Sustainability Conference 2022 Minutes
November 24, 2022
AISIN CORPORATION
Q1: I would like to hear about your company’s competitiveness regarding yourexplanation toward the realization of relief, comfort, and convenience?
Specifically, I would like you to talk about the market size, market share andgrowth prospects.
A1: The strength of our vehicle entry related products is that they can provide theopening-closing systems in a total package. Specifically, we can provide productswith necessary functions, including actuators for opening and closing doors. In
addition, since we have sensing technologies of inside and outside a vehicle, whichmake it possible to provide new value where people and vehicles can coexist in thelow speed range. We believe that the market can be further expanded by enhancing
the systems which is combined with the sensing technologies. We are negotiating
deals with customers in the fast-growing Greater China on more than 10 projects.
We aim to increase sales, which are currently around 700 billion yen, by about
50% by 2030.
Q2: You said you aim for 100 billion yen in new carbon neutral businesses. I would
like to know the progress, business scale going forward, and timing ofinvestment and payback.
2A: In business related to the environment, multiple projects are simultaneously
underway. In-house tests and small-scall tests in the markets have begun. We plan
to bring up the size of the tests to the level of mass production in 2025. The plan is
to introduce those that have completed the testing process into the market andexpand the scale to around 100 billion in the first half of 2030. Issues concerning
the environment are difficult to solve by a single company and are in the domain ofcooperation, rather than competition. This is a business area where we rather need
to work to contribute to society through collaboration between the industry,academia and the government. On our part, we aim to brush up on our technologies
to make sure our efforts will bear fruit. Investment scale varies from one theme toanother. The larger the scale, the larger impact the investment will have. Differing
conditions make it difficult to explain. We hope to develop businesses that will be1/6

appreciated by local communities in terms of scale and outcomes, making surethese businesses will be profitable.
Q3: You anticipate electrification will continue to accelerate in Europe. How doyou plan to expand sales to existing AT customers? I would also like to know if
local production is in your scenario.
A3. Electrification has progressed fast in the European market, led by BEVs. However,customer needs vary around the world. In addition to cost as a differentiating factor,
we engage in technological negotiations with customers around the world bysuggesting products differentiated with high efficiency and compactness. For
production of electric drive units, Japan, the U.S., China and, of course, Europe arebeing considered.
Q4: I would like to know if electrification investment has changed from theprevious figure of 270 billion yen. I would also like to know specifically whatchanges are planned in the reshuffling of business asset composition.
A4: Progress and demand for electrification vary according to regions and products, andwe expect changes in speed of response going forward. But at this point, we haveno plan to change the electrification-related capital spending of 270 billion yen fora period until 2025, which we explained at last year's ESG Conference. Businessassets currently total about 1.5 trillion yen, and we plan to make new investments
going forward. But in order to make new capital spending, we need to change
something and reshuffle the portfolio, for example. As the business environment ischanging rapidly, we usually offer the explanation that we will keep watching thesituation while maintaining restrictions on assets as the total balance by setting a
disciplined restriction within a level of depreciation expenses.
Q5: I would like to know if the targets of asset reduction and portfolio reshuffling
the Aisin Group only, or if they include the Toyota Group.
A5: The Toyota Group is included in our picture. We give the explanation as an
expression of intention that we may partner with external parties going forward inorder to realize management strategies. As soon as we settle on concrete content,
we will promptly disclose it to stakeholders.
Q6: You have indicated electrification investment for each region. I would like toknow whether or not it is proportionate to the number of manufactured unitsof HEV and eAxle, including locations of production.

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A6: You can think that investment is decided in proportion to the number of units.
Capital spending represents the largest share in the overall production of units. As
electrification progresses, the weight of local production and local procurement
grows larger. So we basically plan to do this locally for motors and gears toenhance their competitiveness.
Q7: You explained that capital spending will be larger in North America thanChina. Do you plan to prepare for new plants other than in existing locationsin North America?
A7: We don't plan to set up new operational bases in North America at this point.
Investment and production have progressed in China so far, but in North America,
production will progress going forward in response to increased HEV demand. In
terms of our idea for production of electrification products, the basic policy is touse existing resources and assets in a balanced manner and take measures while
controlling investment efficiently. We will work on electrification measures
suitable to needs of each region, using production facilities of existing plants inNorth America and replacing products to be manufactured.
Q8: When looking at your electrification products as a whole from the viewpoint ofoverall vehicles, how have competitiveness and added value changed? Let meknow how I should understand this, including the status of orders, demandand impacts.
A8: We have largely achieved the power consumption efficiency increase of 10% for asingle eAxle and 15% or higher including other EV merchandise, and we believe
this is attractive to automakers, who are our customers. In fact, they are interested
and technological discussions have begun with multiple customers. The
compactness we achieved with eAxle has been highly praised by customers. As
compactness is a requirement for being installed in vehicles, business talks onordering have begun. This mainly refers to the second generation of eAxle. We arethinking of combining EV products, including cooling modules and aerodynamicdevices, in discussions led by the EV center. We think competitiveness and added
value have improved for BEV as a whole.
Q9: You explained that the 2025 4.5 million-unit structure has remained
unchanged for the production of electric drive units. Do you have confidence
for continued growth when you think about growth toward the period from2025? For example, do you expect the figure may actually exceed 4.5 million?

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A9: The 4.5 million is a 2025 cross section. We think, from then on, it will expand withthe second- and third-generation eAxle. The automotive industry itself hascontinued to grow, driven by quantitative expansion. However, we're in a period ofmajor change, including CASE, carbon neutral and electrification. It is a period inwhich the future is unpredictable. We believe, changing the quality of business andimproving quality in response to changing times, while securing a level of quantity
to maintain corporate activity in a sustainable manner leads to improved
competitiveness and added value. Unless we have additional value in new areas
outside our current areas or unique competitiveness, we would only end up in costcompetition. That would not lead to sustainable growth. We will steer the company
by looking at quality, rather than quantity. In electrification products, highefficiency and compactness are required while of course improving costcompetitiveness. In terms of brakes, cooperative regenerative brake systems will
increase as electrification progresses. It's important for us to make compact, great
products which have increased regenerative energy by taking advantage of theknowledge and technology we have developed since the first Prius model. In termsof body products, we have handled a wide variety of actuators. Aisin has sensing
technologies and wide-ranging other products. Combining these products witheach other leads to relief, comfortable and convenient mobility. We did not provide
explanation on specific figures this time, but when specific figures come up for2025 and beyond, we will talk about figures. For now, we are working to improve
quality and competitiveness.
Q10: You said your attention is on quality. I would like to know specifically what
you plan to change. Also, if you will undergo conversion in financial aspects
from the 2030 perspective, I think you may make a bold bet or spin off
businesses. I would like to know specifically what strategies are you planningto achieve growth in a period from 2025.
A10: What we mean when we say we have to change quality is that we need to change
the quality of business in response to the changing times, rather than inside Aisin,or, in other words, all components of a car. Electrification is not just an electricsystem replacing an internal combustion engine. Overall composition of a car,components, systems, separate from electrification, more advanced sensing, AI,
DX, and so on, will change the world. To allow us to compete under this situation,
we will change our core technologies and products. As our resources are limited,
we need to reallocate resources to areas of future growth and transfer some to othercompanies. We ourselves have to initiate changes. I hope you will understand that

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changing the content is how we improve quality. At this point, we will not talkabout what the figures may be after we gain in competitiveness. There was adiscussion of production line replacement, but when it comes to production, it isvery difficult to reflect changes in trends. As preferences vary depending on theregion, the customer and the end user about electric drive units, you need to beprepared to manufacture flexibly and quickly even though there are many models
and numbers may fluctuate. For the manufacture of the first-generation eAxle, weare working to update equipment to deal with expected developments in the future.
So, we will update whatever is necessary, but we will also think of putting theassets we already have, such as plants, locations and personnel, to effective use. It's
not like we will only make existing things and do what we can within the scopepossible.
Q11: I think where you take the existing AT business is important from thesustainability perspective. I think, even if the market halved in size, you will
be able to take full advantage of existing equipment if your share doubles, andas OEMs, who are your customers, step up electrification investment, youhave the opportunities to win AT orders if you act aggressively. I would like toknow where you aim to take the AT business and measures you are planningfrom the sales perspective.
A11: AT is regarded in negative light, which makes us reluctant to discuss it, but ofcourse we remain aggressive for it. Aisin has large shares for products including AT,
CVT and MT. There are forecast figures vary for different regions, but, as you havepointed out, we think the business can grow if we increase our share from thecurrent levels. If we do well in this area, we will be able to use the earned cash ininvestment for the future. As electrification is progressing at the same time, wethink what we must do is take action for the future and at the same time do all wecan for the existing businesses.
Q12: I have the impression that sustainability conferences by other companies
often present ideas but are abstract. But you have explained business andthere were many points that resonated with me, and your explanation is easy
to understand. I know you understand that you basically need to improve
quality and competitiveness, but my question is, in doing business, does thebusiness have the potential to generate cash over a long term? Or is it really
what your company should do if it doesn't achieve sustainability and makeeconomic sense at the same time? In today's conference, I had a little doubt in

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some details about what you may plan to do for monetization. If it's not easy
to generate sales, I would be able to understand that business becomes viable
where both sustainability and economic rationality are achieved, if you
presented an ROIC target for each business in the timeline through 2030, or, if
doing so is difficult, if you discussed market competitiveness and yourcompany's shares in the timeline through 2030. This is what investors want toknow. Keep this in mind the next time.
A12: Today, we mainly explained how we may go about changing quality andimproving it. But I do understand what investors expect. Next time and later, wethink we can discuss specific figures. However, although the graph showing
historic output volume of electric driving units doesn't show figures, development,
orders and preparation for production have progressed as planned toward the 2025
target of 4.5 million units. We also indicated the regional breakdown of capitalspending to show that we will proceed with forecasts in mind toward 2030. These
pieces of information, I believe, ensures understanding of the direction in which
we're taking the electric drive units in the future. In terms of control brakes, wehave indicated figures toward 2025 and 2030, so I hope for now you canunderstand on the basis of these figures. We'll do what we can to live up to yourexpectations.

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