Toward Sustainable Growth

From the President

We will overcome the challenging external
environment and aim to create prosperity andhappiness for people while working in harmony
with society and the environment.

Overview of Fiscal 2019

Yoshihiro Hidaka
President, Chief Executive Officer andRepresentative Director

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Yamaha Motor Co., Ltd. Integrated Report 2020

In fiscal 2019, ended December 31, 2019—the first year of
our current three-year Medium-Term Management Plan set
to conclude in fiscal 2021, net sales increased in the Marine
Products and Financial Services businesses but fell in theLand Mobility and Robotics businesses (excluding the impact
of M&As), resulting in an overall net sales decline. Despite
an improvement in profitability thanks to 1) structuralreforms and heightened operational efficiency at factories
producing developed market motorcycles in Europe and ourheadquarters, and 2) more premium-segment motorcycle
models in Indonesia, operating income also contracted overall due to the aforementioned decrease in net sales in the
Robotics business and other segments, an increase in
expenses for implementing growth strategies, the impactof foreign currency exchange rates, and other factors.
Our Medium-Term Management Plan was rolled out looking to achieve earnings by securing and improving the profitability of existing businesses and then making investments
and embarking on challenges for future growth. However,balancing these differing goals has proved difficult.
Excluding the expenses for strategic growth and the impactof foreign currency exchange rates, we were able to secure
earnings on a par with the previous fiscal year for theformer, but were unable to achieve the results we wanted.
However, we succeeded in sowing various seeds for thelatter. The Medium-Term Management Plan’s policies are tofurther advance the growth strategies we have pursued thus
far and allocate the management resources to acceleratethem. However, we currently have not been able to raise theperformance of our existing businesses to the extent necessary to facilitate this. With our results for fiscal 2019,
expenses for corporate growth and reinforcing our businessplatforms proved to be a burden and the increase in
expenses greatly exceeded the rise in marginal profit.
Looking at individual businesses, we saw an improvementin earnings with developed market motorcycles in the Land
Mobility business from greater unit sales in Europe and theaccompanying increase in marginal profit at our headquarters. However, profits declined in the emerging market
motorcycle business due to falling unit sales in Vietnam,
Taiwan, and India stemming from the market and competitor environment, and the impact of issues with logisticaloperations in the Philippines. In addition, during the current
Medium-Term Management Plan, we will move toward
implementing specific measures for structural reform in thedeveloped market motorcycle business, an issue present
since the Lehman Brothers bankruptcy triggered the 2008
global financial crisis.
In the Marine Products business, the shift toward large
outboard motors continues and while net sales proceeded
broadly in line with our expectations, profits fell due to theheavy impact of foreign currency exchange rates.
In the Robotics business, sales increased due to the establishment of Yamaha Motor Robotics Holdings Co., Ltd.
(YMRH) through the business integration of Yamaha Motor,
SHINKAWA LTD., and APIC YAMADA CORPORATION in
February 2019, but lasting stagnant market conditions from
U.S.–China trade friction led to a significant decrease inprofits. Furthermore, in April 2020 we converted YMRH into
a wholly owned subsidiary. Going forward, Yamaha Motor
will expedite post-merger integration (PMI) and raise YMRH’s
management speed to create a more integrated management channel with the Company from which to improve the
Robotics business’ profitability as a whole.

Yamaha Motor Co., Ltd. Integrated Report 202011

Toward Sustainable Growth

From the President

Promoting Medium- to Long-Term Strategies
In fiscal 2018, Yamaha Motor formulated its Long-Term
Vision for 2030 under the slogan of “ART for Human
Possibilities.” This vision clearly states the objectives andvalues Yamaha Motor would like to offer society amid thedramatic changes in the external environment and fasterdiversification of people’s values. I believe that the range offields in which the Company can make a contribution isbroadening due to societal changes that include the tightening of regulations on exhaust emissions, electrification,
aging populations in developed countries, and the advances
in information technology (IT) and artificial intelligence (AI)technology. By combining the core technological competencies we have developed to date with cutting-edge technologies and pursuing co-creation with our business partners, wewill seek to create a better society and better daily lives byoffering products and services that build on people’s innate
capabilities and possibilities.
The strategy for achieving this goal is “ART for Human
Possibilities.” The “robotics” in the strategy broadly refers

to advanced technologies such as electronic control and AI,
and forms the foundation for the next stage of growth inall our business activities. Another aspect of the strategy is“Uniquely Yamaha Solutions.” This refers to systems likethe automated low-speed mobility (LSM) service we areconducting real-world testing for and the provision of­non-hardware solutions. “Transforming Mobility,” anothercomponent of the strategy, concerns the offering of hardware solutions, headed by our Leaning Multi-Wheel (LMW)*
technology and electric vehicles (EVs).
The current Medium-Term Management Plan is positioned
as the first three years for advancing reforms aimed at realizing our Long-Term Vision, and we are working to reform
our management platforms and promote growth strategies.
Although our aforementioned business results in fiscal 2019were unfavorable, we were still able to move our growthstrategies forward according to plan.
* Yamaha Motor’s designation for vehicles with three or more wheels that lean like a
motorcycle through turns

Reforming Our Management Platforms
We are reforming our management platforms using thelatest digital technologies and data in our R&D, manufacturing, and corporate fields.
In the R&D field, we are advancing model-based systems
engineering (MBSE). Utilizing simulation models in the development process covering initial design to verification, we
can perform strength and fluid analyses, etc., to identify andsolve problems at an early stage and thereby conduct more
efficient development and manufacturing.
In the manufacturing field, we are moving toward the useof smart factories. This entails using a variety of sensors tocollect digital data on the operational status of a factory,

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Yamaha Motor Co., Ltd. Integrated Report 2020

carrying out big data analysis, and then feeding the resultsback into the operation of the factory. Doing so enables theearly detection and prediction of irregularities, and in turnleads to more efficient management.
In the corporate field, we will promote the overhaul ofenterprise resource planning (ERP). In seeking the bestarrangement for a global corporation, we will standardize
and unify our core systems. We will work to reduce costs
and implement our growth strategies by increasing theefficiency of indirect processes and shifting resources togrowth fields.

Promoting Growth Strategies
Taking on new challenges in our core businesses
We have been taking on—and beginning to see the resultsof—a variety of challenges, such as our quest “To someday
create bikes that lean but do not fall” showcased by our
MOTOROiD and LMW models, efforts to promote the development and commercialization of EVs, and efforts aimed atmore automated watercraft operation in the Marine
Products business.
Today, responding to the trend for “connected, autonomous, shared & services, and electric” (CASE) vehicles has
become an urgent priority in the transportation equipment
industry. In this context, electrification has become a key
word and Yamaha Motor has set a target of reducing CO2
emissions from its products by 50% by 2050 (comparedwith 2010). As part of these efforts, we are promoting the
manufacture and sale of electric products, including theelectrification of motorcycles. Given that engine development is our traditional strength and that it remains animportant element of differentiation for us, electrificationin the transportation equipment industry has the potential
to threaten our survival.
However, while the mobility needs of people may change,
those needs are not likely to disappear. Although I feel thata diverse change will come to the values regarding mobility,
due partly to the global COVID-19 pandemic, I would like toestablish as soon as possible a model for generating steadyearnings even when electric products become the norm,
while ascertaining market and customer needs. To that end,
we have positioned EV-related investments as an issue ofthe highest priority for our core business framework andwill undertake these without constraint.

Promoting the development of new businesses
With an eye on developing prominent new businesses by
2030, I envisioned a three-phase process: the three years of
the current Medium-Term Management Plan as a period for
identifying opportunities; a subsequent three-year period forinvesting management resources in a focused manner in thechosen fields; and another three-year period in which the
newly developed businesses begin to contribute to earnings.
I believed that these periods were realistic based on my own
personal experience. However, the incredibly impactfulchanges to the external environment brought by the global
COVID-19 pandemic has brought to the fore various societal
issues, and amid this we have fast-tracked our new business
opportunity identification plan and narrowed down thefields to pursue to four: mobility services, LSM, agriculture,and medical. Going forward, we will focus on these four
fields and invest our management resources to create new
businesses and grow their scale.

Forecast for Fiscal 2020
At the financial results briefing in February 2020, I conveyed
our intention to focus in fiscal 2020 on restoring the profitability of our existing businesses and moving forward incoordination with each business and corporate function,in light of growing uncertainty about the global economic
outlook, the signs of a recessionary environment, and ourbusiness performance in fiscal 2019.
However, the global COVID-19 pandemic is having an
enormous impact not only on economies and businessbut also human life. Yamaha Motor has also implemented­countermeasures, including production control based on
careful assessment of demand and extensive cuts toexpenses and investment spending.

In addition, we have proactively and quickly provided
donations and carried out support activities in our various
regions of operation. In Japan, we manufactured plastic faceshields and sterilizing detergent and distributed them tomedical institutions as well as donating and offering free
motorcycle rentals to physicians overseas (Thailand, Germany,and Sweden).
In recent years, the Company has overcome several crisesthat have cut off its supply chain, from the large-scale floodsin Thailand to the Great East Japan Earthquake and heavy
rains in Japan. In the process, the level of the Company’svarious initiatives related to our Business Continuity Plan
(BCP), such as the preservation of our supply chain, hasrisen considerably. Accordingly, when an event occurs in a

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Toward Sustainable Growth

From the President

given region, we have become able to swiftly determine
how it will affect us and how best to deal with it.
Nevertheless, the global spread of COVID-19 marked thefirst time that we have been forced to suspend operations
simultaneously around the world. Based on this experience,
we are implementing three countermeasures. The first is thepromotion of e-commerce. As it becomes increasingly difficult to maintain our physical touchpoints with customers
due to limits or restrictions on people leaving their homes,
we will broaden our businesses’ digital touchpoints withcustomers and establish an optimal combination of digitaland face-to-face customer interaction.
The second is transitioning to new work styles. The extent
to which we can ensure production efficiency at our plants
while taking all possible measures to prevent infection on
the frontlines will be vital. For our office-based employees,
we must also revise our personnel systems so that they canachieve results while working from home. I believe that once
this new work style becomes established, we will see each
employee place greater value on the time they are able tosave on commuting or make the most of their spare time.
The third measure is further strengthening our supply chain.
Yamaha Motor products are sold around the world and many
are manufactured in countries outside of their destination
market. Our production structure is such that when manufacturing—including parts and components—ceases in one
country, many other countries where our products are soldare significantly affected. In light of current circumstances, we
are working to stabilize and strengthen our supply chain by

We will calmly assessmarket conditions andtenaciously work
toward achieving
our goals.

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Yamaha Motor Co., Ltd. Integrated Report 2020

reviewing our global production structure and logistics functions, the appropriate products and parts by type as well as
inventory volumes for each country, etc.
A comparatively large proportion of our products are used
for leisure and recreation, and as governments throughout
the world begin to lift restrictions on going out, spending
money on hobbies and leisure may remain a low priority,even if governments enact economic stimulus policies. On
the other hand, I am also hopeful that demand for our products as accessible outdoor vehicles and tools will be stimulated in the post-COVID-19 world. Demand for Yamaha
Motor products such off-road motorcycles, sport boats, andpersonal watercraft is already recovering due to a growing
trend for enjoying nearby places and the outdoors following
the easing of lockdown restrictions primarily in Europe andthe United States.
Furthermore, in regions with extensive and well-developed
public transportation, calls to avoid closed spaces, crowded
gatherings, and close contact with others have remindedpeople of the advantages of personal mobility options likemotorcycles and electrically power-assisted bicycles. In thelogistics industry where essential workers support people’s
daily lives, motorcycles are being reappraised for their­mobility and ability to avoid or better navigate traffic congestion. I believe that these developments will lead to new
demand going forward.
As for our Robotics business, although I expect global
capital expenditures to remain sluggish for a time, I am
certain that the bolstering of communications infrastructure
and other developments will prompt a growth in demand
over the medium to long term. We must steer management
while accurately assessing conditions. Naturally, our policy is
to prevent the further spread of COVID-19 by prioritizing
the lives of our employees and stakeholders first and then­minimizing our business losses. Although we have yet toannounce our performance forecasts for fiscal 2020, we
intend to do so as soon as possible and are currently scrutinizing the impacts of COVID-19 on our supply chain, plans,
and business performance.
I know that this will be a particularly challenging year. We will
do our utmost to calmly assess market conditions and tenaciously work toward achieving the Medium-Term Management
Plan while maintaining a constant sense of urgency.

Shareholder Return Policy
Yamaha Motor views increasing shareholder returns as animportant management issue and strives to raise corporate
value. With regard to the dividend payment, we seek tomaintain as well as strengthen our financial foundations andincrease new growth investments and returns to our shareholders. We have set a benchmark of 30% for the dividend
payout ratio of net income attributable to owners of parent.
For fiscal 2019, we paid a full-year dividend of ¥90 per
share, consisting of a ¥45 interim dividend and a ¥45

year-end dividend, surpassing this benchmark. In regard to
fiscal 2020 dividend payments, as we anticipate challenging
conditions in the first half of the fiscal year, we havedecided not to pay an interim dividend with the goal of
securing liquidity on hand. We will promptly make anannouncement regarding a year-end dividend when we areable to make a forecast.

Further Improving Brand Value
The corporate mission of Yamaha Motor is to be a Kando
Creating Company and we aspire to always be a company
offering new value that inspires customers to look to us for
new Kando. With our origins in Yamaha Corporation, aleader in musical instruments and audio products, we haveengaged in Monozukuri that appeals to human sensibilities
through our consumer-oriented development ideal. With the
Yamaha brand, the Kando that we offer entails an emphasis
on appealing to human sensibilities, and we operate a joint
Brand Committee together with Yamaha Corporation toshare the brand’s direction and alternative indicators of value
as well as our respective targets to that end.
We have made raising our brand value an important­management task at Yamaha Motor. With the electrificationof mobility I mentioned earlier and other technologicaladvances, it has become increasingly difficult to differentiate
ourselves with product specifications and hardware performance, so I believe that customers will choose products
based on their trust in and connection with a brand. As such,
I expect the role and importance of the brand to grow going
forward. Historically, nearly 130 years have passed since the
Yamaha brand was born and over 65 years since we turned
our hand to motorcycles. The brand value we have today was
won through the quality that earned customers’ trust in thebrand and their recognition of our commitment to the value
we create. I believe that this is a strength of the Company.

Yamaha Motor clearly defines the fundamental elementsof the “unique style of Yamaha” with the following key
words expressing its shared values: Innovation, Excitement,
Confidence, Emotion, and Ties. I firmly believe that exhaustively refining these five elements and incorporating theunique style of Yamaha into all processes and levels of ourcorporate and business activities is the way to meet customer expectations and the fuel to further improve ourcompetitiveness. One top internal undertaking that aims to
improve brand value is the Brand Strength Score (BSS),*1 aqualitative indicator for measuring understanding and penetration of the brand. Four internal indicators and six socialand customer-related external indicators are used to gauge
brand strength. Through an interview format, we constantly
research our positioning in relation to our competitors andclarify our strengths and weaknesses in each country andby product category. Based on these efforts, we revise ouraction plans annually and engage in the plan–do–check–act(PDCA) cycle while monitoring score trends. Furthermore,
under the goal of augmenting our organizational structure
to strengthen quality assurance and ensure safety and­compliance with laws and regulations, we established the
Quality Assurance Center in 2020 to minimize risks that
directly impact our brand image and to continuously lift
our corporate value.
Moving forward, I want the Company to express its

Yamaha Motor Co., Ltd. Integrated Report 202015

Toward Sustainable Growth

From the President

commitment to appeal to human sensibilities and create
Kando not only through tangible aspects (products) but also
to embody this commitment through the services and experiences it offers to customers. This falls under the Confidence
and Ties elements of the unique style of Yamaha. For­example, we operate the bLU cRU*2 rider support programas part of our marketing activities in developed markets.
bLU cRU’s most distinguishing feature is its all-around­support for further enriching the riding lifestyles of Yamaha
product owners. The program fosters interactions between
Yamaha Motor and its customers—and among customers­themselves—and embodies the goal behind the Company’s“Revs your Heart” brand slogan of delivering exceptional
value and experiences that enrich the lives of our customers.

Looking ahead, amid rising incomes and living standards inSoutheast Asia and emerging markets, I believe that we will
be able to put our branding efforts to work there when therole of motorcycles shifts from a means of daily commuting
to a tool of choice for recreation.
Through these initiatives, Yamaha Motor will strive to be
a company chosen by customers that achieves continuous
growth by constantly maintaining and improving its brandreputation and brand value.
*1 A method of assessing brand strength provided by Interbrand Japan*2 An amateur racing contingency program for riders using Yamaha motorcycles andother products

Aiming to Create Social ValueTo realize continuous growth, the Company identified in2019 four important societal issues (materiality issues) that it
can help resolve by leveraging its strengths: Environmentand resources; Transportation, education, and industry;Innovation; and Human capital management. It is my belief
that all these issues are directly connected not only to theCompany’s brand value but its survival as well. With that inmind, we intend to focus our efforts on a range of initiatives
in line with materiality issues. In particular, as a manufacturer
selling products that emit exhaust gases, measures for theenvironment are a must for us and as mentioned previously,
we are working to reduce CO2 emissions from our products
while proactively developing electric mobility.
Meanwhile, examples of the Company applying the technologies, knowledge, and expertise it has garnered throughits diverse range of businesses in order to help local communities include the clean water business in emerging anddeveloping economies and our longtime work to help modernize the fishing industry in Africa and elsewhere. I believethat these efforts not only contribute to the resolution ofsocietal issues but also help raise our brand value in thecourse of establishing relationships of trust with local communities, and that this will lead to greater corporate value
over the long term.

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Yamaha Motor Co., Ltd. Integrated Report 2020

Among the materiality issues identified, I view Innovation
as the platform for the Company’s growth that is indispensable for fulfilling its Long-Term Vision. Going forward, we
will work on innovations such as developing new forms ofmobility and providing solutions through robotics to supplement labor shortages. Within Yamaha Motor’s Monozukuri
is its exclusive development ideal of Jin-Ki Kanno. This refers
to technologies that seek to deliver to users the seductive
exhilaration felt when they truly become one with theirmachine. We quantify and fine-tune this kind of exciting
performance, which we call Kanno Seino, and build it into
our products. For example, when creating a motorcycle, testriders systematically ride and evaluate it in the final stages ofdevelopment, making confirmations and repeated improvements. This process is how Yamaha Motor creates a machinewith response tuned to suit human sensibilities, enjoyable
handling, chassis behavior bringing peace of mind, andmore. In solving Innovation issues, we will use the same
approach of exhaustively developing products with characteristics that appeal to all five senses. We will continue toprovide new value to society through our technologies andsensibilities as a Kando Creating Company by infusing ourcore technological competencies and Jin-Ki Kanno into our
products.

Taking on the Challenge of Further Growth
In 1953, when Japan was embarking on its road to recovery,
Genichi Kawakami, the fourth president of Nippon Gakki
Co., Ltd. (today’s Yamaha Corporation), gave the order toenter the motorcycle industry. Despite being a latecomer,
Yamaha Motor was able to survive in an era in which theindustry had already begun weeding out the weaker players
and go on to establish its current brand value. This is thanks
to the Spirit of Challenge passed on to each and every
employee—to always try to create new Kando for society—but I also believe that it is thanks to the free and openminded corporate culture we have that facilitates this spirit.
People are the greatest source of value creation and hence
management should be concerned first with how it can
maximize the performance and motivation of organizations
and individuals. In terms of human resource development,each year we are improving our human resource training
programs aimed at a variety of employees. For example,
we have established training tailored to employee positionlevels, training to hone specialist skills, schemes for gaining
frontline experience outside Japan and overseas trainee
programs for employees aspiring to be active on the global
stage, and coaching to raise organizational performance byenhancing team strength.
As a company operating globally, the promotion of diversity is essential in order to share as knowledge the environments, cultures, and approaches of various countries andregions. In widely sharing such knowledge, the occasional

clash of values leads to the creation of new values.
Specifically, we convene the Global Executive Committee
twice a year for our highest-ranking executives and global
meetings several times a year for specific functions for executives in the rank below. In this way, we are creating opportunities for executives and employees from different
countries and regions to inspire one another.
Business trends are approaching a major paradigm shift
due to the electrification of mobility, the rapid development
of digital technologies, accompanying changes in various
social frameworks, and other factors. In such a context, theadvanced technologies and wide-ranging business platforms
that we have built and developed as well as the capabilitiesof our people to turn ideas and concepts into reality will
surely be a major driving force for the Company as it takeson the challenge of reaching the next stage of growth.
While continuing to work in harmony with society and theenvironment, Yamaha Motor will endeavor to deliver joy,surprise, and delight as well as prosperity and happiness topeople around the world through its products and services.

Yoshihiro Hidaka
President, Chief Executive Officer andRepresentative Director

In a business environment
approaching a major paradigm shift,
we will create new Kando by exhaustively
refining the unique style of Yamaha.

Yamaha Motor Co., Ltd. Integrated Report 202017

Toward Sustainable GrowthSocial Value That
We Create

Yamaha Motor’s Value Creation Process

Environment and resources• Offer environmentally friendly­personal means of transportation

Yamaha Motor’s business model is to provide unique, high-quality products and services that accurately reflect societal andcustomer needs by applying the Spirit of Challenge that has been handed down as the Company’s DNA and the technologies
it has created and refined to date. The very reason for the Company’s existence as a Kando Creating Company is to give­society and customers experiences of Kando unique to Yamaha Motor that intertwine technologies and human sensitivities.
By expanding human possibilities and through our products and services that create Kando, we are aiming to achieve­sustainable growth as well as create a better society and more fulfilling lives.

Kando Creating Company• Consumer-oriented development ideal• Strong teamwork of dealerships, regionalsales bases, and Yamaha Motor

Land Mobility

Long-Term Vision
P.70

Create new value for people’s time,
mobility, and self-expression• Global R&D structure

Foundations for
Creating Competitiveness• Global sales network

Growth Strategy
Directions
Business
Operations

Corporate Mission

ImportantSocietal Issues• Ensure safe water and resources• Original and innovative ability to conceive
new technologies• Creative, advanced technological capabilities and core technological competencies• Marketing methods that connect
with customers over a lifetime

Motorcycles• Proprietary product development methods

Electrically
ATVs / ROVs
power-assisted
bicyclesMarine Products

P.72

Reliable and rich marine life
Toward further increasing the value of the ocean

Sales

Environment andresources

R&D

Innovation

P.44

P.36

Ties

Excitement

P.32

Outboard motors

Robotics

Transportation, education,and industry

Industrial
machinery androbotsConfidence

Procurement /Manufacturing
and Production

Innovation

DesignP.34

P.74

Financial Services

Industrial-use
unmannedhelicopters
P.76

Offer services that strengthen relationships withcustomers and dealerships

P.40/42

Financial services• Design that contributes tomanagement and branding
Human capitalmanagement

Pools

Promote automation and labor-savings
to free up valuable time for people

Emotion• Design capabilities that
express individuality

Human
Resources

P.46• Global production system
and inter-region productdistribution system• Abundant plant
management expertiseand technology• Leading manufacturing
technologies and strong
on-site capabilities• Talented global personnel who
embody the brand• Offer safe, comfortable, and fun
mobility services• Raise traffic safety awareness levels
by bolstering riding safety training• Supportive training for engineers
and the creation of employment
opportunities

There Is Greater Joy Yet to Come*
Three Focus Areas

Boats

Brand

ART for
Human
Possibilities

Transportation, education,and industry

OthersAdvancing

Robotics

Leverage and evolve
intelligent technologies
and robotics asa foundation

Rethinking
Solution

Innovation• Freedom from menial work throughautomation and autonomization• Promote the use of intelligent technologies and control technologies

Propose uniquely Yamaha solutions

Transforming
Mobility

Promote innovations in mobility
P.77

Become a close part of customers’ lives and offer
unique technology to support them

Human capital management• Promote diversity and inclusion
Electric
wheelchairs

Golf cars• Organizational structure that creates
job satisfaction• Diverse specialist skills andmanagement ability• Diversity in terms of specialization,nationality and culture, and gender* The statement made by Yamaha Motor at the 2019 Tokyo Motor
Show to express the world envisioned by its Long-Term Vision.

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Yamaha Motor Co., Ltd. Integrated Report 2020

Yamaha Motor Co., Ltd. Integrated Report 202019

Toward Sustainable Growth

Important Societal Issues (Materiality Issues)

To achieve sustainable growth together with society, Yamaha Motor intends to help resolve a variety of societal issues
in uniquely Yamaha ways.
In formulating its Long-Term Vision and Medium-Term Management Plan, the Company identified important societal
issues that it can help resolve by leveraging its strengths and has incorporated initiatives to resolve these issues into theMedium-Term Management Plan.
Process for Identifying Important Societal Issues 

1

STEP

Sort

We look at the wide range ofsocietal issues referenced in the
United Nations’ Sustainable
Development Goals (SDGs) and
the Global Risks Report, andselect those that will have thegreatest impact on Yamaha
Motor’s use and procurement ofmanagement resources, and forwhich the resolution will makethe greatest contribution to theenhancement of corporate value.
We also evaluate the importanceof societal issues from theperspective of stakeholders,referencing the valuations of
ESG rating institutions.

STEP

Categorize

2

Through consultation with
operating divisions, functional
divisions, and corporate divisions, the divisions clarify the
relationships between the issues
selected in Step 1 and eachdivision’s policies and activities,
and those that should be
addressed Companywide are
aggregated and categorized.

STEP

Designate3

All of the Company’s officers
deliberate societal issues aggregated and categorized in Step 2
at the Management Committee
and the Board of Directors’
meetings, and designate “important societal issues” that should
be addressed Companywide
using the Company’s strengths,
corporate philosophy, andunique capabilities.

4

STEP

Incorporate

Consolidated into Four Materiality Issues
To clarify the respective positioning of the four important societal issues (materiality issues) we identified,
we systematically categorized the materiality issues formulated in 2018.

* We renamed “Work–life balance” to “Human capital management.”

Initiatives to resolve the identified important societal issues
have been incorporated into theMedium-Term Management
Plan. The rigorous implementation of these initiatives will bemonitored going forward.

Environmentand resources

Transportation, education,and industry

Selected societal issues
High

Important issue areas

Importance to stakeholders• Financial crisis in important economic zones• Unmanageable inflation• Failure of national governance• Failure of regional or global governance• Inter-government conflict over regional problems• Deepened social uncertainty• Abuse of technological progress• Abolition of inequality• Responses to multistakeholders• Promotion of innovation(active use of global partnerships)• Implementation of fair taxation• Promotion of sustainable industrialization

Low

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Yamaha Motor Co., Ltd. Integrated Report 2020

• Improved energy efficiency(including promotion of use of renewable energy)• Promotion of use of inexpensive, reliable energy• Promotion of safe and secure work environments• Advancement of diversity and inclusion• Effective use of water resources andprevention of pollution• Securing of clean water resources• Elimination of discrimination against women /protection of human rights• Use of women’s skills• Strengthened disaster prevention and response• Eradication of forced labor, human trafficking,and child labor• Increased employment for sociallyvulnerable people• Prevention of pollution and damage from harmful
chemical substances• Strengthened measures to address climate change• Sustainable use of natural resources• Promotion of innovation(promotion of sustainable industrialization)• Promotion of innovation(promotion of sustainable forms of consumption
and production in ­developing countries)• Promotion of protection and recovery ofland ecosystems• Provision of a stable living environment• Halting of deforestation• Protection and recovery of marine ecosystems• Expansion of educational systems(including vocational training)• Enhanced education environment indeveloping countries• Promotion of social infrastructure development• Prevention of traffic accidents• Protection of small-scale agricultural andfishing industries• Advancement of sustainable fishing industry• Improved access to fishing areas and markets
in least developed countries

Low• Strengthened support for emerging anddeveloping economies• Introduction of industrial processes taking into
account clean technologies and efficient useof resources• Heightened awareness of sustainability• Promotion of economic growth based onfair work environments• Reduction of waste materials• Curtailment of corruption and bribery

Importance to Yamaha Motor

Foundational Issues

Innovation

Human capital management

High

Yamaha Motor Co., Ltd. Integrated Report 202021

Toward Sustainable Growth

Important Societal Issues (Materiality Issues)

Targets and Progress
Important societal
issuesRisks and opportunities

Risks• Tightening of regulations and declining
net sales due to the progression of
global warming• Declining profits due to rising costs

Uniquely Yamaha initiatives forresolving issues

Vision for 2030

Medium-term targets (2019 to 2021)

Progress in 201925% reduction in CO2 emissions from products(CO2/unit sales compared with 2010)* 2050 target: 50% reduction

Reduce by 13.75% (compared with 2010)

13.1% reduction (compared with 2010)

25% reduction in CO2 emissions generated during production(CO2/net sales compared with 2010)* 2050 target: 50% reduction

Reduce by 17.36% (compared with 2010)

32.4% reduction (compared with 2010)

Initiatives for achieving a
recycling society

18.7% reduction in waste generated during production(compared with 2010)* 2050 target: 50% reduction

Reduce waste volume by 10.3% (compared with 2010)* Yamaha Motor on a non-consolidated basis

15.7% reduction (compared with 2010)* Yamaha Motor on a non-consolidated basis

Bringing safe water to people
worldwide

Assisting in village development by contributing to theprovision of safe water

Enhance living and sanitary environment byimproving access to potable water
Bring the number of water purification systems(Yamaha Clean Water Supply System) installed to 60

Number of water purification systems installed: 41

Creating a technology
platform for electrification

Monitoring the electric power policies and battery technology
innovations of various countries while promoting EV development
in order to launch products in a timely manner

Launch electric products in the unique style of Yamaha in many productareas, such as motorcycles, marine products, electrically power-assisted
bicycles, electric wheelchairs, and drones, while establishing a development
platform for electric products

Launched the EC-05 electric scooter in Taiwan
Conducted field testing for the TRITOWN standing electric micromobility
model with twin front wheels
Developed the HARMO electric propulsion system
Total number of drive units for electrically power-assisted bicycles topped
five million units
Developed the YMR-08AP agricultural-use multirotor drone

Achieving a more sustainablemaritime society

Addressing the environmental problems faced by oceans

Initiatives to address the issue of ocean plastic waste

Took part in the Japan Agency for Marine-Earth Science and Technology(JAMSTEC)’s Scientific Survey of Marine Pollution as a survey cooperation
partner

Traffic congestion relief andenvironmental countermeasures

Selling electrically power-assisted bicycles in two or
more emerging and developing economies

Launch sales of electrically power-assisted bicycles in the Indian market

Commenced test sales in India in September 2019

Training to reduce traffic accidents

Reduced number of fatalities due to traffic accidents

Safe riding training opportunities (Yamaha Riding Academy):
Hold 2,000 courses with 180,000 participants in 2021
Number of countries with trainers: 20

Riding safety training opportunities:
Held 1,272 courses with approximately 117,000 participants
Number of countries with trainers: 15

Achieving a more sustainablemaritime society

Conserving marine resources

Offer a number of solution proposals in the fishing industry

Commenced consultations with fishing industry-related companies
regarding smartification of the fishing industry, such as fish farming

Popularizing diverse forms ofmobility for the elderly

Established electrically power-assisted bicycles as an alternative form ofmobility for elderly people in Japan who surrender their driving license

Supply several thousand electrically power-assisted bicycles to local­governments through cooperation with the national government

Began considering supporting test-ride opportunities of electrically powerassisted bicycles in light of the conclusion by a METI committee promoting
the proliferation of diverse forms of mobility that such bicycles could be analternative to automobiles for the elderly

Equipping products with digital devices
for sound maintenance

Equipping an aggregate total of four million units by 2024 (target year)

Supply 200,000 motorcycles equipped with digital devices to themarket per year

Developed a new version of the NMAX scooter equipped witha communication control unit (launched in February 2020)

Offering low-speed mobility services

Selling unmanned transportation systems

Establish prospects for commercialization of low-speed mobility services

Accumulated expertise by conducting field testing (aggregate total of
20 tests) with local governments, various business organizations, andother entities

Developing new forms of mobility

Selling new forms of mobility and having in place a model todrive business

Market penetration of LMWs and new value through the improvement of
the model lineup

Developed the Tricity 300
Commenced field testing of the TRITOWN
Exhibited the MW-VISION at the Tokyo Motor Show

Promotion of economic growth

Increased production efficiency

Develop highly efficient, multifunctional platforms and high-speed ­platforms
for the robotics sector

Developed the YRM20 as a first step toward using a high-efficiency
multifunctional platform (launched sales in April 2020)

Collaboration for factory-use Automatic Guided Vehicles (AGVs)

Made preparations for establishing a joint-venture company for automatedtransporter solutions

Launch sales of autonomous drones

Developed the YMR-08AP (launched in March 2020)

Achieved unmanned agricultural processes for several varieties of crops

Establish prospects for autonomous harvesting of more than one varietyof crops

Commenced harvesting tests at a farm

A leading company for female employees to work at

Promote activities for increasing the ratio of local talent inmanagement positions to 60% at overseas subsidiaries
Continue global recruitment (over 10% of new graduates
in regular positions at headquarters)

52%
10%

Highly international personnel at the headquarters

Number of women in management positions (2014: 16)
2020: 32
2025: 48
Implement trial of an after-school care program in the unique style of
Yamaha for schoolchildren
Obtain Eruboshi, Kurumin, and Platinum Kurumin national certification(Japan)Initiatives for realizing a
low-carbon society• Negative impact on corporate image

Environmentand resources• Delays in the economic independence
of developing countries because ofmarine pollution• Impact of marine pollution on thefishing industry and marine leisureOpportunities• Growing trend of EVs replacing existing
forms of mobility• Heightening demand for smaller formsof mobility

Risks• Shift away from motorcycles due tomore traffic accidents• Rise in traffic accidents caused by theelderly in developed nations• Fewer means of transportation inunderpopulated areas
Opportunities• Growing demand for motorcycles due
to rising populations and incomes indeveloping countries

Transportation,
education, and• Greater need for smaller forms ofindustry
automated mobility• Addressing and supplementing theaging workforce and labor shortages in
the agriculture, fishing, and manufacturing industries• Increased automation with the development of AI technologies• New mobility demand with CASE
vehicles and Mobility as a Service (MaaS)

Risks• Declining competitiveness in themarket and business environment

Innovation

Opportunities• New forms of mobility that drive
business• Offering solutions for the agricultural
sector using robotics

Freedom from menial work throughautonomization

Optimizing entire factories• Increased competitiveness due to thespurring of innovation
Offering solutions for the
agricultural sector using robotics
Risks• Labor shortages from falling birth rates
and aging populations in developed
nations

Human capitalmanagement• Unfair labor practices of suppliers andbusiness partners
Opportunities• Acquisition of new capabilities throughthe promotion of diversity and inclusion• Increased drive with the recruitment ofdiverse and talented human capitalfrom various countries

22

Yamaha Motor Co., Ltd. Integrated Report 2020

SDGs goals

Promotion of diversity and inclusion

Number of women in management positions: 34
Implemented trial of an after-school care program forschoolchildren in July 2020
Implementing supplemental measures to address inadequate factors
toward receiving certification

Yamaha Motor Co., Ltd. Integrated Report 202023

Toward Sustainable Growth

Climate Change-Related Information Disclosure

Yamaha Motor’s Climate Change Mitigation Measures 
Promotion of Low-Carbon Products(Based on the TCFD’s Recommendations)

Yamaha Motor has announced its support for the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD), which was established by the Financial Stability Board (FSB).
In December 2018, the Company formulated the Yamaha Motor Group Environmental Plan 2050 (hereinafter,“Environmental Plan 2050”), which sets out its stance, goals, and action plan as a company that strives to realize a sustainable
society. The TCFD’s recommendations are congruent with the Company’s approach of more proactively disclosing informationon the environmental initiatives it pursues through its business activities and on the achievements of these initiatives.

Governance

The Board of Directors formulates policies on dealing with issues concerning sustainability and regularly reviews their implementation status.
With regard to issues concerning sustainability, the Board of Directors
oversees the Sustainability Committee, chaired by the president and chief
executive officer and comprised of executive officers appointed by the
Board of Directors.
With regard to issues concerning sustainability, we positioned theenvironmental field in particular as an important area to be tackled bymanagement, and established the Environment Committee, chairedby an executive officer in charge of environmental activities. The
Environment Committee meets three times a year to discuss policies
concerning the environment and vision for the future, assess
Environmental Plan 2050, and conduct annual reviews of how each
operating division has performed against its targets. The committee
reports its findings to the Board of Directors at least twice a year.

The products we provide, including our core product line of motorcycles,
are characterized by their light weight and compact forms. They havesmall environmental impacts in terms of resource use during the manufacturing phase, while throughout the use phase they serve as a convenient means of transportation with excellent maneuverability for freely
traveling short distances. Motorcycles, a relatively compact and inexpensive type of mobility vehicle, meet the demand for transportation of
goods and services, particularly in emerging markets that are undergoing
rapid economic growth. They also expand the spheres in which people
live their daily lives, giving them more options in terms of work andeducational opportunities.
We have designated Scope 3, Category 11, “Emissions from the useof products,” which account for 85% of our CO2 emissions in the product lifecycle, as one of our most important initiatives. Under our “BLUECORE” motorcycle engine design ideal, which strikes a balance between
fuel economy and environmental performance, we globally launch newmodels with improved fuel economy every year.

Breakdown of CO2 Emissions for the Entire Lifecycle
Fuels used
Scope 1
0.5%

Electricity used
Scope 2
1.3%

Other
1.2%

Scope 3
98.2%
Rawmaterials
12%

Category 11.
Breakdown by
product
Generators /Snow blowers /Multipurpose
engines
6%2019 lifecycle
CO2 emissions

Outboard
motors14%285.81
million t-CO2

Others8%Motorcycles
72%

Category 11.
Use of products
85%

Setting of Targets for Environmental Plan 2050

Strategy

In formulating Environmental Plan 2050, Yamaha Motor understood andincorporated the business risks and opportunities it may face by the projected
global population increase by 2050, global resource shortages, and energy
shortages, in addition to international greenhouse gas emission reduction
scenarios, such as the 1.5°C and 2°C targets. As such, we have reflected
adaptation and mitigation measures for climate change in our business strategy.

Climate-Related Risks and Opportunities

Aiming to realize a low-carbon society, a recycling society, and a society
in harmony with nature, Environmental Plan 2050 sets milestones for
2025, and promotes environmental activities designed to achieve theplan’s long-term targets through the Company’s businesses.

Motorcycles are the fastest means of transportation for urban mobility and boast
good fuel economy, while having one-third the impact in terms of CO2 emissions
per km per passenger compared with automobiles. When setting our 2017targets, we formulated reduction scenarios for motorcycles, our primary business, with reference to the Sectoral Decarbonization Approach (SDA) developedby the Science Based Targets initiative (SBTi), to set a reduction in CO2 emissionsof 50% by 2050 as a shared reduction target for all our businesses.

Environmental Plan 2050
50% reduction in CO2 emissions during product use

1.0

Impact of CO2 Emissions per km per Passenger
in an Urban EnvironmentIn our scenario analysis, which assumes physical risks based on a 1.5°C
and a 2°C scenario, we have classified and identified the major risks andopportunities for our businesses associated with the transition to a
low-carbon society as regulatory, information disclosure, technological,
market, reputational, and customer risks. In addition, we have evaluatedthe importance of climate change-related risks based on whether they
are likely to materialize in the short term (0–3 years), medium term (3–6
years), or long term (6+ years), and the resulting estimated scale of theresulting financial impact.

80% reduction in emissions in the SBTi (SDA)
automobile sector* Figures are based on Yamaha Motor research
Automobiles

189

Motorcycles

g-CO2 /
passengerkilometer

62

g-CO2 /
passengerkilometer

1/3

(0.3)

0.3

–50%

0.2
0.15

Risks and Opportunities Regarding Important Environmental and Societal Issues, Including Climate Change

Important• Strengthened measures to address
Environmental
climate change
and Societal• Improved energy efficiency
IssuesActionThemesLow-carbon society

Short
term

Risks

Costs for addressing regulations may increasesignificantly, with each country and territory moving
to tighten motorcycle emission standards, and the
U.S. introducing more stringent EPA and CARB
emission standards for marine engines.

Rising demand in India, Africa, and other regions
Medium may increase CO2 emissions from the distribution ofterm
goods, and the introduction of carbon taxes may
increase logistics costs.
Long
term

Heightened environmental awareness may lead todecreased sales of products that use fossil fuels.
Introduction of carbon taxes may increase­manufacturing costs.

Sales of models with improved fuel economy may
Short to increase. In emerging economies, motorcycles
medium may be widely adopted as an inexpensive means
termof transportation with minimal social infrastructure
costs.
Opportunities

Long
term

24

• Effective use of water resources
and prevention of pollution• Reduction of waste materials• Introduction of industrial processes
taking into account clean technologies
and efficient use of resources• Sustainable use of natural resources

Electric models may be widely adopted.

Yamaha Motor Co., Ltd. Integrated Report 2020

Recycling loops in society

Short
to
mediumterm

In emerging economies and elsewhere, severe air
pollution from the use of motorcycles may leadto tighter regulations, including a ban on riding
motorcycles in cities.

Long
term

Increased consumption of resources accompanying
the economic growth of emerging markets mayheighten procurement risks, including a shortageof resources and cost increases.

Short
term

Lightweight and compact low-speed mobility
vehicles (land cars) may be widely adopted as ameans of transportation that helps minimize useof social infrastructure resources and related costs.

• Promotion of protection andrecovery of land ecosystems• Halting of deforestation• Protection and recovery ofmarine ecosystems

A society in harmony with nature

Climate change may trigger abnormal weather
events, including forest fires, droughts, extreme
Shorttotemperature changes, storms, and snowfall,long term destroying the ecosystems of the oceans, mountains,and forests where our products are used.

MediumMotorcycle and marine rental businesses may grow.
term
Long
term

In terms of engineering, manufacturing, andmarketing, ultra-compact mobility vehicles that aresmall, lightweight, and resource-saving may beincorporated into social infrastructure.

Sources: JAMA “2010 Passenger car JC 08 average fuel consumption,” JAMA
“Comparison of average speed of vehicles in cities,” EEA “Average number ofpassengers,” and NILIM “Running speed and CO2 emission intensity”

Yamaha Motor Group’s target
2010

2020

2030

2040

2050

Climate Change-Related Risks 
Identification of Risks

Evaluation of Risks

Each operating division and functional divisioncategorize short-term, medium-term, and long-termclimate change-related risks into “risks related totransitioning to a low-carbon economy” and “risks
related to physical changes caused by climatechange.” Then, after considering the financial
impacts of these risks on business, as well as thefinancial impacts on business when viewing climatechange mitigation measures and adaptation measures as opportunities for management reform, they
identify risks and opportunities in medium-term
management plans.

The Environment Committee evaluates specificinitiatives undertaken as part of a business strategy
on risks and opportunities identified by each operating division and functional division. The Sustainability
Committee evaluates specific initiatives on significant
Groupwide risks—particularly companywide business
continuity risks, including climate change-relatedrisks—that need to be addressed and prevented to
the greatest possible degree.

Process of Managing Climate
Change-Related Risks
We incorporate climate change-related risk management into the risk management structure for theentire Group. The Environment Committee manages
the annual progress toward the goals and targets ofspecific initiatives undertaken as part of a businessstrategy on risks and opportunities identified by each
operating division and functional division. The
Environment Committee reports the results to the
Sustainability Committee, which consists of the same
members as the Management Committee, and to
the Board of Directors.

Indicators and Targets 
Increased awareness of the need to conserve theShortnatural environment may trigger growth of thetooutdoor market where people seek and cherish
long terminteractions with nature.

Each operating division and functional division considered short-term,
medium-term, and long-term risks and opportunities, their business,strategic and financial impacts, and the climate change-related risks
based on a 2°C scenario, in accordance with the designated climatechange materialities of a “low-carbon society,” “recycling society,” and“society in harmony with nature.” These divisions then formulated
specific numerical targets for 2025 and 2050 (reduction of use-phase

CO2 emissions by 19% per unit sale by 2025, 50% by 2050, from 2010
levels; and reduction of production-phase CO2 emissions by 19% per net
sale by 2025, 50% by 2050, from 2010 levels). The Environment
Committee manages progress and deliberates matters that have a significant impact on business, and submits reports or resolution matters to theBoard of Directors at least twice a year.

Yamaha Motor Co., Ltd. Integrated Report 202025

Toward Sustainable GrowthLong-Term Vision and Medium-Term Management Plan
Long-Term Vision

ART for Human Possibilities

The Company has positioned the three years covered by the current Medium-Term Management Plan beginning in fiscal
2019 as the first stage of transformation toward realizing its Long-Term Vision of “ART for Human Possibilities.”
Amid dramatic changes in the external environment and the further diversification of people’s values going forward,
the Company will contribute to the resolution of societal issues based on its longstanding values. At the same time, wewill reform our business and management platforms and promote growth strategies centered on the development of
new businesses in order to achieve sustainable growth.

Advancing

Rethinking

Transforming

Robotics

Solution

Mobility

We will Advance the use of Robotics,
Rethink Solutions, and Transform Mobility
Medium-Term Management Plan

to expand human possibilities for a better society
and more fulfilling life.

Basic Policy Quantitative Targets for Fiscal 2021 

Reforming our business and management platforms and promoting thedevelopment of new businesses

Growth Strategy: Four categories based on technologies and markets
Net Sales

2 trillion¥

Balancing growth investments and shareholder returns
within the range of our cash flows while maintaining
the earnings power of existing businesses
See pages 30 and 31 for details on and thestatus of progress of quantitative targets

49.9%

Operating
IncomeROE¥

Approx.

180 billion

Financial Strategy Equity Ratio
Expanding via co-creation with partners(three-year average)

15%• System supplier• Electrification• Sharing

New Technologies

Operating
Income Margin

9.0%

Continuous andsteady growth+
Inorganic growth

Existing Technologies

Note: We may revise the above targets in lieu of
the impacts of the COVID-19 pandemic.

Establishing business platforms readyfor a new era of mobility

Marine Products

Robotics

Strengthening our high-­profitability
model and building platforms forsustainable growthBusiness scale and area expansion andbolstering profitability• Bolstering current capabilities
	Increasing the efficiency of manufacturing andsales functions• Marine Long-Term Vision	Reliable and rich marine life
Toward further increasing the value of the ocean• Swifter management
	Improving the speed of decision-making using
management systems• Global production layout for outboard
motors	Improving production capacity and flexibility• Growth strategies	Optimizing entire factories and strategies
focused on the logistics, agriculture, andmedical sectors• Shifting to new business fields
	Taking part in the emerging and new economic
zones for mobility• Expansion of comprehensive marine­business strategy
Evolving as a system supplier• Product development strategies	Offering attractive products and services

Yamaha Motor Co., Ltd. Integrated Report 2020

• Agriculture• Medical• Autonomous

Expanding with a
combination oftechnologies

New markets

Progress of Medium-Term Management Plan Measures for “ART for Human Possibilities”
Executed projects

Prospects for commercialization• Low-speed autonomous driving field tests(Wajima City, Iwata City, Unnan City)• Aiming for commercialization in 2021

Autonomous Driving• Invested in AI computing company DMP• Invested in autonomous driving technology developer Tier IV• Joint development of the SC-1 with Sony and start ofservices in Okinawa• Considering business venture in an all-new field byacquisition of core technologies• Business development and application in the
tourism / entertainment sector

EVs• Announced participation in electric motorcycle
battery consortium• Launched battery-swapping electric scooter in Taiwan• Development of electric motor units for EVs• Continuing to develop model products while closely
monitoring electrification policies in various
countries and battery technology innovations

Sharing• Strategic business tie-up with Grab andinvestment of US$150 million• Promoting collaboration and establishing abusiness model

Advancing Robotics• Business integration with SHINKAWA and
APIC YAMADA and investment of ¥10 billion• Invested in Tokyo Robotics• Advancing the pace of YMRH’s PMI and
implementing structural reforms

Rethinking Solution• Started trialing agricultural UGVs
• Land Link Concept exhibited at the Tokyo Motor Show• Considering commercialization throughcollaborations with start-ups

Transforming Mobility• Field testing of the TRITOWN standing electiric micromobility model• Tricity 300 announced as fourth LMW model• MW-VISION exhibited at the Tokyo Motor Show• Expanding the LMW lineup• Accelerating R&D and promoting production
model creation / commercialization

CASE MaaS / Autonomous
Driving• Firming of business platforms
	Strengthening in-house manufacturing­technologies and systems

See pages 70 to 75 forprogress by business

ART

26

Inorganic growth

Existing markets

Medium-Term Priority Measures in Core Businesses Land Mobility

Expanding with funds /M&As

Do not allocate resources to
new areas not synergisticwith existing technologies
and markets

Yamaha Motor Co., Ltd. Integrated Report 202027

Toward Sustainable Growth

Specific Initiatives toward Resolving Societal Issues

The Company is proactively advancing a range of initiatives to contribute toward the resolution of designated­important societal issues by providing uniquely Yamaha solutions that leverage the technologies and expertise­garnered by the Company to date, all while collaborating with its partners and coordinating with industry, academia,
and government.

Innovation

Contributing to labor savings andautomation in agriculture through theapplication of robotics
Labor shortages in agriculture have become a concern for developed
countries across the board, and there is an urgent need for automationand labor savings in the sector. Yamaha Motor is providing solutions forthe agriculture industry through its robotics expertise. By combining
articulated robots that are adept at sophisticated and delicate movements
via intricate electronic control with unmanned ground vehicles (UGVs) for
agriculture, we are aiming to realize fully unmanned harvesting offruit—currently done by hand—and in 2019, we conducted field testingfor grape harvesting at a winery in Yamanashi Prefecture, Japan.

Transportation, education, and industry

Tackling local transportation issues withlow-speed mobility

Environment and resources

Providing a stable supply of potablewater and changing people’s lives
According to the World Health Organization (WHO), approximately
525,000 children under the age of five die from diarrhea-related illnesses worldwide each year (as of 2017), and permanent access to safe
water remains a pressing issue. Yamaha Motor is confronting this with
the Yamaha Clean Water Supply System, a water purification facility
using a simple construction and slow sand filtration, a natural water
purification method.
The system was first developed more than 20 years ago and requires
neither significant electric power nor maintenance by a specialist engineer. It can also be operated independently by the local residents and thewater from nearby rivers and lakes can be made safe to drink. In villages
where the system has been installed, cases of diarrhea, fever, abdominal
pain, and skin disease have fallen significantly. Moreover, beyond creating a stable supply of clean drinking water, installing the system changes
people’s lives in a variety of ways. These include freeing people fromhaving to draw water and allowing them to work and learn instead,and spurring village development through new businesses such as
water delivery, water filtration, and ice-making.
In 2019, we installed 10 systems in the Senegal River Basin and officially handed them over to the Senegalese government. At the sametime, we conducted educational activities to help raise awareness ofproper sanitary practices among local residents, including a picture story
show in which some 350 children listened with great enthusiasm about
the importance of drinking clean water. Yamaha Motor is proceedingwith the introduction of these purification systems through collaborationand cooperation with public institutions such as the Ministry of Foreign
Affairs of Japan, the Ministry of Economy, Trade and Industry (METI), theJapan International Cooperation Agency (JICA), and the Japan External
Trade Organization (JETRO), as well as international institutions like theUnited Nations Development Programme (UNDP).

Japan has the world’s most aged society and is facing a variety of societal
issues, including ensuring modes of transportation for the elderly andregional disparities between urban and rural areas. Countries around theworld whose societies are also aging are paying close attention to developments in Japan. By offering small, low-speed forms of mobility likecompact electric carts as first/last-mile mobility solutions, the Company
looks to contribute to community-building with slow mobility and create
uniquely Yamaha value in mobility to not only address important societal
issues such as transportation, health, and industrial promotion but also
bring fun values to mobility. In 2019, we took part in the Green Slow
Mobility field testing project together with the city of Unnan in Shimane
Prefecture, Takenaka Corporation, and the NPO Entrepreneurial Training
for Innovative Communities (ETIC), in which compact, low-speed EVs
based on our long-proven golf cars circulated major city facilities in
downtown Unnan.

28

Yamaha Motor Co., Ltd. Integrated Report 2020

Yamaha Motor Co., Ltd. Integrated Report 202029

Toward Sustainable Growth

From the Director, Chief General Manager ofCorporate Planning & Finance Center

Approach to Portfolio Management

Through management that places greater
emphasis on the balance sheet and capitalefficiency, we will restore the earnings
power of existing businesses and aim torealize our growth strategies.

Tatsumi Okawa
Director, Senior Executive Officer,
Chief General Manager of Corporate
Planning & Finance Center

Growth and investment businesses
Rate ofincrease in
net sales

Companywide
weighted average
cost of capital(WACC)(Compoundaverage growth
rate)

New
Business

Business
E

New
Business

Business
C

Business
A–10

Business
F

BusinessD0

Simple ROIC

Business
B

Businesses with stable foundations

Businesses to be restructured(After-tax operating profit /Invested capital underoperating division control)–10

Review of Fiscal 2019
The Company has made balancing within the range of its cash
flow investments for new growth and returns to shareholders as
its standard financial policy. However, in order to realize our LongTerm Vision of “ART for Human Possibilities” announced at theend of 2018, we are more conscious than ever before of growthoriented capital allocation.
In fiscal 2019, the first year of the current three-year Medium-Term
Management Plan, the New Venture Business Development departments as well as various existing businesses worked proactively to
explore new fields of business. Up until 2018, we had been unable
to use all the funds allocated for strategic growth investments, so wehave made progress in this regard. On the other hand, we saw signsof stagnation in some existing businesses that are essential for generating the cash necessary for these growth investments.
Free cash flow was a higher ¥19.5 billion, in part due to theeffect of stricter inventory management compared with 2018.
Nevertheless, we were unable to reduce our inventory levels as
initially planned and must therefore carry out more meticulous
management of working capital.
While ROE was 11.1%, down 1.2 percentage points versus our
initial target, this was due to missing our target for net income
ratio, one of the components of ROE. In other words, our earnings power was weak. In particular, the impacts of the Robotics
business and motorcycle business in ASEAN markets—which are
generally highly profitable—were significant. Although the primary cause of stagnation in the Robotics business was a worsening of market conditions, it was a decline in competitiveness andoperational weaknesses in some regions that became an issue forthe motorcycle business in ASEAN markets.

Policy for Fiscal 2020
First and foremost, our priority is responding to the global COVID19 pandemic. To prepare for uncertainties in the business environment, we will ensure that we have sufficient liquidity on hand. To
that end, we decided not to pay an interim dividend in 2020. We
will keep a close eye on the recovery of each market while controlling the implementation of investments and expenses more strictly
than usual. However, we will follow a basic policy of equally engaging in both offensive and defensive tactics by remaining exhaustivein our assessments of new opportunities that are already beginningto emerge as we move toward a post-COVID-19 world.
Based on that policy, we will bolster the earnings power of ourexisting businesses, which has been an issue since 2019. Specifically,in the motorcycle business for ASEAN markets, we will train­particular focus on reinforcing marketing and brand strength and30

Yamaha Motor Co., Ltd. Integrated Report 2020

augmenting our logistics capabilities to overcome the weaknesses wehave. Furthermore, we will expand to all regions of the ASEAN
market and India our premium model segment strategy that is starting to take hold in Indonesia. In the Robotics business, we will leverage the conversion of Yamaha Motor Robotics Holdings Co., Ltd.
(YMRH) into a wholly owned subsidiary in order to accelerate structural reforms for unifying the Group and prepare for market recovery.
In carrying out our growth strategies, we will narrow down candidates for resource allocation by fully utilizing the findings to datefrom our explorations for new business areas, and then make soundinvestments of management resources and strive to reap the rewardsof those investments. At the same time, we will clearly specify fields
for growth for existing businesses in order to develop both fronts.

Direction of Our New Financial Strategy
For our budget for growth strategies in the current Medium-Term
Management Plan, we had apportioned ¥70.0 billion for researchand development expenses and ¥140.0 billion for investments,
including M&As. However, the COVID-19 pandemic has madesecuring these funds difficult. Nevertheless, as our policy andgeneral direction of allocating cash earned through existing businesses toward new business fields will remain unchanged, wemust develop and implement a financial strategy that places
greater emphasis on cash flow and the balance sheet in eachbusiness.
As new metrics for this strategy, we introduced the cash conversion cycle (CCC) and a simplified return on invested capital(ROIC) calculation as important key performance indicators (KPIs).
We commenced full-fledged CCC-based monitoring from 2019,
and approaches focusing on cash flow generation are alreadybecoming widespread among business segment and regional
management. While ROIC is primarily utilized as an indicator forcompanywide portfolio management, we will be applying it toeach business to increase capital efficiency.
Through these initiatives, I would like to change to a management style that puts together a balance sheet under a clear
financial strategy, rather than a style that is the result of the­balance sheet.

Increasing Corporate Value
Yamaha Motor is a multi-industry conglomerate under a single
brand. However, we have never demonstrated an awareness that
we are a conglomerate or adequately put into practice accurate
portfolio management for maximizing the value of that position.
We are currently moving forward with the implementation of
portfolio management centered on growth (compound annual
growth rate (CAGR)) and capital efficiency (ROIC). As a key
agenda item for the Board of Directors, not just those in charge ofbusiness execution, we will clearly define the direction to take foreach business.
For example, under conditions like that of the COVID-19 pandemic, our diversity as a conglomerate should prove invaluable
and there have in fact been many instances of specific businessesor regions rescuing us when we have encountered a variety ofcrises. I am convinced that strengthening our portfolio management will enable us to further exercise our strength of diversity.
Seeing the pandemic as a prime opportunity to review our portfolio, we will promote a dynamic portfolio strategy and continue
creating new value unique to Yamaha Motor and thus achieve
operations as a conglomerate premium.
Turning to shareholder returns, we will do our utmost to
promptly restore business conditions to normal and review thedividend payout ratio, which has traditionally been an indicatorfor shareholder returns, or introduce new guidelines for the total
return ratio and other facets.

Yamaha Motor Co., Ltd. Integrated Report 202031