 trillion yen for the three years.

Speaker #1: And then, in 2028, we will begin introducing strategic models tailored to the Indian market, seeking an optimal balance of performance and price to satisfy customers in India.

Toshihiro Mibe: In 2028, we will begin introducing strategic models tailored to the Indian market, seeking optimal balance of performance and price to satisfy customers in India. More specifically, we will launch our strategic models in 2 categories: vehicles under 4 meters in length, the largest volume segment, and mid-size category. We will proactively utilize local development resources, including external resources, and introduce new models as quickly as possible. The solid motorcycle business will be our key strength in this market. In India, Honda's annual motorcycle sales nears 6 million units and has the largest UIO, units in operation, and sales networks. Honda has also a robust supply chain. In India, the price range of motorcycles are close to the price range of entry-level automobiles. We will fully utilize our competitiveness in motorcycle business and strive to grow by steadily capturing customers upgrading from motorcycles to automobiles.

Speaker #3: The investment for those three years will be 6.2 trillion yen in total. As for operating cash flow after rent adjustment due to turnaround of the automobile segment and powerful cash generation of the motorcycle businesses, it will be expected to be more than 7 trillion yen excluding AV-related losses.

Speaker #1: More specifically, we will launch our strategic models in two categories: vehicles under 4 meters in length, the largest volume segment, and the midsize category. We will proactively utilize local development resources, including external resources, and introduce new models as quickly as possible.

Speaker #3: Consequently, we will continue to invest for the future growth whilst steadily securing the funds for shareholder returns. After FYE March 2030, we will carefully assess the trend of EV demands.

Speaker #1: The solid motorcycle business will be our key strength in this market. In India, Honda's annual motorcycle sales near 6 million units, and it has the largest UIO—units in operation—and sales networks.

Speaker #3: In North America and make decisions for EV investment further. Regarding investment decisions in highly uncertain business environments, we will utilize assets of the past investments or leverage external resources not persisting on our internal resources only so that investment efficiencies will be much improved.

Speaker #1: Honda also has a robust supply chain. In India, the price range of motorcycles is close to the price range of entry-level automobiles. So we will fully utilize our competitiveness in the motorcycle business and strive to grow by steadily capturing customers upgrading from motorcycles to automobiles.

Speaker #3: Finally, regarding dividends, as you can see here, since 2008, global financial crisis, Honda has faced with challenging business environments, Great East German earthquakes, COVID-19, but we have positioned the stable and continuous dividend payouts as one of our key corporate management priorities.

Speaker #1: Moreover, this April, we established Honda Digital Innovation India, a digital platform company which will utilize the Honda Digital Foundation to address the diverse needs of our customers.

Toshihiro Mibe: Moreover, this April, we established Honda Digital Innovation India, a digital platform company which will utilize the Honda Digital Foundation to address the diverse needs of our customers. We'll enhance synergies between our motorcycle and automobile business in India. In addition, a captive finance company, it is scheduled to become operational before the end of the current fiscal year, ending March 2027. Strengthening our financial services business will help expand sales opportunities for our motorcycles and automobile products. The last part of our regional strategy is China, where we need to fundamentally strengthen our competitiveness. As you know, competition in the Chinese market is intensifying, and Honda is facing a very challenging business environment, including a decline in production and unit sales. Here are some initiatives we are taking to continue competing in the market.

Speaker #1: We will enhance synergies between our motorcycle and automobile business in India. In addition, our captive finance company is scheduled to become operational before the end of the current fiscal year, ending March 2027.

Speaker #3: Our payouts have never been reduced and going forward, we will aim to maintain stable and continuous payouts with a target of a DOE of 3%.

Speaker #1: Strengthening our financial services business will help expand sales opportunities for our motorcycles and automobile products. The last part of our regional strategy is China, where we need to fundamentally strengthen our competitiveness.

Speaker #3: Though we'll balance the realization of rebuilding of business structure, efficient investment for future growth, and shared returns, we will make sure to lead and enhance the corporate values in medium-long-term perspective.

Speaker #3: Lastly, I'd like to explain the evolution of the corporate governance structures. Since transitioning to company to three committees in 2021, Honda has significantly expanded the scope of authority delegated from the board of directors to executive offices.

Speaker #1: As you know, competition in the Chinese market is intensifying, and Honda is facing a very challenging business environment, including a decline in production and unit sales.

Speaker #1: Here, some initiatives we are taking to continue competing in the market. First, for the China domestic market, we will pursue cost reduction using locally sourced standard components, while incorporating local technologies for next-generation technologies such as ADAS, to keep pace with the overwhelming speed of advancement of intelligent technologies in China.

Speaker #3: Aiming for to ensure greater agility in management led by executive offices. We have strengthened supervisory functions of each committee and board of directors through various measures.

Toshihiro Mibe: First, for the China domestic market, we will pursue cost reduction using locally sourced standard components while incorporating local technologies for next-generation technologies such as ADAS to keep pace with the overwhelming speed of advancement of intelligent technologies in China. Furthermore, by introducing NEVs built on platforms provided by local partners, we will better serve the needs of customers in China. We will also apply initiatives to improve development efficiency in China, such as the use of standard components, to market outside China to strengthen our products and cost competitiveness in ASEAN and other regions. The second pillar, in order to deliver competitive products, we will focus on strengthening our lean and agile manufacturing structure. I will introduce three specific initiatives we are undertaking.

Speaker #3: By appointing chairpersons of the three committees from independent directors, we have advanced our governance structures according to the external environment. However, our management team recognized the importance of continuously and consistently seeking the institutionalizing optional optimal corporate governance structure in the light of the operations expected by the shareholders and customers.

Speaker #1: Furthermore, by introducing NEVs—NEVs built on platforms provided by local partners—we will better serve the needs of customers in China. We will also apply initiatives to improve development efficiency in China, such as the use of standard components to market outside China, to strengthen our products and cost competitiveness in ASEAN and other regions.

Speaker #3: And we expect our business environment will continue to be uncertain for the foreseeable future. We decided to once again reassess our governance structure to accelerate advancement.

Speaker #1: The second pillar: In order to deliver competitive products, we will focus on strengthening our lead and agile manufacturing structure. I will introduce three specific initiatives we are undertaking.

Speaker #3: And in order to ensure steady execution of each business strategy, as well as bold and transparent. Making necessary for such a strategy execution. First, to strengthen the supervisory function of the board of directors and enable more transparent decision-making, board of directors will be composed of a majority of outside directors.

Speaker #1: First is a fundamental with the cost of outsourced parts. We will improve our cost structure on a global basis: one, by reassessing Honda-specific standards and utilizing standardized components; and two, by incorporating the competitiveness of local businesses in China and India.

Toshihiro Mibe: First is a fundamental cost reduction, particularly with the cost of outsourced parts, we will improve our cost structure on a global basis, one, by reassessing Honda-specific standards and utilizing standardized components, and two, by incorporating the competitiveness of local businesses in China and India. The second is a thorough improvement on development efficiency. This initiative addresses three challenges we face in competition with emerging OEMs. They are, one, development cost, two, development duration, and three, development man-hours or workload. We will re-assess the so-called engineering chain management and increase our production efficiency by reducing each of the three items by half vis-à-vis 2025, and we call this triple half.

Speaker #3: Aiming to further enhance the effectiveness of the board and chair of the board will be assumed by outside person. Finally, to ensure more transparent decision-making regarding the appointments and the dismissal of the directors, evaluation and the compensation of the directors and executive officers.

Speaker #1: The second is a thorough improvement in development efficiency. This initiative addresses three challenges we face in competition with emerging OEMs. They are: one, development costs; two, development duration; and three, development man-hours or workload.

Speaker #3: All the members of the nominating compensation committees will be composing of the outside directors. The business environment surrounding Honda is unprecedentedly uncertain and tough.

Speaker #1: We will reassess the so-called engineering chain management and increase our production efficiency by reducing each of the three items by half, vis-à-vis 2025, and we call this 'triple half.'

Speaker #3: Even under such circumstances, we will sincerely and steadily execute initiatives for rebuilding our automotive business that we outlined today. We are committed to achieve to stronger growth strategy.

Speaker #1: In addition to improving efficiency in design, testing, and production preparation through the use of digital environments and AI, we will transform our development process by reassessing development requirements as well as product planning and development management, to reduce development costs and man-hours and shorten development time.

Toshihiro Mibe: In addition to improving efficiency in the design, testing, and production preparation, and through the use of digital environment and AI, we will transform our development process by reassessing development requirements as well as product planning and development management to reduce development costs and man-hours and shorten the development time. Starting this fiscal year, we will reduce the development time for minor model change by half. Full model change development time will also be halved starting with development projects that start in 2028. This will enable us to introduce up-to-date products more quickly and continuously. Finally, a manufacturing structure resilient to business environment changes.

Speaker #3: With a strong motorcycle business and solid financial foundation, we would like to set up another opportunity before the end of the current fiscal year to share more details about the technologies and strategies for our next generation hybrid models so please keep an eye on to our announcement.

Speaker #1: Starting this fiscal year, we will reduce the development time for minor model changes by half. Full model change development time will also be halved, starting with development projects that begin in 2028.

Speaker #3: Thank you for your attention. Thank you for your listening. Now I'd like to proceed to Q&A. But please wait while we prepare the stage.

Speaker #1: This will enable us to reduce up-to-date products more quickly and continuously. Finally, the building manufacturing structure is resilient to business environment changes. To establish a robust manufacturing structure capable of securing profitability even when market conditions call for reduced production, we will aim for a 20% improvement in production efficiency over the next five years by, one, efficiently injecting and allocating resource investment in new models and equipment, and two, increased efficiency and speed through the use of digital technologies.

Toshihiro Mibe: To establish a robust manufacturing structure capable of securing profitability, even when market conditions call for reduced production, we'll aim for a 20% improvement in production efficiency over the next 5 years by, one, efficiently injecting and allocating resource investment in new models and equipment, and two, increased efficiency and speed through the use of digital technologies.

Speaker #1: The third pillar is the strategic use of external resources. To build future competitiveness, in-house sourcing of the technologies, resources, and parts can be one of the effective approaches.

Toshihiro Mibe: The third pillar is the strategic use of external resources. To build the future competitiveness, in-house resourcing of the technologies, resources, and parts can be one of the effective approaches. However, it will require substantial investments and allocation of resources. In an increasingly uncertain market environment, it might lead to the loss of the competitive advantage. Therefore, as I mentioned already, we will strategically leverage the cost competitiveness and speed of local businesses in China, India, and other countries, or the use of industry standard components and so on, so that we can improve our competitiveness by flexible and the strategic use of the external resources. As for batteries, we will not pursue complete in-house resourcing for the time being. Instead, we will maximize use of the L-H Battery facilities.

Speaker #1: However, it will require substantial investments and allocation of resources. And in an increasingly uncertain market environment, it might lead to the loss of competitive advantage; therefore, as I mentioned already, we will strategically leverage the cost-competitiveness and speed of local businesses in China and India and other countries, or the use of industry-standard components and so on, so that we can improve our competitiveness by flexible and strategic use of external resources.

Speaker #1: As for batteries, we will not pursue complete in-house sourcing for the time being. Instead, we will maximize the use of the H Batteries facilities.

Speaker #1: Keeping an eye on the future demand growth for EVs, we will push forward the personal efficiencies catering for highly demanded hybrid vehicles and other applications for some time, so that our battery procurement strategy will be formulated focusing on the competitiveness in North America.

Toshihiro Mibe: Keeping an eye on the future demand growth for EVs, we will push forward operational efficiencies, catering for highly demanded hybrid vehicles and other applications for some time, so that our battery procurement strategy will be formulated focusing on the competitiveness in North America. Based on such a strategy, we have decided of our indefinite suspension of project to build a comprehensive value chain in Canada, which we announced last year for its postponement about 2 years. We will carefully monitor the market conditions and will continue to reassess our procurement strategies.

Speaker #1: Based on such a strategy, we have decided on our indefinite suspension of the project to build a comprehensive value chain in Canada, which we announced last year for its post-appointment about two years.

Speaker #1: We will carefully monitor the market conditions and will continue to reassess our procurement strategies. While working to further refine the core of our competitive advantage, we will proactively leverage external competitiveness and resources in the areas where we have determined that they can increase speed, flexibility, and cost-competitiveness, thereby strengthening our overall competitiveness.

Toshihiro Mibe: While working on to further refine the core of our competitive advantage, we will proactively leverage external competitiveness and resources in the areas where we determined that they can increase speed, flexibility, and the cost competitiveness, thereby strengthening our overall competitiveness. Up to this point, I have explained the three pillars of our strategy to rebuild our automobile business structure towards 2030. From here, I'd like to explain the directions beyond 2030. In the mid and long term, and in the even more uncertain business environments, we must lay a solid technological groundwork while ensuring greater flexibility and wider range of options so that we will be well prepared to meet demand when it emerges.

Speaker #1: Up to this point, I have explained the three pillars of our strategy to rebuild our automobile business structure towards 2030. From here, I'd like to explain the directions beyond 2030.

Speaker #1: In the mid and long term, in the even more uncertain business environments, we must lay a solid technological groundwork while ensuring greater flexibility and a wider range of options so that we will be well prepared to meet demand when it emerges.

Speaker #1: First of all, our directions to achieve carbon neutrality by 2050 remain unchanged. Because we believe it is a responsibility we must pursue as long as known, to conduct businesses as a comprehensive availability company.

Toshihiro Mibe: First of all, our directions to achieve carbon neutrality by 2050 remains unchanged. Because we believe it is a responsibility we must pursue as long as Honda conducts businesses as a comprehensive mobility company. Besides, we will carefully assess the market environment demands trends in each region and take a multifaceted approach to achieving carbon neutrality, which we will include not only EVs, but also various other technologies such as hybrid vehicles, carbon neutral fuels, carbon offset technologies, and so on. As I mentioned in the beginning, we continue laying groundwork for the sake of the EV demands that may expand again.

Speaker #3: はい、お待たせいたしました。 Thank you for waiting. Ladies and gentlemen, now we'd like to proceed to Q&A. ご質問のある方は。 Specific questions, please wait until the microphone is brought to you.

Speaker #3: Please raise your hand if you have a question. Please state your name and affiliation. Before you ask your question, you speak for your corporation.

Speaker #1: Besides, we will carefully assess the market environment, demands, and trends in each region and take a multifaceted approach to achieving carbon neutrality, which will include not only EVs but also various other technologies such as hybrid vehicles, carbon-neutral fuels, carbon offset technologies, and so on.

Speaker #3: And also, because of the limited time, please limit your questions to two per person. And if possible, please make clear whether it's a question in regards to the business update or the financial results.

Speaker #1: As I mentioned in the beginning, we continue laying the groundwork for the sake of the EV demands that may expand again. And in order to launch compelling products in a timely manner when the time comes, we are continuing to work to prepare for highly competitive EV hardware platforms, as well as the research and development of all-solid-state batteries for the future.

Speaker #3: Those have questions, please raise your hand. First is closest to me. The person in the second row here. Yes, another from NHK. Thank you very much.

Toshihiro Mibe: In order to launch compelling products in a timely manner when the time comes, we are continuing to work to prepare for highly competitive EV hardware platforms, as well as the research and development of also solid-state batteries for the future. Furthermore, we continue to pursue initiatives to enhance application of intelligent technology in order to offer new mobility experiences on board. Looking ahead, we will apply ASIMO OS, the original vehicle OS of Honda, to a wide range of Honda vehicles from ICE to EVs, so that the value of the cross-domain mobilities will improve. Moreover, for the e:N Architecture, the key to embodied initiative, we adopted a domain-based architecture that can flexibly address changes in customer needs and market conditions, as well as the utilization of the external resources.

Speaker #3: To Mr. Mivet. About the business update, I'd like you to ask questions. First, 2050, your carbon neutrality target. You said that this is in place, but up until you were talking about the EV, FCV, 100% by 2040.

Speaker #1: Furthermore, we continue to pursue initiatives to enhance applicational intelligence and technology in order to offer the mobility experiences on board. Looking ahead, we will apply a similar OS—the original vehicle OS of Honda—to a wide range of Honda vehicles, from ICE to EVs, so that the value of cross-domain mobilities will improve.

Speaker #3: What happened to this target? Mr. Yasunaga, thank you very much. Yes, well, carbon neutrality by 2050. As I've already explained in my presentation, well, this is something that the society on the whole has to engage in.

Speaker #1: Moreover, for the E&E architecture, the key to embody the initiative, we adopted a domain-based architecture that can flexibly address changes in customer needs and market conditions, as well as utilization of external resources.

Speaker #3: And as the corporate responsibility will not change this target. Now, as a means, in the past, we were saying EV, FCV, sales ratio will be managed.

Speaker #1: With the adoption of unified software architecture, we will be able to achieve highly efficient development. This will enable us to continually deliver new value to customers in a timely manner while pursuing both flexibility and competitiveness.

Toshihiro Mibe: With the adoption of a unified software architecture, we will be able to achieve highly efficient development. This will enable us to continually deliver new value to customers in a timely manner while pursuing both flexibility and competitiveness. So far, I have explained the initiatives we are taking for automobile businesses. Now let me move on to the motorcycle business that shows a remarkable growth. As I mentioned earlier, in a financial result announcement, our motorcycle sales for the fiscal year ended March 2026 reached 22.1 billion units, which is approximately 40% share of the global market. The global motorcycle market is expected to grow from the current state of 50 million units to 60 million units by 2030.

Speaker #3: But we have been given numbers. But because of the uncertainty in the business environment and also the customer demand, it is changing beyond our expectation.

Speaker #1: So far, I have explained the initiatives we are taking for automobile businesses. Now, let me move on to the motorcycle business, which shows remarkable growth.

Speaker #3: And therefore, we have judged that it will be difficult to achieve so about the sales ratio target. We have decided to withdraw this. Now, going forward, hybrid battery EV included, electrification and carbon neutral fuel, carbon offset technology.

Speaker #1: As I mentioned earlier, in a financial results announcement, our motorcycle sales for the fiscal year ended March 26 reached 22.1 million units, which is approximately a 40% share of the global market.

Speaker #1: The global motorcycle market is expected to grow from the current state of 50 million units to 60 million units by 2030. We will further increase our market share and enhance our presence in the market by introducing products more aligned with the increasingly diverse customer needs and by optimizing production capabilities.

Speaker #3: Well, combining all these, we as a target the total CO2 reduction will be our target. So about the sales ratio, target well, the reason why we set this out was because it was easy to understand for both people inside and outside our company.

Toshihiro Mibe: We will further increase our market share and enhance our presence in the market by introducing products more aligned with the increasingly diverse customer needs and by optimizing production capabilities. For example, India, largest market. Our market share is approximately 28% at the end of the fiscal year ending March 2026, delivering approximately 5.8 million units. However, customer demand is showing a trend, stepping up from the current most popular 100 cc class to 125 or 160 classes. The similar trend is observed in Central South America, too. We will steadily address the shift of demands by implementing initiatives to launch attractive products and to enhance the sales network and service capabilities. In Central and South America, emerging motorcycle OEMs from India and China are beginning to strengthen their presence.

Speaker #1: For example, India is our largest market. Our market share is approximately 28% at the end of the fiscal year ending March '26, delivering approximately 5.8 million units.

Speaker #3: And therefore, we set this sales ratio target but at this opportunity well, I think it's more important for us to look at the CO2 reduction and this should be the objective.

Speaker #1: However, customer demand is showing a trend stepping up from the current most popular 160 class to the 125 or 160 classes. A similar trend is observed in Central and South America too.

Speaker #3: And therefore, we have decided to change our target aligned with this. Well, it's very difficult to predict because of uncertainty and it's difficult to set out specific milestones.

Speaker #1: We will steadily address the shift of demands by implementing initiatives to launch attractive products and to enhance sales network and service capabilities. In Central and South America, emerging motorcycle OEMs from India and China are beginning to strengthen their presence.

Speaker #3: I cannot communicate to you any specific milestones, but at 2030, 5, we are working on numbers that we would like to achieve by 2035.

Speaker #1: We will definitely be taking an aggressive approach by taking advantage of the competitive resources leveraged from India and China, just like the automobile segment. Moreover, we will further strengthen production operations to accommodate global expanding demands in India.

Speaker #3: And once this is finalized, I think that we can announce this to you. By 2040? CVEV, 100%. Well, that ratio I think is not realistic as of now.

Toshihiro Mibe: We will be definitely taking aggressive approach, by taking advantage of the competitive resources leveraged from India and China, just like the automobile segments. Moreover, we will further strengthen production operations to accommodate for global expanding demands. In India, we plan to expand their production capacity from the current 6.25 billion units to approximately 8 billion in 2028, further to both facilities there at the export hub. Through various initiatives, such as in-house production of parts, modularization of the chassis, acceleration of the local procurement and so on, cost competitiveness and speed will be enhanced. Thereby, we can expand exports to Central South America, where the conditions of the roads and the customer preferences are close to India.

Speaker #1: We plan to expand our production capacity from the current 6.25 million units to approximately 8 million in 2028, further evolving facilities there as an export hub.

Speaker #3: As I said at the outset, we have withdrawn this target. And instead, we are going to set our target based on the total CO2 emissions.

Speaker #1: Through various initiatives such as in-house production of parts, modularization of the chassis, and acceleration of local procurement, cost-competitiveness and speed will be enhanced.

Speaker #3: That's all from me. Thank you. So you will not present any sales ratio so the next target will not be sales ratio but instead total CO2 emission.

Speaker #1: Thereby, we can expand exports to Central and South America, where the conditions of the roads and the customer presence are close to India. Indonesia, Philippines, Brazil—we will progressively strengthen motorcycle production supply operations to establish a business environment to accommodate the demands there.

Speaker #3: Another question. About we were trying to break away from engine and in five years or so, well, the environment, as you've said, has changed significantly.

Toshihiro Mibe: Indonesia, Philippines, Brazil, we will progressively strengthen motorcycle production supply operations to establish business environment to accommodate demands over there. We will further sophisticated to commercial value of the products with the development of the dual clutch transmission on the E-Clutch and number of original technologies Honda continues to offer. Joy of riding and joy of maneuvering for customers. Going forward, we will create new values with local technologies unique to Honda to differentiate from other emerging competitors. Regarding EVs, growth momentum of the electrification market is slowing as compared to initial projection. Nevertheless, we are observing the case like Vietnam, where the shift to electric car models progresses rapidly because of the environmental regulation changes. The outlook of the motorcycle market is so uncertain.

Speaker #1: In addition, we will further sophisticate the commercial value of the products with the development of the dual-clutch transmission on the E-Clutch and a number of original technologies Honda continues to offer.

Speaker #3: And you had to revise your plan. So what is your take on this, Mr. Mivet? And about the outlook, I think there's a lot of uncertainty.

Speaker #1: The joy of riding and the joy of maneuvering for customers—going forward, we will create new values with local technologies unique to Honda to differentiate from other emerging competitors.

Speaker #3: Going ahead. So can you share your thoughts on the outlook? Well, Honda, the North American market is our main market. And the significant changes in the market does impact us a great deal just as we see in this case.

Speaker #1: Regarding EVs, growth momentum of the electrification market is slowing as compared to initial projections. Nevertheless, we are observing cases like Vietnam, where the shift to electric car models is progressing rapidly because of environmental regulation changes.

Speaker #1: The outlook of the motorcycle market is too uncertain. In India, we will introduce motorcycle models that meet customer needs as planned, and proceed with the construction of a factory dedicated to the EV models.

Speaker #3: Well, the electrification strategy was made under the Obama-Biden administration. It was in line with the administration's environmental policies. But a year ago, there has been a drastic change and we have seen a shift from a focus from environment to the opposite.

Toshihiro Mibe: In India, we will introduce electric motorcycle models that meet customer needs as planned, and then proceed with the construction of a specific factory dedicated to the EV models. The development of EV models will proceed relentlessly, and we will pre-capture changes in the market environment and customer demands and take a flexible and agile approach to product launches and the establishment of production operations. Now, I'll explain our financial strategy in light of what I discussed so far. As I mentioned earlier, over the next three years, we will focus on rebuilding our automobile businesses structure and transform the business into a stable and profitable business. In the meantime, we will continue to make investments for future growth. EV-related investments will be controlled at a certain level while ensuring the readiness to respond quickly to future EV demands.

Speaker #1: The development of EV models will proceed relentlessly, and we will capture changes in the market environment and customer demands, and take a flexible and agile approach to product launches and the establishment of production operations.

Speaker #3: And therefore, the major reason for this massive impairment is because there's zero series that we're planning for. Well, we had been developing it and as of 2024, we had the development phase completed and we had been entering into the phase we were producing the dyes.

Speaker #1: Now, I'll explain our financial strategy. In light of what I discussed so far, as I mentioned earlier, over the next three years, we will focus on rebuilding our automobile business's structure and transform the business into a stable and profitable business.

Speaker #3: And so seeing this major change in the US administration, we were not able to flexibly respond. Now, what we explained today well, is due to the change in geopolitics as environmental policies.

Speaker #1: In the meantime, we will continue to make investments for future growth. EV-related investments will be controlled at a certain level, while ensuring a readiness to respond quickly to future EV demands.

Speaker #1: In addition, for hybrid vehicles, we will prepare to enhance our product lineups for the priority market explained today as a result of those initiatives.

Toshihiro Mibe: In addition, for hybrid vehicles, we will prepare to enhance our product lineups to the priority markets explained today. As a result of those initiatives, our financial targets as of March 2029, three years from now, we will achieve operating profit beyond JPY 1.4 trillion, the all-time high. That is our aim. During two years after that, based on the rebuilt business structure, we will introduce compelling products prepared for the priority markets on the basis of such business structure as established. That way, we can enhance local group business for growth strategy. In March 2031, five years from now, the model launches a new model segment in North America, India, Japan, will take effect.

Speaker #3: But going forward, we want to be able to have a strategy in place which can even endure such challenges and so rather than just focusing on EV, we want to be flexible whether we need to head towards EV or the other direction.

Speaker #1: Our financial targets for FYE, market March 29, three years from now—we will achieve operating profit beyond 1.4 trillion yen, the all-time high that is our aim.

Speaker #3: So once we see what direction we have to head towards, I think we can focus our efforts and be more focused in ingesting our resources.

Speaker #1: During two years after that, based on the rebuilt business structure, we will introduce compelling products prepared for the priority markets. On the basis of such business structure as established, that way we can enhance the automobile business for growth strategy.

Speaker #3: But at this point in time, because it is uncertain, and we think that uncertainty will continue, we want to have a more flexible strategy.

Speaker #3: So this is a change that we want to make. And this was the gist of today's business update. Thank you. Next question, please. Please.

Speaker #1: In March 2031, five years from now, the model launches a new model segment in North America, India, and Japan. I will take effect initiatives like triple halves. Triple half in the development domain will be actively showing the results.

Toshihiro Mibe: Initiatives like the triple half in development domain will be actively showing the results. Thus our business efficiency will enhance that dramatically to aim for work target of 10% as have been our pursuit for long. Now let me explain our capital allocation plans until FY March 2029. In those 3 years, we will reallocate our resources, which are scheduled for EVs, through the hybrid vehicles instead. In regarding resource allocation for EVs, though we will continue to prepare for the recovery of the EV demand in the future, for the time being, it will be kept controlled to approximately JPY 0.8 trillion level over 3 years.

Speaker #3: In this area. Thank you. Nikkei Shimbun, my name is Mokano. I have two questions. First question, China and India, they cause competitive distance speed.

Speaker #1: Thus, our business efficiency will enhance dramatically to aim for work target of 10% that has been pursued for long. Now, let me explain our capital allocation plans until FYE March 29.

Speaker #1: In those three years, we will reallocate our resources originally scheduled for EVs to the hybrid vehicles instead. Regarding resource allocation for EVs, though we will continue to prepare for the recovery of EV demand in the future, for the time being, it will be kept controlled to approximately ¥0.8 trillion level over three years.

Speaker #3: Now, to be utilized myself. And you had reverse import, let's say, from there. Until now. But what is the changes going forward? And you had supply chain already there.

Speaker #3: And are you going to destroy the supply chain over there from now? Or in China, you are saying that you're going to utilize local partner platform.

Speaker #1: For the software, given the software application essential for all, including hybrid models, we plan to allocate resources of approximately ¥1 trillion, which is consistent with the original plan.

Toshihiro Mibe: For the software, given the software application essential for all, including hybrid models, we plan to allocate the resources approximately JPY 1 trillion that is consistent with the original plan. ICE and hybrid models, we will make a strategic investment for future growth in the priority market. We can plan to invest a totally JPY 4.4 trillion for the 3 years. The investment for those 3 years will be JPY 6.2 trillion in total. As for operating cash flow after interest adjustment, due to turnaround of the automobile segment and powerful cash generation of the motorcycle businesses, it will be expected that to be more than JPY 7 trillion, excluding EV-related losses.

Speaker #3: Do they are going to use their Tongfu Dongfeng or well, their partner company platform? When are you going to start with that? Thank you for your question.

Speaker #1: ICE and hybrid models, we will make a strategic investment for future growth in the priority market. So we can plan to invest a total of ¥4.4 trillion for the three years.

Speaker #3: And China and India, constant suppliers. And in India and China, we've developed our businesses so far. And as I said today, Honda has global requirements and we protected them and we prioritized the quality to accommodate for that in our production activities.

Speaker #1: The investment for those three years will be ¥6.2 billion in total. As for operating cash flow after rent adjustment, due to the turnaround of the automobile segment and powerful cash generation of the motorcycle businesses, it is expected to be more than ¥7 trillion, excluding AV-related losses.

Speaker #1: Consequently, we will continue to invest for future growth whilst steadily securing refunds for shareholder returns. After FYE March 2030, we will carefully assess the trend of EV demands.

Toshihiro Mibe: Consequently, we will continue to invest for the future growth whilst steadily securing refunds for shareholder returns. After FY March 2030, we will carefully assess the trends of EV demands in North America and make decisions for EV investment further. Regarding investment decisions in highly uncertain business environments, we will utilize assets of the past investments or leverage external resources, not persisting on our internal resources only, so that investment efficiencies will be much improved. Finally, regarding dividends. As you can see here, since 2008 global financial crisis, Honda has faced with challenging business environments. Since the COVID-19, that we should people priority. Our pay has never been reduced.

Speaker #3: But it was not probably good enough in this business today for EV. But now in China and India, there are some standard parts that are suitable for their markets and there are some track record of utilizing them over there.

Speaker #1: In North America, we will make decisions for EV investments moving forward. Regarding investment decisions in highly uncertain business environments, we will utilize assets from past investments.

Speaker #3: So we can build our vehicles based on their standard parts. If that is not a problem, we can expand the use of those standard parts components from there to build more vehicles.

Speaker #1: For leveraged external resources, not persisting on our internal resources only, so that investment efficiencies will be much improved. Finally, regarding dividends, as you can see here, since 2008, the global financial crisis, Honda has faced challenging business environments.

Speaker #3: So we can change idea of Honda a little bit now. And then we can try to look at the cost and the local requirements in a good balance so that we can reduce the cost overall.

Speaker #3: So first of all, I'd like to check its effectiveness in the approach the effectiveness in India and China. And then if it works, we can expand globally.

Speaker #1: Priorities. Our payers have been reduced going forward. We aim to maintain and continue, though we'll balance the additional business structure of current investment for future growth.

Speaker #3: And then what happens to the Japanese suppliers? I think that's your question. So we are not necessarily defining to work with the Chinese suppliers or Indian suppliers only and so on.

Toshihiro Mibe: Going forward, we aim to maintain, and Though we'll balance the addition of a business structure of future growth and we will make to these values in long-term perspective. Lastly, I'd like to speak the evolution of financial structures. This transitioning company at March 2021, different as the scope of completely delegating from the directors to officers, aiming for to ensure management by the executive officers. We have a supervisory function management obviously as the directors, various measures by persons of the committees from independent directors. We have advanced governance structures according to the ISB movement. Our management, the process continuously and consistently seeking this structural analyzing obviously the corporate governance structure in light of the respective by the shareholders and customers.

Speaker #1: We will make efforts to lead enhanced values from a long-term perspective. Lastly, I'd like to speak to the evolution of the governance structure. Transitioning to a company to commit the 2021 scope of $30 billion objectives to offices.

Speaker #3: There's no definite way because 40% of the market is supported by the emerging competitors. And then they are sort of setting up the competitive necessary standard.

Speaker #3: And we need to change a bit to against that. Therefore, as long as they meet with the standard, whoever the supplier of whichever the country which we work together so that we can improve our commercial value of the products and I don't want to mislead.

Speaker #1: Aiming to ensure management by the executive offices. We have a supervisory function over each committee and objectives for various measures, handled by persons of the committees from directors.

Speaker #3: We don't mean that we are going to use more Chinese and Indian suppliers more and more going forward. It does not really mean only that way.

Speaker #1: We have advanced governance structures according to the external agreement. However, management. The importance of continuously and consistently seeking this, personalizing optimal governance structure in light of the expected by the customers.

Speaker #3: They will be giving a kind of the standard as well. And platforms, we are still in the discussions with the partner companies. So I cannot give you the details today.

Speaker #3: But there are two companies only, I suppose. But with partners, we can utilize their platform to build a new product that is all I can say today.

Speaker #1: And we expect our business will continue to be successful in the foreseeable future. We decided to reassess our development structure to accelerate advancement, and in order to ensure studies of a strategy as well as execution first.

Toshihiro Mibe: Our businesses will continue to be as profitable as for foreseeable future. We decided that we assess our company structure to develop management. In order to ensure strategic direction of its strategy as well as improve and streamline the decision-making process and properly execution. First, to strengthen supervisory function of the directors, I enable move the designation for the director board to compose of a majority of outside directors, aiming to further enhance the effectiveness of the board, which board two-third will be assumed by outside directors. Finally, to ensure more transparency regarding the performance and the decision of the directors, evaluation, the session of the executive officers, all the members taking their compensation, this will be of the outside. They've been trying hard. Presently, the uncertain.

Speaker #3: Thank you. One more question. So about HEV. In 2030, you had a target of 2.2 million units. And are you going to keep that target or do you set a new target?

Speaker #1: Services by people and function of the directors, and enable the composition of outside directors, aiming to further enhance the effectiveness of the board and for the board to be assumed by outside office.

Speaker #3: And also the fuel efficiency improvement and the intelligence use? Do you have profitability target as well? Not just those volume targets. So I said that we will strengthen our business in hybrid.

Speaker #1: Finally, to ensure more transparency regarding the control of the directors, evaluation of the executive officers, all the members will be of the outside office.

Speaker #3: And I'm not sure if I should talk about volume at a specific level. But based on our plans, 2.2 million that was the number we had.

Speaker #3: For which our intent is to try to go and reach 2.5 million and hybrid plus of course we need to get a profit based on the new hybrid system.

Speaker #1: Even under those initiatives that will be building our automobile business that we outlined today, strong work strategy with a strong work strategy. Consolidate financial.

Toshihiro Mibe: Even under circumstances, we clearly understand the initiative that will be built on the business that we outline today. We did achieve a strong growth strategy with a strong growth strategy to ensure its financial performance. We would like to set up another key before the current fiscal to share more detail of the technology and strategies for our new hybrid model. Please keep an eye on to our announcements. Thank you for your regard.

Speaker #3: And we have the hybrid system of 23. And we are trying to reduce the cost of that by 30% against that year. And I think we could have a 50% cost reduction.

Speaker #1: We would like to set up another before the current to share more details about the technology strategies for our new hybrid models. So please keep an eye on our...

Speaker #1: Thank you for your attention. 皆様, now I'd like to do Q&A. Please prepare the stage. はい、お待たせ. Yes, another. Thank you very much. To Mr. 2016, your company target—that is in place, but up until you were talking about the EV, the 100% by 2040.

Speaker #3: Against that in 27 also, I suppose. And then new platform will be coming in. Therefore, cost-wise, 10%. And by weight, 90 kilograms reduction expected.

Operator 2: Thank you. Now I'd like to Q&A. Please raise your hand to state.

Operator: Thank you. Now I'd like to Q&A. Please raise your hand to state.

Speaker #3: Therefore, platform, new hybrid system, both together will give us a good business. And ensure the good Honda vehicle performance would that be right? Thank you.

Speaker #3: Next question, please. The person in the middle. Second row. Please ask the two questions at once. Thank you. About the business update. In the next three years, ICE hybrid investment 4.4 trillion.

Speaker #3: This is a huge amount. And so this means that you'll have an internal combustion engine. But a new engine. Are you going to develop a new internal combustion engine?

Speaker #3: Is that the correct understanding? That's the first question. And the next question. No one's going to ask this. I'm going to. Ever since you've been listed, it's the first time that Honda is posting a deficit.

Speaker #3: And Mr. Mibe, as president, how do you take your responsibility? Please share with us your thoughts. About your responsibility. Well, the first question. About hybrid.

Speaker #3: The engine. Up until 2030, we were thinking the business will be mainly focused on hybrid. So putting aside the deficit this time, we were continuing our development of hybrid.

Speaker #3: And the first is going to be launched next year in 27. And the performance, cost included, I think we are going to see a major advancement.

Speaker #3: And the engine to be installed? Well, this is not a new framework. It's going to be the conventional engine series. But the heat efficiency will be better.

Speaker #3: Well, hybrid, the area in which the engine is used is limited. So within that range. The heat efficiency is improved. So that sort of development is underway.

Speaker #3: It has a new system. And with the engine, heat efficiency improvement, the fuel economy will be improved by around 10%. So it's not just cost.

Speaker #3: I think this will be a powerful tool and weapon for us. And about the EV development, cancelation. And this huge massive deficit. Well, I repeat myself, but we are facing a very harsh business environment.

[Company Representative] (Honda): Thank you for waiting. Now we will allow to your name. Please wait until your name is called. Please raise your hand with question. Please state your name and affiliation before you ask your question. Because of limited time, please limit your questions to 2 per person. If possible, please make it a question. This is separate for the financial. Does he have question? The person is. Yes, another from. Thank you very much to Mr. About the date, I ask question first. 2015, your company target. You said that it's in place. Up until you were talking about the EV, the 100% by 2040. What happened to this target? Mr. Thank you very much. Yes, carbon neutrality by 2050.

Speaker #3: And the automotive industry itself is entering into a major structural transformation period. We also have been prudent and been investing in EV with prudency.

Speaker #3: But as our 2024 already the 0 series, the EV development will be dies were already ordered and we were preparing at the beginning of 25 to the extent where we could not go back.

Speaker #3: And so the impact of the tariffs and the easing of the environmental restrictions and also the change in policy has had a major impact on our business.

Speaker #3: But it was either cancel or sell. And we were following carefully our business environment. And ultimately, GHG regulation was to be abolished. And the EV market at this time the EV market in the United States was thought to reach 15%.

Speaker #1: What happened to this target? Mr., thank you very much. Yes, carbon neutrality by 2050. That's a very exclusive presentation for something that's not on the whole. Has and responsibility will not change this target.

[Company Representative] (Honda): That's a very exciting representation. This is something that actually on the whole has, and it is responsibility to not change this target. Now, as in the past, they even have actually been some issue how we manage. That's the numbers. Because recently the environment also the demand is beyond our vision. Therefore, we have discussed that it is difficult to achieve. Up until this year target, we decided to withdraw. Now, I'm going to use some hyperbole, battery, even some electricity and carbon neutral fuel, carbon offset technology. At the moment, we are not able to. The total CO2 reduction will be our target. Ratio target. Well the reason why we took this on was because it was easy to understand for many people inside and outside of the country.

Speaker #1: Now, as in the past, but given numbers, but because the business environment and also the demand is beyond our expectations. And therefore, we have decided that if we did achieve about the small ratio target, we decided to withdraw them.

Speaker #3: But last month it was 5.6 or 5.8%. So it was more than less than half. The originally anticipated size. And therefore, it was far below the planned unit sales that we had in mind.

Speaker #3: So if you were to go ahead with this, we knew that in the future we will generate loss. So as Honda Motor on the whole, we did not even with those difficulties have any deficit.

Speaker #1: Now, I'm going to talk about carbon technology. Total CO2 reduction will be our target. So, the ratio target—well, the reason why we said that was because it was easy to understand for most people inside and outside the company.

Speaker #3: But we understood as management to decide to go back on a growth trajectory and post this massive loss to make that happen. Well, about this deficit, I take this very seriously as a management.

Speaker #1: And therefore, we set this ratio target, but have this opportunity. Well, I think it's more important for us to look at the CO₂ reduction, when this should be objective, and therefore we have decided to change our target.

Speaker #3: And based on that, we have come up with that recovery plan that I've just explained. What I've explained today we have to try to stop the bleeding as soon as possible and try to pave the way for future growth.

[Company Representative] (Honda): Therefore, we set this ratio target. Well, at this opportunity, I think it's more important for us to look at CO2 reduction, and this should be objective. Therefore, we have decided to change our target for this. What's very difficult to predict because of uncertainty and the difficulty of estimating margin. I cannot commit to you in terms of margin, but as you can see, but we are looking at numbers to achieve by 2035. This has been the last time we announce this. Well, about EV? EV, no, not the business. Well, that show, I think, is not yet fixed as of now. As I said before, we have withdrawn target and instead, we have improved this target based on the civil CO2 emissions. Not for me. Thank you.

Speaker #1: It's very difficult to predict because of uncertainty, and it's difficult to have specific milestones. I cannot commit to you, but we are looking at numbers to achieve by 2035.

Speaker #3: And amidst uncertainty, we have to establish a structure where we can tolerate such changes. So we quickly have to work on this. And I believe that that is the biggest responsibility that I currently have.

Speaker #3: And at this point in time, I would like to focus my attention and effort on this point. That's all. Thank you. Thank you. Next question, please.

Speaker #1: And this is announced—this by that show is not realistic as of now. As I said, we have withdrawn the target and instead we are going to set our target CO2 emissions.

Speaker #3: Then third are from third pool from the left. Different table, please. My name is Mayura. I have a question about the financial results. Earlier, you talked about EV deficit.

Speaker #1: Thank you. So, I'll present any information, so the next one will not be shown, but it's CO2. Another question, about trying to break away within five years or so.

[Company Representative] (Honda): I'm presenting the information. The next one will not be shown, but it's CO2 emissions. Another question. About the good time to breakaway region within 5 years or so. For the environment, as you've said, significantly, had to revise your plan. What is your take on this, Mr. Mibe? About the outlook, I think there's a lot of uncertainty going ahead. Can you share your thoughts on the outlook? Well, and also many markets are being markets, and significant changes in the market has impacted a few deals in this case. Well, the significant strategy was to make the Obama administration. I was in line with the administration's environmental policy. I'm very close in addressing things, and we went from a perfect environment, the opposite.

Speaker #3: And then in a specific terms, what included according to your presentation in March, you talked about your compensation for the air suppliers and revisiting your developmental projects and so on.

Speaker #3: And do you have a gaps of what we assess now and what you assessed at the time? And is it possible to complete all of those deficit by March 27?

Speaker #1: The environment, as you've said, significantly had to revive your plan. So what is your take on this? And about the outlook, I think there's a lot of uncertainty.

Speaker #3: And second question is about business updates to Mr. Mibe. You talked about external resource utilization since you became the president. You talked about going away from the all internalizing or internal-based resource strategy and when you say utilization of external resources, how do you explain the issues especially as to the Honda's policy for getting the internal resources only, for instance?

Speaker #1: Going ahead, so can you share your thoughts on the outlook? And significant changes in the market have impacted a good deal in this case.

Toshihiro Mibe: Well, and also many markets are being markets, and significant changes in the market has impacted a few deals in this case. Well, the significant strategy was to make the Obama administration. I was in line with the administration's environmental policy. I'm very close in addressing things, and we went from a perfect environment, the opposite.

Speaker #1: Well, the strategy was the main strategy. The Obama administration was aligned with the administration's environmental policy, but a year ago has been addressing—and we, from an environmental opposite—and therefore the major reason for massive impairment is because there's zero that were we it as of 2024.

Speaker #3: Thank you for your question, Mr. Miura. And for your question about EV deficit, on March 12th, as we said before, we had three EV developments for the US to be withdrawn.

[Company Representative] (Honda): Therefore, the reason for massive impact is because there's seriously, that we're Well, we begin, as I'm going to, we had development phase. We had interface with the guys. So, seeing this major change in this situation, we were not able to reflect on. Now, what I'm trying to say is due to each interpreting your politics, the environmental policies. We want to be able to have a strategy in place which can even endure such challenges, rather than, you know, an EV. We want to be flexible where there need to head towards the other direction. What direction we head towards, we can focus, I expect to be more focused in testing our business. At this point in time, first thing is acceptance.

Toshihiro Mibe: Therefore, the reason for massive impact is because there's seriously, that we're Well, we begin, as I'm going to, we had development phase. We had interface with the guys. So, seeing this major change in this situation, we were not able to reflect on. Now, what I'm trying to say is due to each interpreting your politics, the environmental policies. We want to be able to have a strategy in place which can even endure such challenges, rather than, you know, an EV. We want to be flexible where there need to head towards the other direction. What direction we head towards, we can focus, I expect to be more focused in testing our business. At this point in time, first thing is acceptance.

Speaker #3: And then the largest possible deficit to be 2.5 trillion yen as we said at the time. And out of those 2.5, we announced the one for the March 26 in the past term.

Speaker #1: We had the development phase, and we had to interface the dyes. And so, seeing this major change in administration, we were not able to flexibly respond. Now, what do we expect today?

Speaker #3: And the idea was 1.3 trillion yen to be recognized for March 26 as according to our announcement last month in March. And then reality now is that for the March 26, we are now finding out there are some to be putting up in the current fiscal year, not the March 27.

Speaker #1: Due to the change in your political environmental policies. But you want to be able to have a strategy in place even in challenges rather than only on EV.

Speaker #1: We want to be flexible in case we need to head in the other direction. So, what direction should we head towards? I think we can be more focused on testing at this point in time because we think that will continue. We want a more flexible strategy.

Speaker #3: But now some of those we were expecting to put up in March 27 is now brought forward to March 26. That means we have higher deficit for March 26.

[Company Representative] (Honda): We think that as the people continue, we want a more flexible strategy. This is the point to make. This was the with this update. Thank you. Next question, please. Please, Mr. Reeb.

[Company Representative] (Honda): We think that as the people continue, we want a more flexible strategy. This is the point to make. This was the with this update.

Speaker #3: And then out of the deficit for March 26, there are some which are assessed to be lower in terms of the value. Therefore, we have those ups and down quite equally.

Speaker #1: So this is what I want to make. This works. The update. Thank you. Next question, please. First question. And let's say from there until now, but the change is, and you have the supply chain already there, and I'm going to explore the supply chain.

Speaker #3: Therefore, in March 26, we are ending up with the 1.3 trillion yen deficit recognized in the March 26. That is a starting point, let's say.

Operator: Thank you. Next question, please. Please, Mr. Reeb.

Shiva Nakano: Shiva Nakano. Two quick first question, the cost co-speed to be utilized by the company. You have reversing, let’s say, from there until now, but the changes are good for it. You have the supply chain already there. Are you going to use the supply chain there for now? Or I know you’re going to discuss locally partners. Do they continue their to do, or do you have all their public platform? Are we going to start with that? Thank you for your question. Chinese and India buyers. In India, we’ve had about six or so far.

Speaker #3: And in the announcement of the financial results earlier, Mibe-san explained about 500 billion yen deficit to be expected now. And one thing is that regionally, we were trying to recognize the amount.

Operator: Shiva Nakano. Two quick first question, the cost co-speed to be utilized by the company. You have reversing, let’s say, from there until now, but the changes are good for it. You have the supply chain already there. Are you going to use the supply chain there for now? Or I know you’re going to discuss locally partners. Do they continue their to do, or do you have all their public platform? Are we going to start with that?

Speaker #3: We actually recognized that in an earlier previous term. And then at the same time, have the supplier negotiations and so on. And it's already in the beginning and we couldn't see how the outcome would be that time.

Speaker #1: Or you're going to platform, going to start. Thank you for your question. And in general, why is—and, so far, and as I said, Honda global and quality for that.

Speaker #3: And then finally, we believe that we would be having a 500 billion that covers all that. And 1.3 trillion yen deficit is now putting up for March 26.

Speaker #3: That's impaired. And that's it. And the remainder is 1.3, 1.8 trillion and 700 billion still remaining question may be would not be impaired as much as that value or would not be put up in the March 27 or when and so on.

[Analyst 1]: Thank you for your question. Chinese and India buyers. In India, we’ve had about six or so far.

[Analyst]: As I said, hundreds, global response that we are protecting them, our quality, we had to compensate for that. Our activities that was not probably good enough today. Now China, their pilot projects which will put their master plans. There are some plans for the virtual example there to build our from there much. If that is not a problem, we can expand our use of standard from there to build more with people. We can change with their apart a little bit now. Then we can look at the limits and the limits and the cost of our own. First of all, check activities and approach the activities which are in there.

[Analyst 1]: As I said, hundreds, global response that we are protecting them, our quality, we had to compensate for that. Our activities that was not probably good enough today. Now China, their pilot projects which will put their master plans. There are some plans for the virtual example there to build our from there much. If that is not a problem, we can expand our use of standard from there to build more with people. We can change with their apart a little bit now. Then we can look at the limits and the limits and the cost of our own. First of all, check activities and approach the activities which are in there.

Speaker #3: But actually, we have to let you know later on when all those things are sorted out. And then we are clear about those values.

Speaker #3: And financial status. So the external resource utilization and our Honda's internal resource utilization. So external resources, meaning allowances and so on, which is one of the things I would think we would need as we said before.

Speaker #1: Our activities—that was not probably good enough in this day. But now in China and for their market, there are some there. If that is not a problem, we can expand the use of standard from there to build more process.

Speaker #3: So we have to work on that. Of course, within Honda, there are, of course, have a basic idea where we want to get our own sources for everything we could support.

Speaker #1: So, we can change it a little bit now. And then, we can look at the environment. First of all, check this approach, and then, if it works, we can expand it globally.

Speaker #3: And then in the businesses like in China, when we have a struggle, we would have a Honda drawings for ice and we're working on the cost reduction based on that drawing in China, utilizing resources there.

Speaker #3: And we are trying to assess how much cost reduction we could achieve with that. And we know how much we could reduce based on that.

[Analyst]: It works, so we can expand it global. What happens to the different suppliers as your question? We just sort of deciding on two work group Asian suppliers or Indian suppliers or so on. There's no definite answer. 40% of the market is by the area competitors. Where should we have the earth if this is different and we need to take a measure against that this way. As long as we have the support of which we live together so that we can keep our commercial volume. I don't think that it was it doesn't mean that we have more, the Indian suppliers are more reasonable. It does not really only way they will be ahead of us as well.

[Analyst 1]: It works, so we can expand it global. What happens to the different suppliers as your question? We just sort of deciding on two work group Asian suppliers or Indian suppliers or so on. There's no definite answer. 40% of the market is by the area competitors. Where should we have the earth if this is different and we need to take a measure against that this way. As long as we have the support of which we live together so that we can keep our commercial volume. I don't think that it was it doesn't mean that we have more, the Indian suppliers are more reasonable. It does not really only way they will be ahead of us as well.

Speaker #1: And then what happens to the different suppliers, is your question? So, are we defining to work with Japanese suppliers or Indian suppliers, or is there no difference because 40% of the market is held by the competitors?

Speaker #3: And we could use a platform with a partner. And we have a good understanding of how much we could reduce based on that platform with a partner.

Speaker #3: And now we recognize that we perceive is the standard today in the business season. Then as long as we're happy with those, we don't have to stick to our principle of getting only Honda sourced technology.

Speaker #1: And we need to against that as long as with whatever the supply of whichever together, so that we can commercial and mean that we more—it does not really only way.

Speaker #3: So of course, if we are not willing, we have to make a work. We have to work harder. And then we have to grab the technology and so forth.

Speaker #3: That is ready that way to win. And we already have the measures in place. And now we have to involve those in the field to fight further to win.

Speaker #3: And of course, depending on the regions, but we now are thinking about positive utilization of the external resources at different places. And then in North America, the question is, could we use that standard from elsewhere in North America?

Speaker #1: Kind of as well. Platforms in the discussion partner companies give you the idea today. But to come about a new that is today.

[Analyst]: Platforms, we're still in the discussion with partner companies. I'll give you the idea today. Two companies told me supports that with the utilize their platform, we could build a new strategy. Thank you. Thank you. I will proceed.

[Analyst 1]: Platforms, we're still in the discussion with partner companies. I'll give you the idea today. Two companies told me supports that with the utilize their platform, we could build a new strategy. Thank you. Thank you. I will proceed.

Speaker #3: That's another question. But we have to formulate the strategy for the supplies and the supplier value chains and so on. And we are working on that.

Speaker #1: Thank you. So, in 2020 you had a target of $3.2 billion, and to keep that, what do you target? Also, the improvement in profitability as well—not just those targets.

[Analyst]: In 2022, you had a target of 3.6 billion items. I need to see the targets for this year, selling targets. Also the reputation improvement strategies to deliver profitability as well, not just those quality targets. I think we will strengthen our business importance. I'm not sure that I talk to you about your plans. 2.6 billion, that was number we have focused our interest. We try to reach up to 0.5 billion. Hybrid flash, which we get a profit based on the hybridization. Last year, we had the shift of about 22, 23. We are trying to reduce the cost of that at 50% that year.

Speaker #3: And then we haven't really touched upon specific strategy outside of China. We talked about India a bit today. Where the parts prices in India is formulated in a different way from that of China.

[Analyst 1]: In 2022, you had a target of 3.6 billion items. I need to see the targets for this year, selling targets. Also the reputation improvement strategies to deliver profitability as well, not just those quality targets. I think we will strengthen our business importance. I'm not sure that I talk to you about your plans. 2.6 billion, that was number we have focused our interest. We try to reach up to 0.5 billion. Hybrid flash, which we get a profit based on the hybridization. Last year, we had the shift of about 22, 23. We are trying to reduce the cost of that at 50% that year.

Speaker #3: But away from that, we could try to find out. And identify the quality standard that can be utilized in all different regions. And if that is acceptable for the cost perspective, of course, we would take it.

Speaker #1: So we will strengthen our business. And I'm not supposed to talk about no plans. 2.2, that was the number we had for which we'll try to reach 2.5.

Speaker #3: And then utilize that going forward. That is what we wanted to say. Thank you. Next question, please. Please raise your hand. All right. The row that is furthest away, the person in the third row, I'm a freelancer.

Speaker #1: And hybrid slash get a profit based on hybrid and about 2023. And with the cost of that, 20% that year. And we could have a 50% cost of that in seven or so, and then will be therefore 10%, and the rate 90 grams reduction.

Speaker #3: About the business update, I have two questions. About the domestic market, you say that you will launch a new models, more than the current unit sales.

[Analyst]: I think we could have a 50% cost reduction, given that is the 7 or so items. Our overall will be therefore, complete, temporary, and the rate, 90% reduction in cost is your firm system will add to our business. It includes the Honda electric range. Thank you.

[Analyst 1]: I think we could have a 50% cost reduction, given that is the 7 or so items. Our overall will be therefore, complete, temporary, and the rate, 90% reduction in cost is your firm system will add to our business. It includes the Honda electric range. Thank you.

Speaker #3: And how many are you thinking of? And what specific measures do you have in mind? So how are you planning to increase unit sales?

Speaker #3: This is my first question. And also, the K ratio is 43%. And the Japan average is 36%. So it's above the average. So the K-centered sales approach, are you going to maintain this or are you going to reduce the portion of K, many cars, and are you going to introduce more the registered regular passenger cars?

Speaker #1: Business. And thank you. Next question, second row. Two questions that update. Huge amount. And that you haven't anew the first question. The next, there was a first time, and then a deficit.

Speaker #3: So I'd like to ask you about domestic sales and marketing. Kaihara will respond. Currently, as you say, in regards to Japan, the K, the mini car ratio is high.

[Company Representative] (Honda): Next question.

Operator: Next question.

[Analyst]: First in the middle. Second row.

Operator: First in the middle. Second row.

[Analyst 3]: New questions that Regarding about the update. In 3 years, hybrid, four point A huge amount. That you have in combustion engine. A new engine. Are you going to develop into the combustion engine to correct the deficiency? That is the first question. The next question. Ever since you've been this time as a deficit. Mr. President, how do you take your responsibility? Please share with us your thoughts about your responsibility. The first question about the engine. For 23, are we gonna think, will be made on hybrid. The deficit, we have a continuing development plan. Is next year's budget. The program included is that we are a major advance. The engine itself, this is not what you think.

[Analyst 6]: New questions that Regarding about the update. In 3 years, hybrid, four point A huge amount. That you have in combustion engine. A new engine. Are you going to develop into the combustion engine to correct the deficiency? That is the first question. The next question. Ever since you've been this time as a deficit. Mr. President, how do you take your responsibility? Please share with us your thoughts about your responsibility.

Speaker #3: And even compared to the Japanese average, we believe that we are high. This is because we have this strong model and the dealers succeeding and therefore they're relying on this single model.

Speaker #3: But this time, in Japan, the registered cars, we want to try to expand our lineup, strengthen our lineup of registered cars and increase our presence in this category.

Speaker #3: And so for this, currently, well, currently, unit sales is low. But we want to introduce a model to boost this. So we have a plan for that.

Speaker #1: And Mr. President, how do you take your response? Please share with me about your responsibility. First question, about the engine. We were thinking it will be made in hybrid.

Speaker #3: But we are before that, trying to establish a strong network, dealer network. And we want to rebuild or reorganize our dealer network. Well, I think through integration, we can strengthen our marketing capability.

Toshihiro Mibe: The first question about the engine. For 23, are we gonna think, will be made on hybrid. The deficit, we have a continuing development plan. Is next year's budget. The program included is that we are a major advance. The engine itself, this is not what you think.

Speaker #3: And thereby have better touch, customer touch. And we want to strengthen our digital sales and marketing too. And on the EV front, already, the mini category, we have three EVs launched.

Speaker #1: So the deficit we end is next year. And the end would be, this is not the area used—it is within that range, improved. So that is under, we have a new system, and with the engine, to see will be improved by.

Speaker #3: And going forward, insight will be coming up. And super one, too. So for EV, too, we are going to strengthen our lineup. Therefore, for the future EV, Japanese market, we want to lay the groundwork so that in the future, we'll have EV and hybrid to support our presence in Japan.

[Company Representative] (Honda): It's going to be, you know, it's going to be better than hybrid. The area we used is within that range. Heat efficient improved. That is our target. We have a new system, and with the engine, you see, for example, will be improved by about 50%. It's not just to think of this as a powerful tool weapon for us. About EV development by a function, WPT, a massive Well, I mean, but this event, the environment and the future itself.

Toshihiro Mibe: It's going to be, you know, it's going to be better than hybrid. The area we used is within that range. Heat efficient improved. That is our target. We have a new system, and with the engine, you see, for example, will be improved by about 50%. It's not just to think of this as a powerful tool weapon for us. About EV development by a function, WPT, a massive Well, I mean, but this event, the environment and the future itself.

Speaker #3: About the K, mini car category, we will also strengthen our presence and add on to what add on to K, the registered cars. EV, we want to offer to as many customers to increase unit sales.

Speaker #1: There's not just—I think this will be a helpful tool, or weapon, for us. And about massive—well, basically, the environment and the industry itself is structural. Also, we have been prudent and have invested in EV, but as we are already at zero, the EV development—we were.

Speaker #3: That is all. Thank you. Because of the interest of time, I could take only two, three questions for the rest. Thank you. So from here, please.

Speaker #3: Second row from the left, the front table, please. Thank you for your explanation today. Question one about financial results. EV-related losses. And you said that 1.3 trillion yen losses and some of them have been brought forward to recognize.

Toshihiro Mibe: structural type also have prudent and invest EV already. The zero the EV development will size. We were at the beginning of to the extent that we could not. The events and the environment, the pictures also the policy and major impact. It was I can do so. We were from, you know, business. Ultimately, GHG make sure was published and the EV. Well, at this point, the EV into the states was thought to be 2%. Month is 5.6%. That was more than half the originally size. With the 5%, we planned to sell 70. If you were to this, you adapt future rate loss.

Speaker #3: And then you talked about your compensation for the suppliers. And I'd like to know what part, which part is actually brought forward to recognize.

Because of that, I could only choose, uh,

Because of the only 2.

Thank you.

Speaker #1: At the beginning, to the extent we could not, and the impact and the environment restriction also, the policy had a major impact, but it was canceled and we were—our business—and ultimately was—and well, at this, the EV states was thought to reach 80%, but month, 5.6 or 5.2%. There was more than half of the original size, and it was far better. We planned to do sales that we had.

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Speaker #3: And second question, hybrid. Vehicles to be focused going forward. And then you are, of course, had quite a bit of investment in EVs I wouldn't say that you were behind.

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Speaker #3: However, you had a different focus I suppose. Because other companies had many hybrid cars out competitors did. But as compared to the competitors, what is the Honda's winning strength?

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Speaker #3: What is your strength in this field with hybrid? Thank you for your question. For EV-related losses, some of them have been brought forward to recognize in the financial statements.

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Speaker #3: And then countings of that is development assets and right off of the facilities and also additional cost associated with the impairments and so on.

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Speaker #3: And I can't really say which part is really corresponding to the suppliers of compensation, so on. Because we have the other party involved. But writing off the equipment facilities, those are to be done according to the accounting standard.

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Speaker #1: So if you were to this you that future rate loss so we even with those have any but needed as we decide to go on a growth and this massive make that happen well about the I think this seriously as a manager and have come up with that we can whatever we have to try to stop the bleed as possible and try to way for growth this we have to tolerate such so we to work on this and I believe that the biggest that I and at this point in time I would like to focus my attention and effort on that's all thank you then the front I have a question earlier talked about the.

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for this year.

[Analyst]: As for the future book, winning is even with those which have paid their debt. You accept it is needed as we decide to focus on the growth three, and this massive make that happen. About this, I take this seriously as a man. As compared to that, can we complete that request? Whatever. We have to, try to stop the bleeding if possible, and the challenge wave of the growth. This, we have to accept it, tolerate such. We put to work on this. I believe that the business must mean that I can. At this point, I say focus on action, and act it on. That's all. Thank you.

[Analyst 1]: As for the future book, winning is even with those which have paid their debt. You accept it is needed as we decide to focus on the growth three, and this massive make that happen. About this, I take this seriously as a man. As compared to that, can we complete that request? Whatever. We have to, try to stop the bleeding if possible, and the challenge wave of the growth. This, we have to accept it, tolerate such. We put to work on this. I believe that the business must mean that I can. At this point, I say focus on action, and act it on. That's all. Thank you.

The, uh, what is your address field? Question 1 for Ev.

Speaker #3: Therefore, it would not really have a totally different kind of practice of recognizing them. It's a standard way. So hybrid vehicle strength, we have a long history of a hybrid vehicles.

Devices.

Have people, you recognize. State mention.

uh,

Statements. Uh,

Conscience.

Is uh, right.

Uh, right.

Facility. So,

Speaker #3: Three-motor hybrid. We used to have long ago. And we have the two-motor hybrid that is more efficient now. And now we have a compact side and mid-size.

facility also,

Impairments.

Payment.

And, uh, I have the, uh, which one?

because we have,

Speaker #3: And we have a hybrid cars in those segments for the global markets. And this time, 2029 or so, or late 2028 and so on, we are going to launch an offer or launch the large side hybrid models.

Equip.

Those.

According to the accounting.

And I want to equip those accounting.

and therefore,

therefore,

really, uh,

different.

Really different.

Speaker #3: And several years ago, we said that we would strengthen the hybrid as well, not just the EV, especially on the large side hybrid, which we didn't have at the time.

Practice.

A string.

We have a long.

Have a long.

Hybrid a vehicle.

Hybrid vehicles.

Speaker #3: So we studied the development of that. And now we have a full-fledged effort on them. And we want to launch those models as soon as we can.

Uh, 3 Type B.

so, we have lots of

Uh, three types, and we have most of the

hype for efficient.

and now,

Speaker #3: So now, once it's there, we are having all sizes for all segments. And then you have to give it a try, drive it to have a feel.

And now,

We compete. Nice and

The card.

[Analyst 2]: Thank you.

[Analyst]: Thank you, Grace.

[Analyst 1]: Thank you, Grace.

Speaker #3: Because there are different kinds of hybrid, I feel. And we are really confident in our hybrid one. And we have an S series. You can enjoy the driving nicely.

And this, um, 2029 or later.

Side price, and with the car. And this, um, 2029 or later.

[Analyst 2]: Then.

So on.

[Analyst 4]: That's go for different. Yes. I have a question. Best results. Earlier, talked about the terms. What you need to protect this demand. You think about the compensation with the edge supplier and maybe think your, you know, potential as well. You have a gap of what you know, and we need to test the time. As opposed to the, you also say that we should perhaps apply much condition. Second question is about the issue itself to the You talked about that standardization. The issue of the, we believe you talked about going away from all integrated carrying or previously established strategy.

March offer.

We launched the offer.

the uh, last

[Analyst 3]: That's go for different. Yes. I have a question. Best results. Earlier, talked about the terms. What you need to protect this demand. You think about the compensation with the edge supplier and maybe think your, you know, potential as well. You have a gap of what you know, and we need to test the time. As opposed to the, you also say that we should perhaps apply much condition. Second question is about the issue itself to the You talked about that standardization. The issue of the, we believe you talked about going away from all integrated carrying or previously established strategy.

hybrid, the model usually,

Hybrid several years ago.

Speaker #3: And also the ADAS is a good affinity to hybrid model. Because CPU, SoC, be driven, with lots of power consumption, in fact. And EVs and plug-in hybrid could be the mainstream for those CPU things.

I wish that the strength and the hybrid, just a V. See, all the are much hybrid.

I wish that the strength and the hybrid is not just a V, C, only are much hybrid.

on top of the, the

Top of the world.

And now we have.

And we want to launch these models as we have. So, now,

And we want to launch these models as we have. So now,

It's still have a year.

It's there. We have it here.

Speaker #3: Some hybrid, of course. But we have a strength in the hybrid, especially for the power generation part. We have a strength as well. We can supply the power to without any problems.

The sizes compliment each other, and then it has to give it a try.

The sizes, and then we have—if it's a try.

That if you—because, uh, we have different kinds of tablets. I feel—

And we are.

Speaker #3: Therefore, that could be a good strength to offer. Starting with the bezel at 28. With that, we can combine the next-generation ADAS as well.

Confident in our future, we are. And we have activities that you can do with the driving here, and also data sheets.

That if you, because uh, everything kind of, I feel, and we are confident in our—and we have activities that you can do with the driving here, and also data sheets.

The hybrid.

CPU.

Speaker #3: And we are quite able to do that. So that's the strength. And I wouldn't talk about competitors' products. However, we have an absolute confidence in our hybrid models.

CPU.

and,

the, the

Speaker #3: And we try to appeal our products so that customers understand its appeal. Thank you very much. Thank you. I see a lot of hands, but I'm sorry.

we have a

for the Earth.

[Analyst]: When we say offer, you know, resources, how would you explain the business, CSV Honda's knowledge people, getting the internal resources only. Thank you for Mibe and for your about EV. On March, as we said before, we, as we had the 3 EV brokers, with the GP that we saw. The apple of couple school, with 2.3 memos. The time as of February 25, announced the one for the membership, in the past term. The idea was, the 3 that went recognized so much with 3 areas, as we did our others, last month in March.

it's apply the power to

[Analyst 1]: When we say offer, you know, resources, how would you explain the business, CSV Honda's knowledge people, getting the internal resources only. Thank you for Mibe and for your about EV. On March, as we said before, we, as we had the 3 EV brokers, with the GP that we saw. The apple of couple school, with 2.3 memos. The time as of February 25, announced the one for the membership, in the past term. The idea was, the 3 that went recognized so much with 3 areas, as we did our others, last month in March.

Speaker #3: The next person will be the last. And please raise your hand. The person in the middle, the third row, with a white jacket. Magazine X, Shindo.

everything a good.

A time you have experience as well. To apply the power to you every day. A good strength that you

Okay.

With that.

Or, uh, with that, we provide the next. We are quite able to—

So,

so,

Speaker #3: Thank you for this opportunity. There might be a tough question. About Mr. Ozawasan. As far as I know, be it the Nissan partnership or Sony, we're playing a leading role.

however, we have, and

Thank you.

However, we have absolute confidence in the timing, for example. And, uh, uh, thank you.

Speaker #3: And Miwasan, I think this is a person that you mostly trusted. And Aoyama-san also quit. And Mibesan only is staying. In Honda. That you lost your two close aides.

Person will be the last.

Will be the last.

and,

And grow.

Grow.

The 1.

Speaker #3: And yet, can you carry out your Mibe reform? This is what I want to confirm with you. About the personal issues I think this has been announced.

[Analyst]: Reality now is that, with March 2026, we are not like, there are still to deliver putting up in their current episode, you know, not the administration system, 7 budget. Those that we were with have been much. It is now too much at. That means we have higher much participants. The area for the 6 customer in which it used to be lower the value. They have those downs equally. The March participants, we were picking up JPY 1.0 trillion, which recovered much as we that is, let's say. In the number of the year, maybe something about JPY 500 billion, which is to be expected now.

Might be a.

[Analyst 1]: Reality now is that, with March 2026, we are not like, there are still to deliver putting up in their current episode, you know, not the administration system, 7 budget. Those that we were with have been much. It is now too much at. That means we have higher much participants. The area for the 6 customer in which it used to be lower the value. They have those downs equally. The March participants, we were picking up JPY 1.0 trillion, which recovered much as we that is, let's say. In the number of the year, maybe something about JPY 500 billion, which is to be expected now.

About.

As far as I know.

I'll be.

Sheep.

Whistling.

Listening.

Speaker #3: About Ozawa. Well, this change in our strategy over the past three years this has been a very challenging reform. And in addition, this was not mentioned today, but when it comes to our management and operation, DX, AI included, we have been having to do a massive reform.

because,

I am.

And I am.

Have you lost?

You lost.

a, and yet can

and yeah, can

just what?

Is just what?

Speaker #3: And in Honda, we had few people capable of doing so. So initially, I was taking the lead and so I was the corporate reform leader.

Um,

check.

Speaker #3: But in carrying out this reform, I wanted to focus on this part. And when it came to the digital and others, strategy-wise and also operation-wise, digital AI is something that we cannot avoid.

I'm trying.

[Analyst]: One thing is that originally, people were trying to reproduce the NMOF. We actually recommend in the earlier this term. At the same time, the supply execution took too long, and it always individually, and, you know, we couldn't tell the area that come the that time. We relate with the because it really happens is that with JPY 1.3 trillion putting up judgment to shift back in there, the back. This JPY 1.3 trillion. You have still many, so maybe be impaired much as that or potentially management or when.

[Analyst 1]: One thing is that originally, people were trying to reproduce the NMOF. We actually recommend in the earlier this term. At the same time, the supply execution took too long, and it always individually, and, you know, we couldn't tell the area that come the that time. We relate with the because it really happens is that with JPY 1.3 trillion putting up judgment to shift back in there, the back. This JPY 1.3 trillion. You have still many, so maybe be impaired much as that or potentially management or when.

and,

Today.

The management.

DX.

Um,

telling to do.

and,

And J.

um, we have

We had.

The love to.

Would love to.

Speaker #3: So to strengthen digital AI, Shikama who has knowledge, is at the top of corporate planning. So in addition to what was explained today, the company's operation will also be changed.

So,

and,

um,

leaders.

Leaders.

but um,

but,

can you hear this?

Can I have?

this, I

Speaker #3: And that is the reason why we have decided on this made this HR. Decision. So Ozawa, we'll step down following the shareholders' meeting. We have a lot of talent at Honda.

What you do?

What to do?

and,

Also.

A digital.

Speaker #3: And with a new lineup, we would like to continue to strive. Thank you. Thank you very much. And with this, we would like to conclude today's meeting.

You cannot avoid.

[Analyst]: Actually, we have the ability of all things to put it out of clear, so this was situated with our in terms of resource identification. Resources, alliances, is one of the thing with unit as which also we have that. Of course, there are, we want our coaches, everything supported. We visited China with, we have 100, and we production in China resources out there. We so how much we could achieve that. We know that, so that, we could use that platform either that. We have the data, how much use of it, a platform partner.

Cannot avoid.

[Analyst 1]: Actually, we have the ability of all things to put it out of clear, so this was situated with our in terms of resource identification. Resources, alliances, is one of the thing with unit as which also we have that. Of course, there are, we want our coaches, everything supported. We visited China with, we have 100, and we production in China resources out there. We so how much we could achieve that. We know that, so that, we could use that platform either that. We have the data, how much use of it, a platform partner.

Jacob.

Scammer.

Who has?

Who has knowledge. Um,

Knowledge. Um,

so, um,

Was explained.

Let's explain.

the um,

and then,

so,

Shareholders.

we have a lot of

hold up.

and we,

and,

We line up.

Thank you very much.

this is,

This is a

Thank you.

and then,

[Analyst]: Now that we decided to the solution then, as long as with those, we don't have to our rule of getting on the digital technology. We will not have to make our work product. With the to close it, that is ready to win. We already have in place. Now for those to fight further and of course, depending on that, now positive position of the resources. The question use that standard, that's another. We have to this for the supply value on and so on that. We haven't put on strategy.

[Analyst 1]: Now that we decided to the solution then, as long as with those, we don't have to our rule of getting on the digital technology. We will not have to make our work product. With the to close it, that is ready to win. We already have in place. Now for those to fight further and of course, depending on that, now positive position of the resources. The question use that standard, that's another. We have to this for the supply value on and so on that. We haven't put on strategy.

[Analyst 5]: We talked a bit today, the use in India, we are formulating away from China, away from the trade front, you put the standard that provides, you know, all risks. I accept cost perspective of take it and they well that is to say. Next question please. Yeah. Right. The row just away in the third row. A little bit about the two questions. About the you will do but also encourage sales and how you can and which business you have in mind. Are you planning unit sales? My question. If the case is 43 and Japan average 6%, average. The case for this sale approach, how you can make this, but to reduce the cost of pay because and are you targeting-

Toshihiro Mibe: The register regular. Can I ask you a statistic share of the market? Well, currently in regards to the kei car ratio is high, and to the Japanese market that we are high. This is because we have this one model and it's 60 and everyone relying on it. In Japan, the guys actually trying to, I know, take this. This is it between separate risk category with them is currently. Well, currently, in a way, we want to model to this. We have for that. Before that, I'm trying Misha, network. We want to or nice idea, but I think inspiration on my ability and thereby touch the tabs. Luckily, it's digital to the marketing. I believe already at the way we have three lines going forward.

[Company Representative] (Honda): Yeah, when we come and Super-One. We added a lineup. The EV we want to lay so that it has EV hybrid to presence in. About the page, take 5. We will also strengthen our progress and add on what we take the cars from CT. That is all. Thank you. Because of the I could only 2, thank you. Here please. I'll take it from the front.

[Analyst 6]: Thank you for your question. Which one, the related and you at 1.3 losses. Have you talked about vision for the software. Would I like to pass? I would actually. Second question. Hybrid vehicles are stable. Quite a bit of these. I wouldn't say that, behind we had a different because other cars out like compared to the, others as obviously are in the field of hybrid. The third question, one for EV losses. Have people recognized that mentioned, concessions is a tremendous right or facility. Also, the associate payments. I, which product will be required to complete this one because we have this.

[Analyst 4]: Thank you for your question. Which one, the related and you at 1.3 losses. Have you talked about vision for the software. Would I like to pass? I would actually. Second question. Hybrid vehicles are stable. Quite a bit of these. I wouldn't say that, behind we had a different because other cars out like compared to the, others as obviously are in the field of hybrid. The third question, one for EV losses. Have people recognized that mentioned, concessions is a tremendous right or facility. Also, the associate payments. I, which product will be required to complete this one because we have this.

Toshihiro Mibe: Your equip, those, according to accounting, therefore, really, probably different practice of recognizing that's not the way. Hybrid shrink. We have a long hybrid vehicles, 3 type 3, which have a legal. We have multiple hybrids for efficient. Now we compact side size and major cars from the global market. This 2020 dials or later, so on, we launch over the last hybrid models several years ago. I wish that the strength and the hybrid just be the only are much hybrid on top of the choice. Now we have to put up. We want to launch these models as we can. Now, it's still. Have your sizes or equipments and then give it a try.

[Analyst]: We would like to hear how you feel because how this is kind of hybrid, I feel. We are confident in our future as well. We have X, you can see the driving here. Also Ada, she's looking to the hybrid because the CPU, the power factor. The bridge could be the mechanism for other things. Some parts of this, we have a separate bridge only for the car generation part. We have the same response. We could supply the power to without any problems. Therefore, that would be a good step to offer whether it be the petrol or it be the with that we supply the ADAS. We are quite able to do that.

[Analyst 1]: We would like to hear how you feel because how this is kind of hybrid, I feel. We are confident in our future as well. We have X, you can see the driving here. Also Ada, she's looking to the hybrid because the CPU, the power factor. The bridge could be the mechanism for other things. Some parts of this, we have a separate bridge only for the car generation part. We have the same response. We could supply the power to without any problems. Therefore, that would be a good step to offer whether it be the petrol or it be the with that we supply the ADAS. We are quite able to do that.

[Analyst]: Your first time is as normal competitors. However, we have absolute confidence in the type of thumbnails. We feel prevent future customers with this advantage for you. Thank you very much.

[Analyst 1]: Your first time is as normal competitors. However, we have absolute confidence in the type of thumbnails. We feel prevent future customers with this advantage for you. Thank you very much.

[Company Representative] (Honda): Thank you.

[Analyst]: I think that was it.

[Analyst 1]: I think that was it.

[Company Representative] (Honda): No chance. Sorry. This person will be the last. Please mark the person in the middle of the room with the white flag. I guess Shinjyo with this might be a gentleman about Mr. As far as I know, I will be at the partnership with him. We can definitely trust him. I am equipped. Maybe some day in Honda. Maybe last week. Yet can maybe this is what we do. About the person in another. About. To check. It is sometimes. It is not good to do this, but the management is, I think coming to do one. We hope with the love joint. It is taking the lead. I work with four leaders. Carry out this. I want to do it on this.

[Company Representative] (Honda): and that is good. Also, additional 8 cannot avoid. Take them. Scammer who has knowledge, and is of money. Let's explain the reason we're on. Then it's the reason we are this age on. Ozawa will as well chairholder. We have a lot of Honda, we sign up to see your idea. Thank you very much. Thank you very much.

[Analyst]: To those and the not. It is up. Then see.

[Analyst 1]: To those and the not. It is up. Then see.