25 May, 2022

Remarks by the President at 20th General Assembly Meeting

Masatoshi Kimata
President,
Japan Land Engine Manufactures Association

Thank you for attending today out of your busy schedules.
Once again, I thank you for your continued support and cooperation in the managementof our association. Here at the occasion of the 20th Ordinary General Meeting, I would

like to make some remarks.

For the past two years, due to the spread of COVID-19, the General Assembly has been
held with only a small number of participants. Today, I am delighted to be able to welcome
you all together for the first time in three years.
As for the economic situation in the last fiscal year, socio-economic activities, whichwere largely limited by COVID-19, have gradually started to recover as the risk of severe
disease has decreased due to the spread of the vaccination. Capital investment andpersonal consumption rebounded in the United States, China, and Europe.

As a result,domestic economic activities, particularly exports, are expected to be revitalized.
Under these circumstances, Russia invaded Ukraine, and the countries that opposed
Russia imposed economic sanctions against Russia, restricting trade in a wide range offields including energy, mining and industrial materials, and food. As a result, the costs ofraw material procurement and distribution, as well as commercial activities, which arerelated to global economic activities, have been affected. On the other hand, the economic
recovery in China has been hampered by the suppression of real estate investment and theresurgence of the COVID-19 infection spread. In addition, the future situation is uncertain
due to factors such as delays in the supply of semiconductors and stagnations of sea
freight.
As for the production status of land-use engines which we handle, we announced on
April 1, that the total domestic production of engines for fiscal 2021 is expected to be
3,818,000 units, 114.2% of the previous fiscal year, due to an increase in domestic
production of gasoline, diesel and gas engines.

Overseas production volume is also

expected to rise to 10,288,000 units, 112.8% of the previous year. Combined domestic andoverseas engine production volume is expected to increase to 14,106,000 units, 113.2% ofthe previous year, marking the first significant increase in 3 years.

The main factors areexpected to be the slowing of the pandemic, recovery in demand in the United States andChina, and the demand increase of diesel engines in Europe.
As for the outlook for fiscal 2022, despite sluggish growth in domestic production ofgasoline engines, growth in production of diesel engines and gas engines has resulted in a
forecast for total production of 3,816,000 units, 100.0% of the previous year. Overseas
production is expected to rise to 10,798,000 units, 105.0% of the previous year, due toincreased production of gasoline and diesel engines.

As a result, total production of land-use engines in Japan and overseas is expected to be 14,614,000 units, 103.6% of theprevious year, increasing for the second consecutive year.
Next, I would like to introduce two main activities of LEMA.
The first one is the voluntary emission regulations. Currently Japanese law does not
regulate environmental standards for exhaust emission composition for engines below
19kW. Recognizing the need to comply with certain level of environmental standards forthis class of engine, since 2003, the association members established and operated
voluntary environmental regulations.

Recently, however, engines made by overseas

manufacturers, who are not members of the LEMA, are being sold in the consumer market
in large numbers.

Therefore, we revised the qualifications for participating in the LEMA

voluntary regulations so that business operators who use engine products made byoverseas manufacturers can also participate in the LEMA voluntary regulations. The
contents of the voluntary regulations revision will be briefly introduced in today's agenda.
The second one is about carbon neutrality.

Since former Prime Minister Suga's

inaugural speech in October of the year before last, discussions on energy reform measuresto achieve carbon neutrality by 2050 have begun on many fronts.

Last year, we also

developed a scenario for carbon neutrality of internal combustion engines and published it
on LEMA website.

As this agenda will have a significant impact on the future prospectsof the internal combustion engines, we plan to continue to discuss on this matter.
Finally, I would like to conclude my remarks by expressing my sincerity for thecontinued success and growth of our members and for the health of those who attend.
Thank you for your cooperation today.