Suzuki Motor : announces Mid-Term Management Plan (April 2021 to March 2026)

24 February 2021

Suzuki announces Mid-Term Management Plan (April 2021 to March 2026)

~ "Sho-Sho-Kei-Tan-Bi" ~

Suzuki formulated "Mid-Term Management Plan (April 2021 to March 2026) ~ "Sho-Sho-Kei-Tan-Bi" ~ for the 5-year beginning April 2021.

Suzuki celebrated its 100th anniversary in March 2020. Over the past 100 years, we have taken on many challenges, including looms, motorcycles, automobiles, and outboard motors. Suzuki will continue to take on the challenge to realize carbon neutral and in such a course, the philosophy of "Sho-Sho-Kei-Tan-Bi" which represents the basis of Suzuki's manufacturing since its foundation, is truly worthy of this challenge.

Based on the unwavering commitment to "Focusing on the customer" inherited from our founder, and we will make even greater efforts to provide customers with the value of "Sho-Sho-Kei-Tan-Bi".

*"Sho-Sho-Kei-Tan-Bi" is an abbreviation for Japanese meaning "smaller" "fewer" "lighter" "shorter" and "neater".

The Mid-Term Management Plan is outlined below.

• I. Basic Philosophy

  Suzuki's commitments are "Assure people's means of mobility" and "Emerging economies will continue to be a pillar of growth". Suzuki will stay focused upon customer throughout the next 100 years, and with our "Sho-Sho-Kei-Tan-Bi" concept, we strive to create value-packed products and services. We would like to convey our thought together with the slogan of "Small cars for a big future."

• II. Review of the previous mid-term management plan

In the previous medium-term management plan, we achieved net sales target in FY2017 and FY2018, operating profit ratio target in FY2016 toFY2018, ahead of schedule plan. However, target was not achieved in its final year of FY2020 due to the slowdown of the Indian market, final inspection issue, and the COVID-19 pandemic.

During the previous mid-term management plan period, there were cases of loss of customer trust, including quality problems, frequent recalls, and fraud in fuel efficiency tests and final inspection. Moreover, many issues remain, including delays in responding to CASE.

Once again, we will return to the basics of our mission statement and take on the words of our founder, "If the customer needs something we must do whatever we can to respond. Hard work guarantees success." as our determination for the next 5 years.

III.New Mid-Term Management Plan Initiatives

Amid the global trend toward carbon neutrality, it is necessary to clarify Suzuki's efforts, and to place even greater emphasis on quality as shift to electrification and software development are to take place. Therefore, we will give priority to three issues: CO2 emissions in use, CO2 emissions from production, and quality assurance.

With regard to CO2 emissions in use, we will develop electrification technologies by 2025, fully implement these technologies in products from 2025, and make full-scale quantitative increase from 2030.

We will proactively promote development of various technologies toward carbon neutrality.

In terms of CO2 emissions from production, we will take on the challenge toward "zero" CO2 emissions from production in 2050.

In terms of quality, we will work, focused on customer, to create products of high quality, value-packed products at affordable price. In addition, we will strive to prevent the occurrence, early detection, and outflow of quality problems by promptly investigating the causes and taking countermeasures, producing products with reduced variants, and expanded traceability management.

In the automobile business, target for Japan is to maintain 30% or more share in the mini-car market, as well as 50% increase in the compact car sales (vs FY2020). In India, Suzuki will take the initiative in promoting electrification required by society in response to environmental issues in India, and maintain market share of more than 50% in passenger car segment.

As for the alliance with Toyota, we will deepen our alliance by cooperating in electrified vehicles, African market, and supplementing product and components.

In the motorcycle business, we will build an attractive and diverse lineup using common platform to secure sales of 2 million units and an operating margin of 5% or more.

In the marine business, we will strive to achieve the net sales target of ¥100 billion.

In terms of SDGs, we will contribute to solving social issues while generating profits through our business activities.

IV. Management performance targets

As for management performance targets, we expect a recovery from the COVID-19 pandemic and growth in the Indian market, and we aim for a record consolidated net sales of ¥4.8 trillion.

The operating income target is set at 5.5%, below the previous target of 7%, due to aggressive investment in research and development, such as electrification, which amounts to ¥1 trillion over 5 years.

The dividend payout ratio is targeted at 30%.

We will make steady efforts to increase corporate value while balancing investment for growth and strengthening our management base.

FY2019 Result	FY2020 Forecast	FY2025 Target
Performance	Net Sales	3.4884 trillion yen	3 trillion yen	4.8 trillion yen
Operating income margin	6.2％	5.3％	5.5％
Shareholder return	ＲＯＥ	9.3％	-	8％
Payout ratio	29.7％	TBD	30％
Investment	R&D	148.1 billion yen	150.0 billion yen	1.0 trillion yen/5 years (200.0 billion/year)
Capital Investment	236.4 billion yen	220.0 billion yen	1.2 trillion yen/5 years （240.0 billion/year)
Global sales	Automobiles	2.85 million units	2.38 million units	3.7 million units
Motorcycles	1.71 million units	1.48 million units	2.0 million units

Note. Exchange rate assumptions ... US $1 = 104 yen, 1 Euro = 124 yen, 1 INR = 1.42 yen

*Forecasts for the consolidated operating results are based on currently available information and assumptions, contain risks and uncertainty and do not constitute guarantees of future achievement. Please note that the actual results may greatly vary by the changes of various factors. Those factors, which may influence the future results, include economic conditions and the trend of demand in major markets and the fluctuations of foreign exchange rates (mainly U.S. dollar/Yen rate, Euro/Yen rate, Indian Rupee/Yen rate).

Suzuki Mid-Term Management Plan

(April 2021 to March 2026)

~ "Sho-Sho-Kei-Tan-Bi" ~

24 February 2021

Table of Contents

• 1. Introduction

• 2. Basic philosophy

• 3. Review of previous mid-term management plan

• 4. New mid-term management plan initiatives

• 5. Management performance targets

1. Introduction

P3

1. Introduction

• 2. Basic philosophy

• 3. Review of previous mid-term management plan

• 4. New mid-term management plan initiatives

• 5. Management performance targets

Introduction

Suzuki celebrated its 100th anniversary in March 2020. Over the past 100 years, we have taken on many challenges, including looms, motorcycles, automobiles, and outboard motors. Suzuki will continue to take on the challenge to realize carbon neutral and in such a course, the philosophy of "Sho-Sho-Kei-Tan-Bi" which represents the basis of Suzuki's manufacturing since its foundation, is truly worthy of this challenge.

We reaffirm the unwavering commitment to "Focusing on the customer" inherited from our founder, and we will make even greater efforts to provide customers with the value of "Sho-Sho-Kei-Tan-Bi".

Toshihiro Suzuki, President and Representative Director

Note: "Sho-Sho-Kei-Tan-Bi" is an abbreviation for Japanese meaning "smaller" "fewer" "lighter" "shorter" and "neater". Over the years, it has become an accepted expression of Suzuki's mind and culture.

2. Basic philosophy

1. Introduction

2. Basic philosophy

• 3. Review of previous mid-term management plan

• 4. New mid-term management plan initiatives

• 5. Management performance targets

Suzuki's Commitment

Assure people's "means of mobility"

Emerging economies continue to be a pillar of growth

・Mini-cars in Japan function as local transportation and is an indispensable means of living.

・Providing economical and quality products and services to customers in emerging countries

・As a mobility company, Suzuki contributes to the environment providing small products worldwide.

・Emerging economies as a pillar of Suzuki's future growth, anticipating the medium-and long-term development

Challenge to provide valuable products and services

• • Suzuki will stay focused upon customer throughout the next 100 years, and with our "Sho-Sho-Kei-Tan-Bi" concept, we strive to provide value-packed products and services

• • We would like to convey our thought together with the slogan of "Small cars for a big future."

3. Review of previous mid-term management plan

• 1. Introduction

• 2. Basic philosophy

3. Review of previous mid-term management plan

• 4. New mid-term management plan initiatives

• 5. Management performance targets

Achievement of previous mid-term management plan

• • Net sales target achieved in FY2017 and FY2018, operating profit ratio target achieved in FY2016 to FY2018

• • Target not achieved in its final year of FY2020 due to the slowdown of the Indian market, final inspection issue, and the COVID-19 pandemic.

Review and determination

Review of previous mid-term management plan

・Loss of customer trust

・Frequent quality problems and recalls

・Fraud in fuel efficiency tests and final inspection

・Delay in CASE development

Determination Return to basics in the Mission Statement

If the customer needs something

we must do whatever we can to respond.

Hard work guarantees success.

- Founder Michio SUZUKI

4. New mid-term management plan initiatives

• 1. Introduction

• 2. Basic philosophy

• 3. Review of previous mid-term management plan

4. New mid-term management plan initiatives

5. Management performance targets

Medium- to long-term business image

• • In the global trend toward carbon neutrality, we clarified our initiatives.

• • Shift to electrification and software development requires greater emphasis on quality.

• • Therefore, Suzuki puts top priority on the following three issues.

2020

2025

2030

2050

Reduction plan for CO2 emissions in use

2030 onward : Increase the quantity of electric-powered products

Visual image toward "zero" CO2 emissions

Proactively promote development of varioustechnologies toward carbon neutrality

By 2025 :	Develop electrification technology
•
By 2030 :	Full application of electrification technology developed during the mid-
•
term management plan period
•

CO2 emissions in use - 5 year plan

・Development of hybrid system for mini, compact and commercial vehicles

・Development of plug-in hybrids ・Expand the range of vehicles equipped

・Development of mini EV and compact EV ・Utilize joint development with Toyota

CO2 emissions from production

Challenge toward "zero" CO2 emissions from production in 2050

Visual image toward "zero" CO2 emissions

Advance and expand use of existing technologies

Proactively promote development of various technologies toward carbon neutrality

"Zero" CO2 emissions from model plant (Hamamatsu Plant)

Apply to all production sites

2020

2025

2030

2050

Quality assurance and cost reduction

• • Suzuki, as a manufacturing company tackles to develop new technologies.

• • However, no product will be accepted unless the technology is; high quality, and affordable.

• • Only when customers choose Suzuki products, Suzuki's business makes sense.

• • "Develop products of superior value by focusing on the customer"

Mission Statement

• 1. Develop products of superior value by focusing on the customer

• 2. Establish a refreshing and innovative company through teamwork

• 3. Strive for individual excellence through continuous improvement

Mission Statement ・ Established in 1962 ・ Suzuki upholds a slogan "Value-packed Products", and all employees are striving every day to be value creators

Quality - Acceleration of quality measures

P17

Drawings	Production	Inspection	Market
Prompt • • • Production wit (Prevention o	investigation of ca (Early detection an Not to miss a sing AI management o Automatic acquisi	uses and counterm d countermeasure le defect f tion of vehicle datmarket quality inf	easures s) ormation a ity management of outflow)
h less variants f occurrence) Human resourc	Expand traceabi (Prevention es development

Automobile business - Japan strategy

Maintain market share of 30%+ in mini segment, and increase compact car sales by 50% (vs FY2020)

• • Expand sales of models equipped with Suzuki Hybrid System

• • Expand charging infrastructure to cope with future EV sales

• • Strengthen distributor function

• • Update direct sales outlet, increase sales and service personnel

• • Digitization for effective sales

• • Enhance lineup of compact carsStrengthen preventive safety technology

• • Continuous introduction of new models

• • Flexible production operations to meet the changes in demand

• • BCP administration of supply chain

Automobile business - India strategy

• • Taking the initiative in promoting electrification required by society in response to environmental issues in India

• • Maintain market share of more than 50% in passenger car segment

• • Promote penetration of hybrids

• • Introduce EV

• • Increase number of rural small outlets, allocate circuit service car

• • Develop demand in rural areas

• • Increase sales efficiency through digitization

• • Strengthen SUV segment

• • Promote CNG cars

• • Strengthen production capacity in line with the growth of the Indian market

Alliance with Toyota Motor Corporation

Deepening of alliances

• • Expand mutual supply of hybrid vehicles

• • Promote use of batteries for hybrid vehicles produced in India

• • Development of small EV platform

• • Market development

• • Introduction of products from India and establishment of logistics and service systems

Enlarge mutual supply of vehicles and powertrain

Motorcycles and marine businesses

Motorcycles

2 million sales units, Secure operating profit of 5% or more

・Commonization of platform ・Attractive and diverse lineup

・Introduction of EV scooters

Marine

Net sales target ¥100 billion

• • Increase sales of large 4-stroke models (leisure use)

• • 2 stroke models →4 stroke (business use)

  Comprehensive brand recognition

• • Promote Clean Ocean Project with customer participation

• • New technologies including electrification

• • Integrated vessel controls

Efforts for SDGs

Contribute to solve social issues while earning profits from business activities

• • Suzuki contributed to creating jobs in emerging countries, through development and penetration of environmentally friendly compact cars

• • Through business activities that take advantage of Suzuki's strengths, Suzuki will contribute to solve social issues while increasing profits.

• Balancing contribution to a sustainable society and business growth
Environ-ment	・ Efforts to develop environmental technologies ・ Challenge toward carbon neutral ・ Disclosures in line with TCFD
Social	・ Reducing the number of traffic fatalities and injuries (Safety technology initiatives) ・ Resolving regional and elderly mobility issues (next-generation mobility and services) ・ Recruitment and development of human resources with expertise that will lead the next generation ・ Development of an environment and personnel system that enables diverse human resources to work ・ Diversification of work styles and promotion of health management ・ Preventing occupational accidents and promoting a safe and secure working environment
Governance	・ Continuation of measures to prevent recurrence of inappropriate incidents ・ Risk management for environmental and social issues related to business activities ・ Strengthening information security

5. Management performance targets

• 1. Introduction

• 2. Basic philosophy

• 3. Review of previous mid-term management plan

• 4. New mid-term management plan initiatives

5. Management performance targets

Management performance targets

FY2019 Result	FY2020 Forecast	FY2025 Target
Performance	Net Sales	3.4884 trillion yen	3 trillion yen	4.8 trillion yen
Operating income margin	6.2％	5.3％	5.5％
Shareholder return	ＲＯＥ	9.3％	-	8％
Payout ratio	29.7％	TBD	30％
Investment	R&D	148.1 billion yen	150.0 billion yen	1.0 trillion yen/5 years (200.0 billion/year)
Capital Investment	236.4 billion yen	220.0 billion yen	1.2 trillion yen/5 years （240.0 billion/year)
Global sales	Automobiles	2.85 million units	2.38 million units	3.7 million units
Motorcycles	1.71 million units	1.48 million units	2.0 million units

Note. Exchange rate assumptions ... US $1 = 104 yen, 1 Euro = 124 yen, 1 INR = 1.42 yen

SUZUKI MOTOR CORPORATION

Caution with respect to Forward-Looking Statements

•  The forward-looking statements mentioned in this presentation are based on currently available information and assumptions, contain risks and uncertainty and do not constitute guarantees of future achievement.

•  Please note that the future results may greatly vary by the changes of various factors.

•  Those factors, which may influence the future results, include economic conditions and the trend of demand in major markets and the fluctuations of foreign exchange rates (mainly U.S. dollar/Yen rate, Euro/Yen rate, Indian Rupee/Yen rate).