Mid-term Business Plan
(April 2011 to March 2014)

November 8
8, 2011

Isuzu Motors Limited1

Table of Contents

1. Position of Mid-term Business Plan
2. Surrounding Environment & Direction
3. Mid-term Challengesgy Product Strategy
 Regional Strategy
 Groupp Strategygy Alliance Strategy
4. Quantitative Plan

2

Position of Mid-term Business Plan
The Great East Japan
Earthquake(3.11)

Economy globally
expanded

FY06

FY07 FY08

Operatingg profit scaale (JPY in
n Bil.)

Stabilization of income/ financial position

FY09

Advanced countries are stagnant. Emerging countries sustain
growth.

FY10

FY11

Measures taken tocope with economiccrisis

*FY12

FY13

FY14

FY15

FY16～

Mid-term Business Plan

Changeg & Growth of Business Model

90.7

107.0

109.6
88.2
21 7
21.7

 The mid-term pplan wassuccessfully attained

3

GlobalfinancialcrisisGlobal Three
Core
Business
Organization

11 0
11.0

 Preconditions werelargelyg y changed:ghowever, profit was
secured Address to expand our business regions andstabilize our business structure,
structure with a view to theachievement in FY2016*Note: “FY12” from April 2011 to March 2012.

２．Surrounding
２
S
di Environment
E it&
Direction41) Global Economy
 Fallingg economic growthgrate of advanced market due to financial deterioration and decline in workinggpopulation, etc. Concern about continuous appreciation of JPY to USD and Euro.
(％)

10

Work
king
population rate

70

60※Working population=15~64 years old

50

‘80
‘90
80
'90
90
'80
Japan

‘00
‘10
'00
00
'10
10
N. Am e r ic a

‘20
‘30
‘40
‘50
'20
20
'30
30
'40
40
'50
50
Eu r o pe
Em e r g M kt

G
GDP
gro
owth ratee

Forecast

Source: UN, World Population Prospects, The 2010 Revision
(％)

-5
-10
-15
15

※Vs. GDP
‘00
'00

‘02
'02

Japan

‘04
'04

‘06
'06

‘08
'08

‘10
'10

N.America

‘12
'12

5
0
-5
-10

150

Forecast

0

‘14
'14

Europe‘16'16

Source：IMF, World Economic Outlook Database April 2011

Forecast‘00 ‘02'00
00Japan'02
02
J‘04 ‘06'04
04Am e '06
06
NAN.
r iic a‘08 ‘10
'08
08Eu
'10
10
E r o pe‘12 ‘14 ‘16
'12
12Em
'14
14 '1616
E e r g M kt

Source：IMF, World Economic Outlook Database April 2011

Efffective
excha
ange ratte

Financcial balan
nce
5

5

(％)

(Index: CY2005=100)
As of July ’11

100

50

Japan
Japan

U.S.

Euro China India Russia Thai.
Euro
India
Thai.

Nominal terms

Real terms

Source：BIS effective exchange rate, July 2011

2) Global Market Trend
 Sales volume transfers to emerging market,
market mainly in Asia and expands there
there. Competition is intensified
due to rise of Chinese/Korean manufacturers.

Trend of export volume ofChinese Korean and Indian manufacturers
Chinese,Global vehicle demand by region
100(Mill. unit)

350

Global financial
crisis

77

72
65

60

40

250
200
150
100
50
0

0
(Emergingmarket ratio)

2007

2009

2011

2015

(41.3%)(49.1%)(56.5%)(61.4%)

N. America
China
Latin America

6300

Advancedmarket20※Commercial vehicles (incl. Pick-up）
Forecast

85
Emerging
g market

80

Forecast(K. unit)

W. Europe
Asia
Mid-E. Europe

Source: Isuzu Motors Limited

Japan/PacificMiddle East/Africa

2007
Korean vehicle

2009

2011

Chinese vehicle

Source: Isuzu Motors Limited

2015
Indian vehicle

3) Macro Environment
 World energy demand increases due to large growth of number of vehicle in operation,
operation mainly inemerging market. There is a trend from petroleum dependence to energy diversification.

1,500

Vehicle in operation (Forecast)

Energy consumption / Composite ratio(Mill. unit)(Bill. ton)
Forecast

1,370

1,026

1,000

759

50

Forecast
Emerging market
E

Future growth will
exceed that for the
past 10 years.

(％)

15

40

30

10

20
Advancedmarket

500

10

0

0
2001

7

5

2011

N. America
China

W. Europe
Asia

Latin America

Mid-E. Europe

Source: Isuzu Motors Limited

2021
Japan/PacificMiddle East/Africa

0
1990

2000

N. America
Middle East
Petroleum
Nuclear power

2010

2020

EuropeAfricaNatural gas
Hydraulic power

2030

Asia
Latin America
Coal
Regenerable

Source: BP Statistical Review “BP Energy Outlook 2030”

4) Product / Technologies
 Engine cost significantly increases to comply with emission regulations
regulations. The number of R&D centers has
been increased to respond to product needs in emerging market.

Measures taken to meet product needs(in emerging market)

Cost required to comply with emission
regulations
Increased and complicateddevices to meet emission
regulations

Cost
increase

Difference in prod
duct needssImage of Engine. Mfg. cost

Emerging market

E3

E4

E5

E6

Basic ENG

ECM Injection sysytem

Turbo

After-treatm ent/Exhaust system

No. of R&D ce
enters8

E2

Environmental performance- Low fuel consumption /low emission
Safety/comfort/quietness

Robustness- High payload, low
quality fuelBasic equipment

120

E1

Advanced market(Japanese manufacturers)

Source：JBIC

100
80
60
40
20

ASEAN-5
N.America

0
2001

2003

2005

2007

China
EU15

2009 2010

5) Domestic Operations
 Deterioration of business environment surrounding
g the transportationpindustryy due to low transportationpfreight and increased vehicle life-cycle cost. The Great East Japan Earthquake exposed structuralconcerns of supply chain.

Business environment of road transportation(Bill. Ton-kilometer)

400

Structural concerns of supply chain(Index: CY2000=100)

Transport ton-kilometers
Road Transportation Freight
No. of truckload carriers

120

300

110

 Excessive dependencypy on specificpsupplierspp
under TierⅡ.
Î The supply chain blocked by the Great
Earthquake.
Tier1

200

100

Remainstagnant

100

Tier2
Tier3
Tier4

90

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

300

Tier5
Only-one company

Parts commonization

Diesel fuel price

200
100
0

(Index: CY2000=100)
Source：BOJ, MLIT, Oil Information Center

9

Rise

 The constrained power supply resulting fromthe nuclear power station problems.
Î Deteriorating manufacturing location
conditions in Japan.

Corporate Philosophy and Vision

Competition
Rise of Chinese,
Korean and Indian
manufacturers

Environmental
Response(C(Corporatet PhilPhilosophy)h )Isuzu will always mean the best
A leader in transportation, commercial vehicles
and diesel engines,
engines supporting our customers
and respecting the environment

Expansion of a
product needs

10

Financial deterioration &economic stagnation
continued.

Domestic market
Decrease in businessprofitability

Large increase of
product costs

Market needs

Advanced market

Isuzu’s Vision
Aiming at excellence in :•Respect
Respect environment to meet social demand•Maximize vehicle-operating-rate and minimize
life-cycle cost to meet customer’s needs

Supply chain
Risk ofoverconcentration inJapanMid-term Basic Policy

Direction

 Develop “eco-friendly product” and “product meeting specific needs ofemerging market”
 Set-up growth strategy for emerging market and maintain business inadvanced market- Aggressive resources input to establish manufacturing operations inemerging market“Expand
Expand Business Domain and Stabilize Business Structure
Structure”

Basic Policy

Japan-based
Business Organization

Global Three Core
Business Organization

CV Business(Dom.+ Export)

Advanced market
CV Business

LCV Business

11

Emerging market
CV B
Businessi

LCV BusinessGlobal Three Core Business Organization
 In order to strengthen business structure, the China
Cand India ffootholds support three core operations(Japan, Indonesia, Thailand).

((Japan)p )((Indonesia))((Thailand))CV foothold
for advanced market

CV footholdfor emerging market

LCV foothold• Mother functions• Improve efficiency /increase value-added• Introduce next-generation
products• Manufacturing functions• Strengthen sales /Develop export business• Introduce products for
emerging market• Self-sustained functions• Expand overseas market• Enhance product line-up• Low-cost parts procurement• Engineering cost sharing
withith localll partnert(China)(India)CV support
pp
foothold

LCV support
pp
foothold• CV/PT full line-up introduction• Strengthen engineering / procurement
functions• StrengthenSt
th relationshipl ti
hi withith partners
t

12

Core
operations• Low-cost parts procurement• Expansion of LCV-based
marketk tSupportoperations• Establish own manufacturing operations andsales network• Low cost LCV model and emerging market
prod cts introd
products
introduction
ction

Action Items and Future Growth Strategy
 Accelerate business frameworkfconstruction and promote growth strategy to establish Global
G
ThreeCore Business Organization.

Prroduct
Manufaacturing/Enginneering

Action Items

Future Growth Strategy

 Formulate basic product strategy- Product portfolio for emerging market- Next-generation product (HD, Pick-up /Pick-up derivative)- PT downsizing Expand product segments to reinforce thegrowth strategy
 Strengthen DE competitiveness and apply toalternative fuel
Î Product Strategy

Emerging  Parts procurement center in China
market CV  Engineering function in ASEAN

 Clarify direction and business position ofeach region
Î Regional Strategy

LCV

Sale
es

 Reorganization of logistic channel- Establish Isuzu Motors Sales Ltd.
Domestic
and integrated dealers to coverextensive areas

Overseas13

 Transfer engineering responsibilities toThailand and transfer function on stepby step process

 Establish After-Sales Center (ASC)- Middle East, Latin America, Europe Enhance cross-business functions to
support Regional Strategy
Î Group Strategy
 Complement Regional Strategy, secureadvanced technologies and strengthen
procurement capabilities by expanding
volumeÎ Alliance Strategy

3 Mid-term
3.
Mid term Challenges
 Product Strategy
 Regional Strategy
 Group Strategy
 Alliance Strategy
14

Product Strategy 1) Vehicle
 Introduction off best suited product forf emerging market by engineering functionflocalization.
 New entry in Light-weight truck segment as future strategic vehicle.
Emerging
marketAdvancedmarketC
V

BUS

BIG MCHD

Next-gen.
HD

MD
700P

SOP timing‘11‘12-’15

 Next-generationgHD- No.1 fuel efficiency / loading
capacity Low-priced HD for emerging market

HD forEmerg. Mkt.

 Low-priced products to meet local
needs- AggressiveA
i use off llow costt countrytparts (ex. China)

MD/LD for
Emerg. Mkt.

LD
Light-weight truck
Next-gen. P'up &P’up Derivative

LCV
15

New
products

Model
Change New entry to growing market
Pick-up

Pick-up Derivative LCV Full Model Change- Significant improvement of productquality and performanceProduct Strategy 2) Powertrain
 Accomplish fuelfefficiency
ff
and cost reduction by DE downsizing. Take aggressive action to respond theneeds for alternative fuel.

Correspondingpg alternative fuel

Heavy

HD

DE downsizing
g concept
p

BUS

High

Low-disp.

HD

MD

LD

LCV

-

-

●

-

●

●

Engine Torque

MD

GVW
W

Hi h tHigh-torque

Light

L
Low
Displacement （L）

Efforts toL/D DE
16

CNG

LCV

LD

New small
displacement DE

HEV
(EV)

2.5 3

5

8 10 15

 Pursue characteristics required for CV- Robustness/durability/serviceability,
R b t/dbilit /
ibilit etct
 Attain balanced performance and economic
efficiency●
Newly
Introduced●●
Massproduced●
Newly
Introduced

Bio
Diesel Correspond to 1st generation
Bio Diesel , considering needs
i eachinh country

GTL/
DME(*)

 Promote fundamental research
toward commercialization for
future growth

Alternativefuel (DE)(*) GTL: Gas to Liquid
DME: Dimethyl Ether3 Mid-term
3.
Mid term Challenges
 Product Strategy
 Regional Strategy
 Group Strategy
 Alliance Strategy
17Regional Strategy - Basic Direction
 Prioritize business directions by regions and resources forf business scale expansion.

Advanced market
CV Business

N.America

Efficient
Stabilize

Market Position

EuropeJapan
CIS

OceaniaHome
H
Country
ASEAN

Asia

China

India

MiddleEast Strengthen

Latin
America

ASEAN
China
India

Middle East (Expansion of business domain) Expand involvement in these sales regions
AfricaLatin America
and increase sales volume in the growing
Oceania/CIS
markets

N. America
Europe(Improvement of business efficiency)
 Maintain current business with intensive
efficiency

Japan(Stabilization of business)
 Maintain current business profitability andemployment

Af i
AfricaExpandEmerging market
CV B
Businessi
18(Strengthening of business foothold
foothold)) Actively promote resources and enhancethese markets as the core of Isuzu business

LCV BusinessRegional Strategy 1) ASEAN (LCV)LCV Business

Strengthening of global sales<FY2011: 324K units → FY2016: 467K units> Introduction of next-generation Pick-up and its derivatives
 Establish IMIT (NEWCO for Export) to strengthen global sales- Spare parts / service operation to be added to the NEWCO that integrate “3S” functions—sales, spare parts and service- Development of new market and production/sales operations (India)
 Establish the new plant (with a production capacity of 400,000 units), Self-sustainedengineering functions in Thailand

Next-gen. Pick-up(Introduction in Thailand in Oct.’11)
19

Regional Strategy 1) ASEAN (CV)CV Business

Strengthen CV competitiveness <FY2011: 38K units → FY2016: 81K units>(Market share No.1)

Market share: 40％
 Develop and introduce best suited product for emerging market using Indonesia
foothold as a core
 Consolidate local manufacturing company to strengthen manufacturing functions- Localize engineering functions, expand parts localization (local contents: 40%), tostrengthen production capacity
 Strengthen the sales network (parts supply chain and service network establishment)
Strengthen
Subsidiaries
functions
Newly
Affiliates andothersconsolidated

Indonesia

E iEngineeringi

Thailand

Malaysia

VietnamPhilippines

IVC

IPC

ITA
Integrated

Procurement
Manufacturing
MD for Emerg. Mkt.
(Introduction in Indonesia in Jul.’11)
20

Sales /
Parts / Service

IMCT
IAMI

IHM

TIS

IMSB

Regional Strategy 2) China

Vehicle Business

Enhance partnership<FY2011: 58K units → FY2016: 138K units> CV full line-up development by H/D truck introduction
 Strengthen global H/D competitiveness by engineering localization
 Increase number of vehicle sales and improve “ISUZU” brand value through support to Qingling
Motors Ltd.

Component
Business

Contribution to ISUZU profitearning<FY2011: 150K units → FY2016: 328K units> Engine full line-up development by H/D engine introduction(including industrial engine) Absorb and increase earnings through consolidation of manufacturing operation andstrengthening sales including industrial engine
 Strengthen global competitiveness of Isuzu product through components and parts export21

Regional Strategy 3) India

CV Business“ISUZU” branding penetration<FY2016: 30K units> Introduction of best suited product for India equipped with Isuzu components based on
existing SML truck
 Strengthen SMLI functions (dispatch engineering and sales personnel from Isuzu)
 Establish dedicated task force team in SMLI to reconstruct DLR network (core DLR selection)

LCV Business

Build upp future core business<FY2016: 120K units ((Dom. 80K / Exp.
p 40K)>)

 Low cost LCV model and emerging market products introduction (new market entry)
 Establish Isuzu-driven manufacturing operations and sales network
 Contribute to CV/LCV business for emerging market through low cost parts and products
export22

Regional Strategy 4) CV Sales Expansion
Further involvement in sales
operations<FY2011: 93K units → FY2016: 159K units>

Middle East Establish ASC (After-Sales Center) in Dubai to expand Isuzu’s
after-market business and strengthen marketing function
 KD operation introduction in Saudi Arabia

A i / CentralAsia
C t l AmericaAiOceania / CIS

After-Sales Center (ASC) in Middle East Consolidate Mexico Distributer affiliated companies and establish a newDistributer in Pakistan
 Strengthen parts business of Australia Distributer subsidiary (hub parts
operation function in Oceania)

South America/
Africa Establish Isuzu-driven CV sales network ((South America)) and manufacturinggoperations (South Africa)
23Regional Strategy 5) Advanced Market
Stabilize and maintain businessefficiency
Japan<FY2011: 47K units → FY2016: 55K units> Strengthen cost competitiveness and optimize asset allocation by streamlining sales/manufacturing- Establish integrated dealers to cover extensive areas (consolidation: 15→6 companies) andconsolidate distributer/dealer indirect work
- Core module manufacturing and flexible production lines establishment (mutual
complementation of H/D and L/D lines) Maintain business profitability/employment by expanding added value

N. America / Europe<FY2011: 17K units → FY2016: 37K units> N. America: Consider export business of locally-produced vehicles and parts business hub
operation for Latin America
 Europe： Maintain current business by improving vehicle business efficiency and strengthening
parts operation24

3 Mid-term
3.
Mid term Challenges
 Product Strategy
 Regional Strategy
 Group Strategy
 Alliance Strategy
25

Group Strategy 1) Engineering Japan focusesfon core engineering and transfersfengineering ffunction to ASEANS
to develop specificfproducts best suited for emerging market.

Strengtheningof function

CV

LCV

PT

Core Engineering

Japan

Functiontransfer

3,300

SupportEngineering
responsibility(core+specific)

Current numberCbof Engineering
Personnel

Overseas
O
s

ASEAN

ASEAN-specificEngineering for
emerging market

China

Support HD
Engineering

Support industrial
engine Engineering

20

Europe/N. America

N. America uniquevehicle Engineering

U.S./Euro emission
evaluation

150

Functiontransfer210

TTL 3,680
26

Group Strategy 2) Manufacturing (Vehicles)
 C
CV ffull line-up development in ASEAN.
S
Transferf manufacturingffunctionffromfJapan to China
Cto establish
foothold for next-generation HD.

Current
New foothold

Japan

ASEAN

FY 2016
China

Japan

ASEAN

China

HD
MD

ISZ

ISZ
Qingling
Qili
MotorsLD
LCVExport27

Lightweight
truck

IMCT

ISZ

IMIT

Productfforemerging
market

IMCT

ISZ

IMA
IMIT

Qingling
Qili
MotorsIndia

Group Strategy 2) Manufacturing (Components)
 Expand localization off C
CV components in ASEAN
S
by utilizing LCV
C infrastructurefand promoting local
production by Isuzu Group companies.

FY 2016

Current
Japan
New foothold

ISZJ

Group
Company

ASEAN
CV

LCV

China

ASEAN

Japan
ISZJ

Group
Company

CV

LCV

China India

6W/6U
EngineE

6H/4H

T/M・Axle
Casting/
Forging
28

I-Metal

TDF

AICC
ITF

Qingling
Motors

Parts
JV
group

I-Metal

TDF

IEMT
MII
IAMC

Infrastrructure
utiliza
ation

IEMT
MII
IAMC

QIEC

JBK
Promotte local
Produ
uction

4J

QIEC

JBK

AICC
ITF

Qingling
Motors

Parts
JV
group

3 Mid-term
3.
Mid term Challenges
 Product Strategy
 Regional Strategy
 Group Strategy
 Alliance Strategy
29

Alliance Strategy
 Isuzu will aggressively promote discussions forf alliance with possible partners on a product by productbasis and on a market by market basis so that Isuzu can grow as an independent entity.

Alliance
needs

Items
alreadyin place

Futurepolicy30

Ensure volume tomake business viable(share of fixed cost)

Secure advanced
technologies

Complementary
regional project

Volume expansion（secure procurement
capability)

Bus(Hino)

Emission aftertreatment((Hino))

S. America / Africa(GM)

Domestic LD(Nissan/UD/Mazda)

 Business integration ofbus body
manufacturing
operations (JBUS)

 Mutual complement ofadvanced technologies/
effective utilization ofengineering resources

Joint Venture-S. Africa/Egypt ;manufacturing/sales-Andean ;marketing Aggressive OEM(OriginalEquipment
Manufacturing) supply ofcompetitive products

Aggressively utilize Alliance by products and by markets

4. Quantitative Plan

311) Volume Plan

Vehicle shipment volume

Diesel engine production volume(K. units)(K. units)

1,000

1 000
1,000

1,500

1,500

1,272

829

292

500

598

1,000

423

217

500

322

32

188

500

408

792

956

560

188
64

84

92

FY 2011

FY 2014

FY 2016

CV for advanced mkt

231

126

346

0

903

313

CV for emerging mkt

0
FY 2011

LCV

Vehicle eingine

FY 2014

Industrial engine

FY 2016

Others2) Business Target / Investment Plan
(Bill. In JPY)
FY2011

1,415.5

1,850.0

88.2

130.0

6.2%

7.0%

FY2009 - FY2011

FY2012 - FY2014

R&D Expense

181.5

185.0

Facilities
Investment
Financial
Investment

121.8

200.0

71
7.1

44 0
44.0

Net Sales
BusinessBiTargetInvestment
Plan

33

FY2014

OperatingO
tiIncomeOperating
Income Ratio

(Appendix) ISUZU Subsidiaries and Affiliates

Area
Japan

Thailand

ASEAN Indonesia
Malaysia
Philippines
VietnamSingapore
China
India

34

Company Name

Type Of Business

Pages

Jidosha Buhin Kogyo
gy Co.,, Ltd.
JBKI Metal Technology Co., Ltd.
I-MetalTDF Co., Ltd.
TDF
Isuzu Motors Co., (Thailand) Ltd.
IMCTIsuzu Technical Center of Asia Co., Ltd.
ITA
Isuzu Engine Manufacturing Co., (Thailand) Ltd.
IEMT
IT Forging (Thailand) Co., Ltd.
ITF
Tri Petch Isuzu Sales Co., Ltd.
TISIMIT Isuzu Motors International Operations (Thailand) Co., Ltd.
P.T. Isuzu Astra Motor Indonesia
IAMI
P.T. Mesin Isuzu Indonesia
MII
P.T. Asian Isuzu Casting Center
AICC
Isuzu Hicom Malaysia sdn
sdn. bhd
IHM
Isuzu Malaysia Sendirian Berhad
IMSB
Isuzu Philippines Corporation
IPC
Isuzu Autoparts Manufacturing Corporation
IAMC
Isuzu Vietnam Co.,
Co LtdLtd.
IVC
Isuzu Motors Asia. Ltd.
IMA
Quingling Motors Co., Ltd.
QL
Quingling Isuzu (Chongqing) Engine Co., Ltd.
QIECSML ISUZU Ltd
Ltd.
SMLI

Manufacture of Diesel Engines
gand components
p

28
28
28
20,27
20
28
28
20
19 27
19,27
20
28
28
20
20
20
28
20
27
21,27,28
28
22

Manufacture of Casting
Manufacture of Forgings
Manufacture of CV and LCV
Vehicle Engineering
Manufacture of Diesel Engines
Manufacture of Forgings
Distribution of CV and LCV
Export of LCV
Manufacture of CV and AUV
Manufacture of Diesel Engines
Manufacture of Casting
Manufacture of CV
Manufacture of LCV and Sales of CV and LCV
Manufacture and Distribution of CV and LCV
Manufacture of transmission
Manufacture and Distribution of CV and LCVControl of Business in the Asian Area
Manufacture of CV and LCV
Manufacture of Engines
Manufacture and sale of CV

Notice to The ReadersThis document is intended for information purposes and includes, but not limited to,statements on future business performance and business plan. Information contained in the
document, other than historical or current facts, constitutes forward-looking statements
which are based on assumptions and judgment formed by management of the Company inview of information currently available. By its nature, Isuzu does not guarantee or give any
warranty as to the accuracy of all information contained in this document.
Such statements involve elements of risk and indefiniteness uncertainty contained in suchpand jjudgment,gand/or various factors including
g but not limited to economic
assumptions
changes in future, changes in automotive market conditions, foreign currency exchange
rate fluctuations, and changes of business environment surrounding the Company. Suchelements and/or factors may therefore cause the actual results and performance to bematerially different from any future results and performance expressed or implied by thepredictive statements stated herein. If you actually have an intention to invest, do notdepend upon this document as your sole source of information, and use your own
didiscretion
ti iin making
ki an iinvestmentttd
decision.
i i35

Trucks for Life

36